By Janice St. Onge, President of the Flexible Capital Fund
Fresh from a year-long stint at Groupon, Dan White moved to Vermont in 2011 with an idea–to localize the popular couponing platform in a way that supported Vermont farmers, producers, and restaurants.
By 2017, the Localvore app had 20,000 customers and $3 million in gross sales. White and co-founder, Michael Nedell, were onto something. But the ‘daily deal’ model was not the ultimate vision for the company. It was, according to White, “just what I knew how to do as a 25 -year-old entrepreneur.” With the help of their advisory board, White and Nedell decided to move the platform to a paid subscription model, launching the Localvore Passport in 2019. Rather than generating sales in the form of vouchers, members now pay a monthly or annual fee and receive access to hundreds of deals and offers from local businesses.
“The idea is to drive people to the restaurants that are supporting local farmers and producers,” said White. “But we wanted to do that in a way that didn’t put the cost burden on small businesses–that’s where we really depart from Grubhub or Yelp, along with the fact that we don’t include any national chains.” Localvore provides the platform for Vermonters to access local food and support their communities at the same time.
With more than 1,000 subscribers right out of the gate, White and Nedell were dreaming big, already planning to open a second market in the Minneapolis-St.Paul area and building a social component into the app when the COVID-19 pandemic hit. “We had all the momentum and evidence we needed to show that the platform could successfully scale,” said White. “And then everything went on hold.”
Partnership with Everyone Eats
Reeling as restaurants around the state closed or moved to take-out only, the app lost 50 percent of its subscribers. “At the same time, the pandemic forced us to think about where our food was travelling from, and we saw a heightened sense of community building up around our local food system,” said White. “People wanted to support local businesses and there was a lot of awareness about keeping dollars local.”
In August of 2020, a few months into the pandemic, The Skinny Pancake launched Everyone Eats, a program that connects local restaurants with people in need of food. The win-win-win was obvious–restaurants are paid $10 per meal allowing them to keep people employed, source at least 10 percent of supplies from local growers and producers, and provide healthy meals to vulnerable Vermonters. They just needed a way to connect everyone.
White and Nedell jumped in. They created a login to Localvore Passport that did not require a subscription, built the software, and helped to onboard restaurants all over the state. In 2020, Everyone Eats provided more than 530,000 free meals to Vermonters struggling to obtain enough food, which, according to Vermont Digger, pushed $5.3 million to Vermont restaurants and $500,000 to the farms and producers who supply those restaurants.
The Localvore Passport app allowed qualified users of Everyone Eats to order meals for pick-up from participating restaurants the same way any of the Localvore Passport app’s paid users might order takeout. In the last few months of 2020, Localvore facilitated 56,000 meals to more than 4,000 Vermont households, and processed weekly payments for over 50 restaurants statewide, sending $560,000 to Vermont restaurants, food producers, and distributors. This spring, White estimates they will have facilitated 100,000 meals.
“Localvore is a great example of why we invest in people with a mission,” said Janice St. Onge, president of the Flexible Capital Fund, who invested $400,000 in the company a few years ago to help with their transition to a subscription model. “The company has gone through a couple of pivots, but the core idea of using technology to support local food system businesses and connect consumers to local producers has always been at the heart of the business.”
Moving Toward Their Mission
While a challenging year for most in the food industry, White and Nedell actually feel that the pandemic has brought their mission to the forefront of the business. They are currently spending about 80 percent of their time managing the platform for Everyone Eats, and have started to see some subscribers to the Localvore Passport return in recent months. “Restaurants are seeing how it works through Everyone Eats and signing up,” said Nedell. “The app is becoming known as a way to find and support local food producers, which is what we always hoped the deal incentive would do.”
And they have started to dream big again. “Everyone Eats has demonstrated how the app supports local food systems,” said White, who has received calls from similar programs in Maine, Hawaii, and Rhode Island. “Right now, feeding people who are food insecure and giving restaurants an additional source of revenue is the most important thing. We will get through COVID-19, and when we do, we’ll be ready to move our core business forward.”
White and Nedell are both hopeful for the future, and optimistic that the localvore idea embraced by Vermonters will be well-received in other markets post-COVID. “Supporting local businesses was seen as optional before the pandemic; something nice to do but not necessary,” said Nedell. “COVID has shown how essential it is to spend our dollars with the businesses, farmers, and people who are feeding us and keeping our communities alive. I’m hopeful that trend will hold well into the future.”
About the Flexible Capital Fund
The Flexible Capital Fund, L3C is a Community Development Financial Institution (CDFI) and impact investment fund that provides flexible risk capital in the form of subordinated debt, revenue based financing (also known as royalty financing) and alternative equity structures, to growth-stage companies in Vermont and the region’s food systems, forest products, and clean technology sectors.