Former Trader Joe’s Exec: Selling “Rich Man’s Garbage” to the Poor?

If you’re not too concerned about “gently expired” or slightly damaged packages of food, you can save a lot by shopping at “scratch and dent” stores. But is it right to peddle such products to those who may have no other options?

Doug Rauch, the former president of Trader Joe’s, is working to open a nonprofit store in Boston that caters to low-income residents – with past-its-sell-by-date food. His Urban Food Initiative would take products that supermarkets would otherwise discard, and offer them at deep discounts to those who can’t afford everyday supermarket prices. If the idea works, he plans to expand it nationwide.

Rauch is raising money from donors, and using a lot of his own, to launch the initiative. But would all that money be better served by, say, buying unexpired food and donating it?

Jose Alvarez, a former Stop & Shop president who is now on the Urban Food Initiative board, understands that the idea may appear unseemly at first. They don’t want low-income customers to think “Hey, I’m going to be eating the rich man’s garbage,” he tells the Boston Globe. What he wants people to think instead is, “you could have bought this yesterday at Whole Foods or Stop & Shop for $2, and today you can get it at Doug’s store for a dollar, or 50 cents, and it’s perfectly fine.”

That’s what fans of so-called scratch-and-dent stores have long believed. Once relegated to the fringes, such stores have gone mainstream recently, with growing chains like Grocery Outlet Bargain Market. To those who believe many expiration dates are just a suggestion, and damaged packages have no effect on the product inside, stores like the Grocery Outlet can be a bargain-hunter’s dream. In fact, at one store in Spokane, Washington, a whole shipment of products from the defunct company Hostess recently showed up. The store acquired them from a source that froze them, after the company went bankrupt late last year. “We’ve got some real treasures here if you look,” the manager told Spokane’s KXLY.

So maybe Twinkies never really expire, no matter what’s printed on the outside of the box. But fresh food does – as shoppers at “Rodney’s Discount Foods Clearance, Scratch and Dents” in Virginia recently found out. The owner was arrested last year for allegedly reselling meat and dairy products that he fished out of other grocery store’s dumpsters (read: “Scratches, Dents – Oh, And Putrid Dumpster Meat, Too”).

Rauch insists nothing like that would happen at his store. He says tossing food, just because it reaches a sometimes arbitrary sell-by date, is a huge waste. Supermarkets, he says, throw out an estimated $47 billion worth of food each year. Reclaiming just a portion of that would not only help eliminate food waste, but help make nutritious food more affordable to those who need it most. Milk priced at a dollar a gallon, for example, would make it less expensive than soda. Salads and sandwiches created from products destined for the dumpster, would be less expensive than a fast food burger and fries. He likens his effort to Goodwill, which resells donated but still usable clothes.

In a recent report on food waste, the Natural Resources Defense Council notes that many stores pull items off their shelves two to three days before their sell-by dates, which it points out are really just “manufacturer suggestions for peak quality.” Most foods, it says, are safe to eat well past their printed use-by dates. Alvarez says stores stock more products than they can possibly sell, particularly produce, to keep their displays looking bountiful and fresh. And were it not for initiatives like Rauch’s, all that produce would serve as mere “props” that would otherwise go to waste.

Rauch knows his idea is a tough sell, though. At Trader Joe’s, he aimed to keep prices low by selling a limited assortment of store-brand – and unexpired – products. His new venture is a whole different kind of business model. “We don’t want it,” one neighbor of his proposed store told the Boston Globe. “Why would we?” But others were more open to the idea. “If it’s surplus and it’s usable,” another neighborhood resident said, “I’d rather have it in the hands of people who can use it than see it go in the trash.”