At the height of COVID-19 lockdowns, when restaurants survived off takeout and delivery and residential trash bins were brimming with discarded to-go containers, Dispatch Goods launched a reusable container restaurant service that, many hoped, would be the long-awaited elegant solution to the scourge of ballooning restaurant refuse. By January 2021, the San Francisco-based company with a distribution facility in Hayward announced it was expanding the restaurant service. But customer confusion and complicated logistics proved to be stubborn problems, and the company sunset the program at the close of 2022.
The Bay Area startup founded by UC Berkeley MBA graduate Lindsey Hoell that aims to remove 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.
Though Dispatch Goods made the decision a year and a half ago, it only shared the post in July, writing that it was published for the sake of transparency. So, what went wrong?
Despite an alleged growing demand for the service, the blog post cited complicated logistics, challenging unit economics and low lifetime value of the products — all of which contributed to significant financial hurdles for the early-stage startup.
While this may spell the end of Dispatch Goods containers in restaurants, East Bay businesses are not without options. The appetite for reusables is growing among restaurants and consumers alike, and policy changes rippling through the state are paving the way toward a future of greener takeout containers. Plus, there are always lessons to be gleaned from failure.
“We’re just seeing that this is the very beginning of reuse and takeout being able to replace disposables,” said Miriam Gordon, the reuse program director at environmental nonprofit The Story of Stuff. “There’s a lot that we can learn from the ones that fail or change their business model.”
Confusion and complexity for customers and restaurants
Mica Talmor, who owns Oakland’s Californian-Israeli restaurant Pomella, felt the sting when Dispatch announced it was snuffing 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 could see why the partnership didn’t pan out. One of her biggest hurdles as a Dispatch user, she said, was getting customers on board with how the model worked.
Dispatch employed a reverse logistics model, which means end users return products back through the supply chain to either the retailer or manufacturer. After receiving takeout in Dispatch containers, customers would contact the company to arrange for pickup or return the containers to designated drop-off areas. 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.
Though Talmor applauded the concept, its execution proved more complicated than expected.
“The idea was brilliant. It was to create the fourth bin,” she said. “Dispatch would become another utility, where you have a bin and you put all your empty containers in, and then it would get picked up, just like your garbage.”
The novelty of container pickup, however, stirred some confusion among takeout customers. Not everyone understood that pickup was an option. To this day, Talmor still has customers who bring empty containers back to her restaurant, even though it’s been over a year since Dispatch ended their contract.
“To get people to create a habit is difficult, and so many times I stood here personally or had my employees explain over and over: you don’t need to bring it back,” 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 statements. She enjoyed working with Dispatch Goods and was disappointed to see the program go.
“I’m not sure my customers understood that it had to get sent back and the work that goes into keeping everything cleaned, sanitized and organized,” Rice Cisneros said in a text message to Nosh.
Some reusables companies, like New York metro-based DeliverZero, are sidestepping the reverse logistics headaches by partnering with courier services like Uber Eats, DoorDash and Caviar to tap into their pre-existing resources. The couriers deliver food in the containers and customers bring them to designated drop-off spots once they’re finished, eliminating the need for DeliverZero to coordinate pickup with their own fleet of vehicles.
Dispatch didn’t include any points about the service’s usability in its blog post, but it did acknowledge that increasingly complicated logistics — specifically when coordinating with restaurants — contributed to its operational woes.
“Some restaurants were flexible when it came to their deliveries, but since restaurants often have very specific operating times, logistics got hairy …. even getting to the restaurants proved to be troublesome,” the post states. “The lack of space that restaurants had also proved to be problematic.”
Dispatch Goods did not respond to Nosh requests for additional details and an interview about the restaurant service.
Challenging economics
To compound issues, Dispatch’s partner restaurants required a number of different container shapes to accommodate their specific dishes.
“Some restaurants wanted square containers, or rectangular ones, or circular ones…not to mention they all had to be different sizes,” the blog post reads.
Gordon said that container standardization is key to the viability of large-scale reusables rollouts. For now, large-scale reusable container standardization is still a work in progress, but many beverage containers are already quite standardized in some parts of the world.
“The countries with the highest reusable beverage rates are the ones where various sectors have created standardized cooperative programs, where all of the soft drinks and all of the water bottles are being delivered in the same size and shape,” she said. “These markets are sharing the reverse logistics.”
In Germany, for example, customers pay a small deposit when purchasing bottled beverages. They drop the empty bottles into a collection machine (found in most major supermarkets) and receive their original deposit back.
From the collection point, the bottles are sent to a wash facility, then sorted out and sent back to the bottling plants to be refilled. Because of their standardized shapes and sizes, it’s easy to sort them quickly with mechanized systems.
Gordon said local governments on the West Coast are working to create shared systems for washing and creating universal cups and food containers. In Alameda, cafe-goers can already see the use of reusable beverage cups in action with Okapi, a reusable beverage container provider offering stainless steel cups in 12 Alameda cafes and across the San Francisco peninsula. The cups are available in eight, 12 and 16-ounce sizes and are insulated to keep both hot and cold drinks at their optimal temperatures. Customers have two weeks to return them to the cafes.
“People are just sick and tired of instant trash”
Dispatch’s decision to end its restaurant model may be a testament to an admittedly imperfect solution to a very real and complex problem. But restaurant owners, patrons and policymakers are stepping in themselves to accelerate the transition to reusables.
Consumers know the impact of the trash they generate when ordering takeout — and they’re ordering a lot of it. COVID-19 turbocharged growth in both takeout and delivery and the market continues to rapidly expand. A report from Research and Markets found 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 in a typical month 77% of consumers ordered delivery and 76% picked up takeout. Many of those orders come with a side of plastic utensils, napkins and sauce packets. Upstream, a reuse research and advocacy agency, calculates that this equates to 4.9 million tons of waste per year.
“People are just sick and tired of instant trash,” Gordon said. “I mean, if you get a bunch of utensils with a delivery order that you didn’t want or need, it ends up in the garbage before it’s even used.”
In her previous role as the policy director of Upstream, Gordon enacted a national policy campaign called Skip the Stuff, which helps local and state governments enact policies that require restaurants to “ask first” before adding those accessories to takeout orders. California and Washington are the two states that have passed this policy.
Restaurants can also reduce single-use plastic by encouraging patrons to bring reusables themselves thanks to California’s “bring-your-own” legislation that Gordon helped pass in 2019 and took effect in 2020. The legislation clarifies how restaurants and other food vendors in California can serve food and beverages without cross-contamination in consumer-provided reusable containers.
Dispatch Goods may no longer be in Bay Area restaurants, but the future of reusable takeout containers and wares remains optimistic. According to Gordon, 39 local jurisdictions in North America have a policy requiring reuse in food service. Plus, local restaurants are hungry to reduce their impact and sense that Dispatch’s decision to end their partnerships is a loss.
“If they were still operating now, I would work with them,” Talmor said.
