Restaurants were excited about this plan to reduce food waste. Why did it fail?

At the height of the COVID-19 lockdowns, when restaurants were surviving on takeout and delivery and household garbage cans were overflowing with discarded to-go containers, Dispatch Goods launched a restaurant service with reusable containers that many hoped would be the long-awaited elegant solution to the problem of bloated restaurant waste. In January 2021, the San Francisco-based company with a distribution center in Hayward announced it would expand restaurant service. But customer confusion and complicated logistics proved to be persistent problems, and the company shut down the program in late 2022.

Founded by UC Berkeley MBA graduate Lindsey Hoell, the Bay Area startup whose goal is to eliminate single-use plastic from the waste stream recently published a blog post detailing why it ended its beachhead model that provided San Francisco and East Bay restaurants with reusable takeout containers.

Even though Dispatch Goods made the decision a year and a half ago, the post was only published in July, with the explanation that it was published for transparency reasons. So what went wrong?

Despite a supposedly increasing demand for the service, the blog post cited complicated logistics, challenging unit costs and a low lifetime value of the products – all things that presented the young startup with significant financial hurdles.

While this could mean the end of Dispatch Goods containers in restaurants, East Bay businesses still have other options. The need for reusable products is growing among both restaurants and consumers, and policy changes across the state are paving the way to a future with more environmentally friendly takeout containers. Plus, there’s always something to learn from mistakes.

“We’re seeing that this is just the beginning of reuse and takeaway products that can replace single-use products,” said Miriam Gordon, reuse program manager at environmental nonprofit The Story of Stuff. “We can learn a lot from those who fail or change their business model.”

Confusion and complexity for customers and restaurants

Mica Talmor, owner of California-Israeli restaurant Pomella in Oakland, was shocked when Dispatch announced that the company would abandon its restaurant model.

“They broke up with us and I was very, very sad,” she said, “because I really am a true believer.”

Still, she knew why the partnership wasn’t working. One of her biggest hurdles as a Dispatch user, she said, was convincing customers that the model worked.

Dispatch used a reverse logistics model where end-consumers return products through the supply chain to either the retailer or the manufacturer. After receiving takeout food in Dispatch containers, customers contacted the company to arrange pickup or returned the containers to designated drop-off locations. In addition to Pomella, Dispatch worked with Bombera, Zuni Cafe, Square Pie Guys, Mixt, Voodoo Love, Kasa Indian Eatery, Azucar Lounge, and The Morris, among others.

Although Talmor welcomed the concept, implementation proved more complicated than expected.

“The idea was brilliant. It was about creating a fourth bin,” she said. “Dispatch would become another utility company where you have a bin where you throw all the empty containers and then they get picked up, just like the garbage.”

However, the novelty of container pickup caused confusion among take-out restaurant customers. Not everyone understood that pickup was an option. To this day, Talmor still has customers returning empty containers to her restaurant, even though the contract with Dispatch was signed over a year ago.

“It’s difficult to teach people a habit. I’ve stood here so many times or had my staff explain to me over and over again: You don’t have to reinstate it,” she said.

“It’s really hard to explain to people,” Talmor added with a laugh. “I mean, look, we’ve been talking about this for twenty minutes.”

Bombera owner and chef Dominica Rice Cisneros echoed Talmor’s comments, saying she enjoyed working with Dispatch Goods and was disappointed that the program was discontinued.

“I’m not sure my customers understood that it had to be returned and how much work it is to keep everything clean, sanitary and tidy,” Rice Cisneros said in a text message to Nosh.

Some companies that offer reusable products, like New York-based DeliverZero, are getting around the problems of reverse logistics by partnering with courier services like Uber Eats, DoorDash and Caviar, leveraging their existing resources. Couriers deliver the food in containers and customers take them to designated drop-off points after emptying them, eliminating the need for DeliverZero to coordinate pickups with its own fleet.

Dispatch did not address the service’s usability in its blog post, but acknowledged that increasingly complicated logistics – particularly coordination with restaurants – contribute to operational problems.

“Some restaurants were flexible with their deliveries, but since restaurants often have very specific opening hours, logistics became complicated… even getting to the restaurants proved problematic,” the post said. “Lack of space in the restaurants also proved problematic.”

Dispatch Goods did not respond to Nosh’s requests for further details and an interview about the restaurant service.

Challenging economy

To make matters worse, Dispatch’s partner restaurants required a variety of different container shapes to accommodate their special dishes.

“Some restaurants wanted square, rectangular or round containers… not to mention they all had to be different sizes,” the blog post said.

Gordon said container standardization is key to making large-scale adoption of reusable containers viable. Currently, large-scale standardization of reusable containers is still a work in progress, but many beverage containers are already largely standardized in some parts of the world.

“The countries with the highest shares of reusable beverages are those where different industries have developed standardized cooperation programs where all soft drinks and all water bottles are supplied in the same size and shape,” she said. “These markets share reverse logistics.”

In Germany, for example, customers pay a small deposit when they buy drinks bottles. They throw the empty bottles into a collection machine (found in most large supermarkets) and get the original deposit back.

From the collection point, the bottles are taken to a washing facility, then sorted and sent back to the bottling plants for refilling. Because of their standardized shapes and sizes, they can be sorted quickly using mechanized systems.

Gordon said local governments on the West Coast are working to create shared systems for washing and producing universal cups and food containers. In Alameda, cafe-goers can already see the use of reusable beverage cups in action at Okapi, a reusable beverage container provider that offers stainless steel cups at 12 cafes in Alameda and across the San Francisco Peninsula. The cups come in 8-, 12- and 16-ounce sizes and are insulated to keep both hot and cold beverages at optimal temperatures. Customers have two weeks to return them to the cafes.

“People are simply fed up with instant garbage”

Dispatch’s decision to end its restaurant model may be evidence of an admittedly imperfect solution to a very real and complex problem. But restaurant owners, diners and policymakers are taking action themselves to accelerate the transition to reusable products.

Consumers know the impact of the trash they produce when they order takeout—and they order a lot of it. COVID-19 has spurred growth in both takeout and delivery, and the market continues to grow rapidly. A report from Research and Markets found that the North American online food delivery market, which reached $29.8 billion in 2022, could more than double to nearly $65 billion by 2028. A 2023 DoorDash study found that in a typical month, 77% of consumers ordered takeout and 76% picked up takeout. Many of these orders come with plastic cutlery, napkins, and sauce packets. Upstream, a reuse research and advocacy agency, calculated that this equates to 4.9 million tons of waste per year.

“People are just fed up with trash being thrown away immediately,” Gordon said. “I mean, if you get a delivery with a bunch of cutlery that you didn’t want or need, it ends up in the trash before it’s even used.”

In her previous role as Upstream’s policy director, Gordon created a national campaign called “Skip the Stuff” that helps local and state officials enact policies requiring restaurants to “ask first” before adding these side dishes to takeout orders. California and Washington are the two states that have adopted this policy.

Restaurants can also reduce single-use plastics by encouraging diners to bring their own reusable containers, thanks to California’s “bring-your-own” legislation that Gordon helped introduce in 2019 and which took effect in 2020. The legislation clarifies how restaurants and other food vendors in California can serve food and beverages in consumer-provided reusable containers without cross-contamination.

While Dispatch Goods is no longer available in Bay Area restaurants, the future of reusable takeout containers and dishes remains optimistic. Gordon says 39 local jurisdictions in North America have a policy requiring reuse in food service. Additionally, local restaurants are committed to reducing their environmental impact and feel Dispatch’s decision to end their partnerships is a loss.

“If they were still in operation, I would work with them,” Talmor said.