As business-school students at Berkeley, Kirsten Tobey and Kristin Richmond cooked up an unlikely idea. They wanted to tackle the growing problem of childhood obesity by starting a company that would deliver healthy, tasty and affordable lunches to school children: Instead of chicken nuggets and tater tots, they’d serve fresh vegetables and fruit, for well under $3 a plate.
They started Revolution Foods on the day they graduated in 2006 — it was a busy day, because Kristin went into labor that same day — and they’ve never looked back.
“We’ve been on a crazy ride every since,” Kirsten told me, when we met the other day at Revolution’s headquarters in Oakland, CA.
I reached out to Kirsten because I’ve been hearing great things about Revolution–and because it seems like such an audacious idea. Haven’t we been told that eating well costs more than eating badly? If that’s so, what hope is there for attacking the obesity crisis, especially among the poor? And, yes, it’s a crisis: Childhood obesity has more than tripled in the last 30 years and more than one third of children were obese or overweight in 2008, according to the Centers for Disease Control and Prevention. How sad, and how unnecessary.
Revolution Foods is trying to use market forces to attack the problem. From a modest beginning–it served food to four schools at first–the company has grown rapidly. This past school year, it served about 120,000 meals a day in 500 schools. It has served 41 million meals, without transfats, artificial ingredients or fried foods.
The number will grow this fall, although Revolution has yet to break into any big-city public school systems. They’ve had most of their success selling to charter schools, private schools and school districts that previously outsourced their meal service. Most of the students they serve — an estimated 80 percent, Kirsten told me — qualify for free or reduced price lunches under the National School Lunch Program administered by USDA.
This means that they need to design and produce meals that are healthy and appetizing to kids for about $2.74 per lunch–that was the federal reimbursement for lunches last year for kids who qualify. Some schools can afford to pay a bit more than that by charging more money for lunchs to teachers or to students who don’t quality for the lunch program. And the reimbursement will go up next fall by at least 6 cents because of a law called the Healthy Hunger-Free Kids Act passed by Congress in 2010. Still, it’s a tight budget.
“The school meals business is very, very constrained,” Kirsten admits. “Schools can’t pay their teachers enough, let alone invest in their meals.”
As a result, she says: “We’re very focused on efficiency. We cut out the fat at every stage.” Desserts, too–no ice cream or cake as a reward for eating vegetables. “If we have $2.74 to spend on a meal, we’re going to focus on the food that’s going to fill you up and make you strong.”
Still, every meal–every one-includes fresh fruits and vegetables. Collard greens and butternut squash show up on the menu, with all of it prepared and presented in a kid-friendly way. Some of the menu items are familiar. To my surprise, the company offers its own version of that old standby, sloppy joes as well as pizza and lasagna.
“We have a great hot dog that’s on a whole grain bun,” Kirsten says. “It’s a grass-fed beef hot do that has four ingredients — water, beef, salt and spices.”
Other offerings, like vegetarian bean and cheese quesadilla or sesame chicken salad, require kids to adapt. The company sends its chefs into school lunch rooms to test new recipes.
None of this is simple. Revolution now operates in six regions: northern and southern California, Colorad0, New York-New Jersey, the mid-Atlantic states and Texas. Each one has a central kitchen where food is prepared each day and then trucked to schools, where it is re-heated. The company has about 750 employees, all of whom have access to health care benefits and company stock.
Wondering how the company could serve healthy, kid-friendly food and still turn a profit, I emailed Will Rosenzweig, an entrepreneur who started Republic of Tea and taught Kirsten and Kristin at the Haas business school. Will later became an investor in Revolution Foods through Physic Ventures, the venture capital firm where he’s a partner.
I must be their longest running advisor, so I am biased.But to your point above, Physic Ventures did not invest early on as we saw the same risks that you describe. However, after the first several years of consistent execution and stellar growth we became convinced that the Company had developed important competitive advantages in culinary expertise (serving healthy food that kids will actually eat!) and supply chain innovations that provide access for the children, affordability for the schools and profitability for the Company.K+K have brought an exceptional level of focus, execution and creativity into a very tough business environment and RF has established itself as the leading challenger brand in their marketplace. They evolved from being a youthful team with a big vision into a sizable, leading business with a valuable product and service and a scalable business model. That’s what entrepreneurship is all about!