Blockchain In The Food Service Industry: 5 Possible Use Cases

  • 6 November 2018
  • Sam Mire

While the oft-cited figure that 90% of restaurants fail within the first year of opening has been proven false, there’s no doubt that the food service industry, from supermarkets to suppliers and restaurants, is a tough racket. While only about 17% of restaurants actually close their doors in the first year, it does not take long for any business in the food industry to solidify a poor reputation that prevents any long-term prospects for prosperity.

There is no quicker way to tarnish a reputation than to be the source of an outbreak of foodborne illness. The CDC estimates that 48 million people get sick, 128,000 are hospitalized, and 3,000 die from foodborne diseases each year in the United States. Getting somebody ill is a sure sign that word of mouth will likely doom a restaurant or supermarket for at least the foreseeable future — just ask Chipotle management. But killing someone could be a one-time occurrence that results in imminent, if not immediate, failure. And often, it’s not even the fault of the restaurant or grocer who is responsible at the point of sale.

Tracing foodborne illnesses to their source by using decentralized ledgers in the food supply chain is the most potentially impactful use case for blockchain tech in the food service industry. Nothing can be more important than preventing potential death and/or serious illness, and the ability to hold individual suppliers accountable through better traceability of produce and meat represents a large step in making the industry as a whole much safer. The blockchain will also play a lesser, albeit still important, role in modernizing food growth, shipping, and storage processes to reduce spoilage as well as modernizing the way in which restaurants are managed.

Blockchain in the Food Service Industry - Practical Use Cases

Tracing Contaminated and Fraudulent Inventory

When one hears the word “counterfeit,” they probably think of a knockoff Fendi bag being peddled on Canal St., faux Rolexes being pushed in the subway tunnel, or even China’s endless array of brick and mortar knockoff stores — anybody want to hit the Nibe outlet for some Air Jadens?

What some may not consider is that the fake goods market can be deadly, especially when it comes to the glut of fake food, drink, and formula being pushed across the globe. In 2017, Brazil — already in the throes of political scandal, a violent crime wave, and economic uncertainty — was struck with the “mother of all food fraud cases.” Several companies, including meat packing titans JBS S.A. and BRF SA were at the center of an investigation dubbed “Operation Weak Flesh.” The companies were found to be issuing bribes to food inspectors, which allowed them to export rotten meat across the globe, using acid to camouflage foul odors and disguising cheap imitations for higher-priced meat items.

Brazil isn’t alone in the world of food fraud. China’s “food safety” policies are notoriously lax — to the point of comedy, if the stakes weren’t so high. Among 900 “meat fraud” arrests in China in 2013 was a gang of fraudsters allegedly using chemicals to transform rat meat to take on a more mutton-like appearance. 2016 was a particularly bad year, with headlines including “The Parmesan Cheese You Sprinkle On Your Penne Could Be Wood.” Concerned about food fraud yet?

There is a solution waiting in the wings, or at least a means to nip such fraud in the bud as soon as it emerges. The blockchain’s ability to oversee products’ movements along a supply chain allows for easier identification of the source of contamination or counterfeit. This allows suppliers and restaurants to state definitively to their customers what the issue was, and ensure that the subpar product has been excised from the inventory. Overall, this means fewer customers contaminated, less inventory unnecessarily trashed, and more hard-earned reputations preserved. 

Companies Trying to Solve This Problem

  • Zego  Blockchain based provenance solution used to identify harmful chemicals in Monsanto foods.
  • TE-Food  Farm to table food traceability.  
  • Connecting Food Tracing food along the supply chain, from farm to point of sale.

Reducing Food Waste

Blockchain use cases in the Food Service Industry - Reducing Food Waste

From a class of third graders to a lecture hall full of grown adults, lecturing a crowd about the perils of food waste is one sure-fire way to induce a collective eye-roll. Yet it’s actually a very important topic. An astounding one-third of the food produced on the earth for human consumption goes to waste. That one-third is the equivalent of 1.3 billion tons each year! And it’s the food that’s best for us, fruits and vegetables, that tends to go down the drain or to the dump most often. It seems completely impossible, but it’s estimated that the average American throws out 300 pounds of food each year — more than most people’s body weight.

While grocers and even fast food restaurants often catch flack for throwing away “perfectly good” food, statistics show us that consumers probably would have ended up throwing away excess or barely-expired food, anyway. According to the New York Times, around 40% of wasted food in developed countries is thrown out by the consumer, not the seller. While food waste is sometimes unavoidable, that’s in part because our systems for planning picking, shipment, and purchase are often not nearly strategic or data-driven enough.

Those who make their money in food sales know that over-ordering, spoilage, and contamination seriously hurt the bottom line, too. Monitoring product more closely by utilizing a blockchain record of customer buying patterns, a product’s life course before and after it is in a grocer or restauranteur’s possession, and even more insightful intel will help those in the food service industry make informed decisions to minimize food waste. 

Companies Trying to Solve This Problem

  • Goodr  Blockchain based platform to reduce food waste/inefficiency. 

Restaurant Management Processes

In 2018, San Francisco became the “first major city” to adopt a $15 minimum wage, but they are far from the first city to take such a step toward raising the wage floor for the lowest-paid employees. On January 1st, 2018, 18 states and 20 cities experienced a minimum wage increase, and the trend is only going to continue upward. By 2022, an estimated 17% of Americans will live in a state or metropolitan area with a $15 minimum wage.

Though there are plenty of studies touting the health benefits of such a wage increase, the effect that a higher-paid workforce will have on industries that rely on low-skilled workers remains unclear. The rise of completely-automated restaurants such as Spyce Kitchen is, as they describe, an almost direct response to the likelihood that chefs, servers, bussers, and other restaurant employees are almost certain to account for greater shares of the operating budget going forward.  

Automation is set to fundamentally alter the food service sector. This is not a matter of if, but of when and how. The incorporation of smart contract technology could underpin transactions between humans and kiosks, and a network of sensors could provide data about customer purchase patterns and food quality standards — standardized information that could also be stored on the blockchain for analysis by decision makers within a company regardless of their location. These are just two examples of how the blockchain may come to play a role in increasingly automated processes in the food service sphere. 

Companies Trying to Solve This Problem

  • Mobivity – Blockchain based loyalty programs for restaurants. 

Food Supply Chain Provenance

Blockchain use cases in the Food Service Industry - Food Supply Chain Provenance

Back in the day, there was a general trust among consumers and retailers across industry lines that goods being sold would be of a certain quality and safety standard. Perhaps that was naïve, but today there’s no doubt that how a product was made, how and where it was grown — was this Kobe beef educated in private or public school? — and virtually every other specification you can imagine is required for consumers to sleep soundly at night.

Admittedly, the pickiness doesn’t come without good reason. Perhaps you can recall one of the many outbreak of mad cow disease; they occurred in 1986, 1988, 1989, the early 90s, 1993, the mid-90s, 1995, 1996…to be honest, basically every year. In each of these instances, it would have been a help and a comfort to be able to trace the meat back to its source. In recent past, high-profile chains, such as Chipotle, have suffered serious revenue and PR hits thanks to E. coli, while fraudulent products — see: the 2003 European horsemeat scandal — are also a concern to safety, our consciences, and palettes. Standards are only going to get more stringent for grocers and restaurateurs going forward; turns out, millennials want ethically sourced food, and they want it to go. Sheesh!

Fortunately, the blockchain provides immense potential for supply chain tracing. If participants on a chain log information pertaining to a food product’s growth method, harvest, and shipment, consumers will no longer be limited to the trust that comes with sell-by dates and the often misleading appearance of a product. They will have a verifiable record of how a steak was raised or a vegetable grown, when it was shipped, when it arrived in store, and how long it has been sitting on the shelf. This, in turn, will differentiate the grocers and restaurants with best practices from those hocking nearly-expired products to an unsuspecting consumer base. 

Companies Trying to Solve This Problem

Proving Marketing/Label Claims

The food industry is notorious for espousing false, intentionally misleading claims about products for the sake of appealing to a healthier or trendier consumer base. The reality is that for those who don’t have a Ph.D. in reading the back of a product label, deciphering the fakers from the honest can be extremely difficult, if not impossible. In fact, 50% of Americans find food labels to be misleading.

It’s easy to see why consumers feel misled when a closer examination of specific claims is conducted. For instance, many probably don’t know that “non-GMO” is a completely different claim from “certified non-GMO,” or that “low calorie” generally means that any subtracted calories have been replaced with a chemical sweetener. Another common practice that the untrained consumer’s eye may gloss over is the reality that “multigrain” is not nearly as healthy as it sounds, or that darker breads and items aren’t always healthier — a common conception — because some are injected with caramel coloring to imitate healthier grains. It’s no wonder why trust in the food industry is so degraded.

Blockchain ledgers offer consumers the opportunity to trace a product back to its source, and the technology could provide a standard of provenance that food producers will conform to if they seek to remain competitive. This means not just claiming that a product is organic, but proving it, too. Same goes for products that claim to be GMO-free, etc. Once one honest producer puts their blockchain where their mouth is, the rest of the industry will have little room not to do the same, and a more accurate picture of labels’ and marketing campaigns’ respective honesty will emerge.

Companies Trying to Solve This Problem

  • Deloitte Advising on the use of blockchain provenance for label verification.
About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.