Balancing costs and benefits in the food redistribution supply chain Open Access

Uneaten food represents an unnecessary exploitation of resources, including land and water, contributes to climate gases and poses an economic issue (Mourad, 2016; UNEP, 2021). It is estimated that up to 50% of all food produced in Europe and the United States is wasted along the supply chain (Papargyropoulou et al., 2014). Globally, about a third of the food produced is wasted, with food service and retail contributing 26% and 13%, respectively, to this waste (European Commission, 2023). The waste is attributed to supply chain inefficiencies, aesthetic aspects and unpredictability of demand (Mohan et al., 2013; Mourad, 2016; Rey et al., 2018). At the same time, the number of people in need of affordable, healthy food in the advanced Western economies is increasing, with millions of individuals needing food assistance in Australia, the United States and Canada (Bazerghi et al., 2016). Yet, according to Mourad (2016), most research and practice focuses on reusing food surplus (sometimes termed “waste of quality food”) as animal food and in energy recovery, not food for human consumption, as the EU governmental directive on food hierarchy would stipulate (Papargyropoulou et al., 2014).

Food redistribution supply chains (FRDSC) connect people in need with surplus food. FRDSC thereby addresses sustainability from the environmental side since they aim at reducing food loss and food waste (Luo et al., 2022), and from the social side since they reach people in need (Sundgren, 2020). The literature distinguishes between two types of FRDSC: those involving food banks and those involving social supermarkets (Lowrey and Boyer, 2023; Teller et al., 2016). The importance of supporting sustainable development and encompassing the well-being of individuals, communities and society has risen on the supply chain management research agenda (Bals and Tate, 2018). In this context, the central concept of well-being is defined as “a state of flourishing that involves health, happiness and prosperity” (in line with Mick et al., 2012, p. 6). The pursuit of well-being in FRDSC is evident, as food is essential for the quality of life and is intrinsically linked with well-being aspects such as psychological, physical, emotional and social relationships with food, especially for those who experience hunger (Bublitz et al., 2019a, b). However, research on how to manage FRDSC and secure well-being in terms of stable, affordable and healthy food access is scarce (Bublitz et al., 2019b).

Besides people in poverty (i.e. the recipients of food) and redistributors (e.g. food banks and social supermarkets), a third central actor in the FRDSC is food donors (e.g. companies in wholesales, food production and retail). When focusing on food donors, there is a need to introduce a complement to well-being: for this purpose, added value is used in this paper to describe positive outcomes that lead to reduced cost or increased revenue for companies (inspired by Osterwalder and Pigneur, 2010). Added value is a multifaceted construct that includes functional and emotional benefits from a business perspective (De Chernatony et al., 2000). The added value for food donors includes an improved image and reputation (Michelini et al., 2018; Mourad, 2016), as well as more efficient operations (Holweg et al., 2015). Despite creating added value, FRDSC are challenged by large costs for redistributors (Lohnes and Wilson, 2017), which in turn may lead to their collapse. This has been overlooked in research as well as in practice (Bech-Larsen et al., 2019; Gualandris and Klassen, 2018; Rey et al., 2018), mainly due to redistributors being run by non-profit organizations and relying on donations (Mourad, 2016; Schneider, 2013). To achieve the long-term viability of FRDSC, there is thus a need to understand the logics of both business and well-being (Pullman et al., 2018).

Most social enterprises consider profit as a “by-product of social value creation,” while adopting a business mindset and having a well-thought-out business model can facilitate long-term livelihood (Boons and Lüdeke-Freund, 2013; Osterwalder and Pigneur, 2010). Lacking these may lead to financial issues, exemplified by Lohnes and Wilson (2017), who noted that a large food bank in the United States incurred a budget deficit of $250,000 and was one month away from closing its business. The core of a business-driven business model is to create value propositions for customers to secure a steady stream of income that exceeds the associated cost of the business. Value propositions in the context of FRDSC include both well-being directed to, e.g. people in poverty, and added value directed to food donors and redistributors.

Continuing with the business logic, one prevailing challenge is the potential imbalance regarding actors in the FRDSC who experience well-being and added value versus those who incur the costs. This imbalance in the FRDSC and the practical challenge of securing long-term viability due to large cost structures underscores the importance of sharing costs and benefits (i.e. well-being and added value) across actors in the FRDSC. This leads to the aim of this study: To increase the understanding of the uneven distribution of costs and benefits among actors within and outside the food redistribution supply chain, and identify ways to balance costs and benefits to secure sustainable food supply chains. The first contribution of this paper is the inclusion of empirical findings from a high-impact case with a complex and innovative design combining different distribution channels, to enhance existing literature with a comprehensive overview of well-being and added value that can be generated. A second important contribution of this paper is the identification of mechanisms to balance pros and cons among actors both within and outside the FRDSC. The study also fills a gap where the business model’s logic is combined with social enterprises’ endeavors (Pullman et al., 2018) to strengthen the development and management of a complex supply chain for social enterprises, thereby contributing to filling an important gap mentioned by, e.g. Rey et al. (2018).

This review begins by presenting FRDSC and food redistributors such as food banks and social supermarkets, followed by describing the role of sustainable supply chain management and its relevance to FRDSC. The concept of business models is thereafter presented, both in general terms and especially adopted to the FRDSC context. Finally, different forms of well-being and value added by food redistribution for various actors in the supply chain are presented.

Compared to more traditional supply chains, redistributors often look upstream in the supply chain, instead of downstream, to identify actors who generate financial revenue, rather than selling products to beneficiaries (people in need) downstream (McLachlin et al., 2009). Upstream actors (i.e. on the supply side) include food producers, wholesalers and retailers. The main type of donations from these actors is food products (McLachlin et al., 2009). In some cases, other actors, such as consumers or restaurants, engage in donating surplus food to reduce food waste (Luo et al., 2022; Raassens et al., 2021). Other donations consist of funding, materials or services (Sundgren, 2020).

At the center of FRDSC are the redistributors, who combine the supply side (food donors) with the demand side (people in need) (Sundgren, 2020). Redistributors such as food banks have played an important role in the North American welfare scene for a long time (Lowrey and Boyer, 2023), but are a relatively new phenomenon in Europe (Teller et al., 2016). Food banks are run by social enterprises with a mission to collect food from, e.g. stores and restaurants (Mohan et al., 2013; Teller et al., 2016), store the products in warehouses and then redistribute them, providing cooked and/or uncooked food to people in need (e.g. people in homeless shelters) (Aschemann-Witzel et al., 2017; Bublitz et al., 2019b; Schneider, 2013). Besides being reliant on food donations, food banks also commonly depend on volunteers (Lowrey and Boyer, 2023; Mohan et al., 2013; Simmet et al., 2018).

More recently, a new distribution model, the social supermarket, has been introduced. Social supermarkets receive surplus food from producers and retailers for free and sell it at discounted prices to people living in or at risk of poverty (Holweg et al., 2015; Stettin et al., 2022; Teller et al., 2016). In Austria and Australia, mobile social supermarkets operate in low-population areas, run as a bus service with fixed stops (Schneider, 2013). Social supermarkets not only reduce waste but also provide socially disadvantaged groups, often through memberships, with an opportunity to preserve their dignity. This is because it is not considered food aid but rather food retail, offering a range of products to choose from (Michelini et al., 2018). The revenue of social supermarkets is used to cover expenses such as salaries, rent and transportation (Holweg et al., 2015).

Sustainable supply chain management (SCM) adds the social and environmental goals of sustainability to traditional economically focused SCM (Seuring and Müller, 2008). The triple bottom line of sustainability has been put into perspective, since humanity cannot survive without the Earth’s survival. This puts the environment before the economy or society, regardless of how remote that seems from a supply chain perspective (de Leon et al., 2021; Wieland, 2020). In line with this, there is a need to transform the goal of sustainable supply chain management from profitability in isolation (where, e.g. environmental actions are seen as a marketing tool) to become truly sustainable and prioritize human and environmental well-being over profit (Tansakul et al., 2023).

A key feature of well-being is that it can be found on different levels for individuals, communities and ecosystems. This is evident in several frameworks that capture the diversity of well-being in different settings. One example is the OECD (2020) framework, which strives to capture a large variety of well-being at the individual, household, and community levels, taking into consideration aspects such as income, work and job quality, health, knowledge and skills, and environment quality. Another example is the framework in Ungaro et al. (2021), explaining consumers’ perception of services’ contribution to transformation in terms of individual well-being, such as economic stability and the simplification of daily life, versus collective well-being in terms of, e.g. political and economic stability, environmental well-being in terms of preservation of biodiversity and resources, and the service providers’ role in the economic transformation in terms of, e.g. education, innovation and technology.

The important role of well-being has been acknowledged in supply chain management and logistics research. To exemplify, with a point of departure in the areas of transformative customer research (e.g. Corus and Saatcioglu, 2015; Mick, 2006) and transformative service research (Kuppelwieser and Finsterwalder, 2016; Rosenbaum, 2015; Ungaro et al., 2021), researchers have made efforts to take this transformative perspective into the area of supply chain management (see, e.g. Ben Abdelaziz et al., 2024; Tansakul et al., 2023; Thornton et al., 2024), exemplifying with well-being outcomes captured in various ways, such as well-being related to, for example, social sustainability, including individual and collective well-being, but also environmental well-being (Min et al., 2019; Ungaro et al., 2021).

Thus, in order to develop toward a truly sustainable supply chain, there is a need to acknowledge SCM goals other than profit-oriented ones, and include environmental, social and economic well-being on individual to ecosystemic levels. In addition, applying the transformative lens to SCM highlights the importance of strengthening well-being both within and outside the organizational perspective, as well as the importance of the collaboration and interaction between society, the environment and the supply chain, as well as the customers (Tansakul et al., 2023).

Business models are a well-acknowledged concept in both SCM and sustainable supply chain management (e.g. Boons and Lüdeke-Freund, 2013; Osterwalder and Pigneur, 2010), which organizations use to structure their operations. Given this, business models play an important role in securing long-term viability and can provide guidance on how to balance costs with income (Björklund et al., 2017). Traditionally, business models are described as consisting of several components, including value proposition to customers, financial revenue and resources (Osterwalder and Pigneur, 2010; Osterwalder et al., 2015). More socially oriented business models add value propositions to society (Boons and Lüdeke-Freund, 2013). Given the focus of this paper, applying a business model logic to the FRDSC, particularly the redistributor, can enable a shift to a more comprehensive plan and consider value propositions to society and people in need, as well as the need to create value for actors who can financially support such initiatives. Table 1 below presents components that are recurring in the business model literature, and suggests how each component could be captured in the FRDSC context.

Food redistribution provides well-being and added value to a wide variety of actors, including donors, socially oriented enterprises, volunteers, governments and collaborators (Pullman et al., 2018). A common feature of all FRDSC is that they generate well-being for individuals, families, communities and ecosystems by targeting environmental, social and economic dimensions. Reduced food waste in the supply chain is often presented as well-being for society (Bublitz et al., 2019b; Lowrey and Boyer, 2023; Michelini et al., 2018). Using surplus food means that natural resources used in, and emissions from, production are not generated in vain (Bech-Larsen et al., 2019). Instead, the surplus food contributes to well-being for society in terms of improved environmental sustainability. Decreased food poverty and decreased economic poverty, by providing affordable food or food for free to people with a lack of money or other resources, are commonly put forward as well-being for the recipients of the redistributed food (Bech-Larsen et al., 2019; Bublitz et al., 2019b; Michelini et al., 2018). Improved health by providing nutritious food to people in need (Bazerghi et al., 2016; Bublitz et al., 2019a) and by educating people about healthy cooking and food storage (Bublitz et al., 2019b) are other examples of well-being aimed at recipients. Bublitz et al. (2019b) add job-training programs that provide future employment as another well-being, and Michelini et al. (2018) add the increased awareness of food waste and poverty in society.

Added value in FRDSC can, for example, be reduced logistics and waste disposal costs (Michelini et al., 2018; Mourad, 2016), and improved reputation through being involved in working toward a more sustainable society (Mourad, 2016), and through contributing to more social bonding (Raassens et al., 2021), which could lead to new market shares. Furthermore, as mentioned in the introduction, improved image and reputation, as well as more efficient operations, add to the list of potential added value.

A case-study research approach was used for this study with one in-depth case, a redistributor with four redistribution channels (4RDC) located in a large city in northern Europe. The approach was selected as the focus of this research to increase the understanding of a seldom-examined phenomenon (i.e. of the imbalance of costs and benefits among actors in the FRDSC). It is therefore important to interact with and gain empirical input from individuals who have experienced this phenomenon to gain in-depth information and understanding of the specific problem situation (Bryman and Bell, 2015; Eisenhardt, 1989; Yin, 2009). The selection of a single case was justified by its revelatory nature (guided by Yin, 2009), and since it was possible to collect data over a longer time and in-depth (as suggested by Voss et al., 2002), using multiple investigators (Voss et al., 2002), and to warrant the flexibility of the study to also gain unexpected answers (cf. Ellram et al., 2022). Even though it is a single case, the study encompasses several organizational entities and their respective layers (Ellram et al., 2022; Lowrey and Boyer, 2023). The research approach has to some extent been inspired by an interactive research approach, with the ambition to bring more closely together data collection and reflections, as well as theory and practice. This enabled the collection of deeper empirical data, thus increasing the likelihood of having some practical impact (Anderson and Ostrom, 2015). Furthermore, this method has granted a deeper understanding of the studied case and the targeting of relevant organizations with connections to the case for the data collection.

The selected 4RDC case is what Patton (2014) would classify as a high-impact case. It was selected for several reasons. Its complex and innovative distribution design, combining distribution channels (a food bank, social supermarkets and public restaurants), is quite uncommon. The design with several combined distribution channels makes it an interesting case as it provides opportunities for identifying a broader range of well-being and added value than cases that consist of only one type of channel. The interest shown by 4RDC’s redistribution manager in collaborating with the research group increased the researchers’ access to proprietary data.

The 4RDC initiative involves food manufacturers and large retailers as surplus food donors. These kinds of upstream actors in the food supply chain usually have larger volumes and longer expiry dates of surplus food compared to downstream actors such as store owners. The 4RDC redistributor facilitates the recovery of approximately 50 tons of food every month. The donated surplus food is distributed to the initiative’s terminal either by a logistics service provider (LSP) paid for by the food donors or, if that is not possible, by the initiative’s own transport fleet. After sorting, the material flow continues with four distribution channels (see Figure 1), including two social supermarkets, a food bank that distributes food to its own food cantinas and homeless shelters, food banks of other social enterprises and their shelters, and a public restaurant that offers lunches using at least 50% surplus food. The use of different distribution channels creates the potential to redistribute large volumes and to match the different forms of surplus food to different channels. For example, products with very short best-before dates are cooked in the restaurant on the same day as acquisition, whereas products of larger quantities and longer expiration dates can be sold in social supermarkets.

The research study, which spanned one year, included several activities for planning and data capture. As suggested by Eisenhardt (1989), multiple data collection methods were used for this case study, consisting of interviews, workshops and observations (site visits). Nine interviews were held with present or potential food donors, and 11 focus group meetings (FG) (Bryman and Bell, 2015) were held with representatives from 4RDC and LSPs. In addition, two workshops conducted in collaboration with the representatives from 4RDC and two site visits contributed supplementary empirical information. The sampling of participants for the interviews and workshops was carried out in close dialogue with the representatives from 4RDC, with a point of departure being their network of potential and existing donors, searching for representation from different types of donors regarding types of food handled and their position in the food supply chain. Hence, an indirect form of convenience sampling known as snowball sampling was used. The sampling was of a nonprobability character (Bryman and Bell, 2015). See Table 2 for more details regarding the data collection in terms of respondents and the researchers involved.

The interviews were unstructured, taking a point of departure in the respondents’ personal reflection on how their operations created well-being and added value for different actors. A probing approach was used, with the objective being to capture how value can be built up, delivered and captured, encompassing, for example, all central actors both in and outside the FRDSC, the different roles of these actors, and how they experienced and saw well-being and added value in the FRDSC. The group meetings focused on themes such as the forms of social or environmental value that the FRDSC could generate, the cost structure of redistributors, and the potential number of people in need that can be targeted.

The analysis was largely inspired by Gioia et al. (2012) and consisted of three separate steps:

1. First, the first-order concepts − i.e. terms and codes − which can be traced to the empirical data were extracted. (see Table 2).

2. Next, first-order concepts were linked to the second-order themes, where the themes are more closely related to the conceptual framework. The themes were based on well-being and added value identified in the empirical data, complemented with literature. The identification of links between the concepts and themes transpired through a structured process based on the researchers’ interpretation of the raw empirical data in relation to the literature.

3. Finally, second-order themes were then linked to aggregated dimensions. This step in the analysis involved bundling well-being and added value into dimensions, with each dimension relating to benefits for certain actors.

Several measures have been taken to ensure trustworthiness in terms of credibility, transferability, dependability and confirmability, guided by, e.g. Halldorsson and Aastrup (2003), and Wowak et al. (2021). Multiple methods for data collection were used to get a comprehensive understanding of the situation, to limit personal bias and to raise credibility. The discussions were documented by the involved researchers and representatives from 4RDC (see Table 2 for more information). The notes were reviewed and compared, and an overall level was compiled, resulting in a clear and mutual agreement on the most important aspects identified and progress made, thereby strengthening confirmability. To minimize inducing biases during the workshops, the researchers did not steer the discussions but instead sought to understand why opinions, on a few occasions, differed and why the differences arose. To secure dependability, the same template was used during the workshops to ensure that all discussions addressed the pre-determined areas. To secure transferability, multiple representatives from the organizations throughout the redistribution supply chain were included in the data collection. The FG discussions were characterized by a broad consensus, reaching saturation when themes and even details were becoming repetitive, and when new interviews did not result in further novel insights. All workshop discussions, FG discussions and interviews during field visits were documented and sent to the participants for review to strengthen credibility, accuracy and confirmability. An additional benefit of this approach was that workshop participants could gain insights into the discussions held in groups other than their own. Moreover, interviews (with companies one to nine) mainly provided data triangulation, thus pointing to saturation of data and strengthening confirmability.

This chapter addresses the first part of the purpose of this study, “to increase the understanding of the uneven distribution of costs and benefits among actors within and outside the FRDSC.” The first two steps in the analysis, inspired by Gioia et al. (2012) − namely, the clustering of empirical data and linking these to the second-order themes (i.e. well-being and added values) − laid the foundation for the presentation and analysis of the empirical findings below.

The complex design of the studied FRDSC resulted in a comprehensive overview and the identification of 14 different elements of well-being and eight types of added value that are generated for different actors both in and outside of the FRDSC, as illustrated in Figure 2. The well-being and added value identified will be presented on a more general level below. To provide more details and insights, and to illustrate key points, creating a more traceable and convincing narrative (Fawcett et al., 2014), empirical data on the identified well-being and added value, along with examples of raw empirical data, can be found in Table 3.

Value proposition in terms of well-being is represented by boxes with solid lines in Figure 2, and primarily benefits recipients, the government and society. These findings are on an overall level expected due to the large focus on people in poverty (i.e. recipients) and society at large in the literature on food redistribution (see, e.g. Bech-Larsen et al., 2019; Bublitz et al., 2019b; Michelini et al., 2018). Returning to the different elements of well-being (see, e.g. Min et al., 2019; Ungaro et al., 2021), the findings show that social (society/collective) well-being clearly dominates in this case (marked in red in Figure 2), followed by environmental well-being (green), while few are clearly economic (black). This is not surprising since the value propositions should be designed to be offered to the main actors in focus (in this case recipients) (Osterwalder et al., 2015), and this is evidently what redistributors are striving for.

Most identified elements of well-being have also been described in the literature, albeit scattered across different studies (see, e.g. Bazerghi et al., 2016; Bublitz et al., 2019a). Furthermore, several workshop participants from the food industry (including current food donors) saw an increased value if the well-being could be quantified, including reduced food waste, added work training, decreased economic and food poverty, and improved health. For them, quantifications could more easily be communicated externally in sustainability reports as part of sustainability performance when supporting the initiative. This also points to the need to have good communication channels among the actors so that the benefits FRDSC can yield are translatable to desired value propositions.

Five well-being elements identified were not found in the literature: greener logistics, better food hygiene, increased work motivation, sustainable food at restaurants and enhanced knowledge, thus adding to both the well-being literature (e.g. Pullman et al., 2018) and business model literature that focuses on social enterprises (e.g. Boons and Lüdeke-Freund, 2013). The potential of greener logistics was identified in the FG, as transport operators can offer available free space for transporting surplus food, potentially increasing transport operators’ fill rate, and resulting in more efficient use of transport modes. The studied redistributor provides a solid base for better food hygiene (e.g. decreasing the risk of unhealthy bacteria in the food), as the redistributor (4RDC) is registered as a food organization, and thereby needs to follow the legal demands placed on food hygiene and food security, such as traceability and sustained cold chain. Furthermore, some of the present food donors explained that donating food is highly appreciated among the employees, making them proud of their “work,” which in turn can increase work motivation. Sustainable food at restaurants is possible due to one of the innovative distribution channels for food with very short expiration dates, thus providing an additional way to reduce food waste. Lastly, enhanced knowledge is gained since 4RDC provides a solid educational program that efficiently trains people outside the job market, where they gain work experience and develop knowledge. This program demonstrates a very successful track record regarding future employment for the participants in the work training program.

In spite of volunteers being more common in food redistribution (Pullman et al., 2018), the discussions held in the FGs provided arguments for the use of work training instead of volunteers. There is little interest in using volunteers at the same time as on-the-job training, since people having on-the-job training perform activities similar to the volunteers, and work training needs to be run on a large scale to be efficient. Furthermore, voluntary work provides man-hours but no financial revenue, while work training can generate both, if, for instance, the government (as in the case of 4RDC) provides financial support for every person in training.

Added value, presented in Figure 2 by boxes with dotted lines, on the other hand, mostly benefits the actors on the supply side (i.e. food donors). On an overall level, these findings are expected because of the “business” nature of added value, and in line with this, most added values are clearly economic in character (i.e. the black lines in Figure 2).

Two types of added value from the study had not been previously described in the literature: decreased transportation costs and enhanced social performance. These contribute to the literature as potential value propositions from FRDSC. The 4RDC has managed to purchase transportation services at a reduced price. Surplus food creates a lower demand for delivery services, such as lead time, generating better planning opportunities which can lead to higher fill-rates for transport companies and thereby potentially lower transportation costs. The organization of pick-ups is indeed a much-contended issue, as also problematized by Lowrey and Boyer (2023), extending to frequencies and volumes, schedules and variability of pick-up times, and plannability on all sides. Based on this, LSP representatives in the FG argued for the use of a specific freight rate model for the redistribution of surplus food, in which the LSP did not gain any financial profits from these transport efforts. This was supported by TM in several FG meetings, and the LSP designed a first version of such a price tariff, taking into consideration the need for cold transport, distance traveled, number of pallets and weight of the goods. Food donors highlighted enhanced social performance as they can externally communicate their involvement in the FRDSC, as well as the social well-being achieved.

However, the positive impact suggested in the literature regarding decreased internal logistics costs (see, e.g. Michelini et al., 2018), was questioned by some of the food donors both during interviews and in the workshops. Instead, arguments were put forward that these costs in fact could increase. One explanation for this was found during one workshop, as the food donors have different internal systems for handling the donated food, as well as different routines regarding what to donate. One donor had, for example, started to integrate food donation in their internal information system, providing efficient guidance in decisions regarding what to donate and how to handle the food to be donated, while another donor had no routines and had to make manual decisions at different company levels for each product handled, thereby decreasing or merely maintaining the level of efficiency. Furthermore, donating surplus food frees up warehousing space, decreases materials handling in production and warehousing, and reduces waste disposal costs. However, some food donor representatives even stated that it was much easier and cheaper for them to make animal food from their surplus food, thus not following the principles of the food hierarchy (as defined in, e.g. Papargyropoulou et al., 2014). Overall, the handling of surplus food requires a reorganization of materials handling by the food donors. Redistributors perform their initial sorting and separation activities at the food donors’ sites. Any food that the redistributors do not accept remains to be handled by the food donors.

The potential for reduced waste disposal costs, highlighted in the literature as an added value for actors donating surplus (Michelini et al., 2018; Mourad, 2016), was also questioned in the discussions in one FG meeting, as it was suggested that this might not always be the case. Manufacturers, for example, can be compensated for surplus food supplied to a biogas producer. This added value is therefore expressed as “changed waste disposal costs” instead of the decrease in waste disposal costs suggested in the literature.

The potential of a reduced tax burden (see Mourad, 2016) was discussed in the FG, but this governmental subvention did not exist in the country in which the 4RDC operates; as a consequence, this added value is marked with an “X” in Figure 2.

While many actors, both within and outside the FRDSC, reap benefits from the myriad of well-being and added value, redistributors incur massive costs to enable the redistribution of surplus food. As in most organizations, the cost structure is based on necessary resources and activities that need to be in place in order for 4RDC to operate, such as rent for the warehouse and transport activities. After discussions in the FG on different cost components, the 4RDC representatives calculated that the costs for electricity, salaries, office space, cleaning and maintenance for the studied redistributor run to over €300,000 per year for the 1,000 square-meter building containing a warehouse, a social supermarket and the office space needed. Furthermore, some food donors see the social and environmental benefits generated from food redistribution as their accomplishment, while they do not fully finance the (logistics) activities (e.g. transport, warehousing and handling) needed for these added values to arise. Yet food donors call for other actors to step up and take responsibility. The uneven distribution of costs and value among actors within and outside the FRDSC thereby becomes apparent.

However, some income streams do balance these costs to a minor extent. Social supermarkets sell the rescued food at a reduced price to their members who the government has attested as living below a certain poverty line (in line with Holweg et al., 2015; Michelini et al., 2018). Viewing vulnerable people as a potential market (as is done in the social supermarkets) combines the business model logic (Osterwalder and Pigneur, 2010) with social impact (Pullman et al., 2018). The restaurant, which uses food products that cannot be donated due to short expiration dates, also serves as an example of using the channel to generate income for redistributors. The rent for one supermarket, the terminal cost for two years, and the cost of store shelves and other store furnishings are covered by one separate large donation from one food donor. However, a donation of this kind is not necessarily only positive, as it has proven harder to attract other food donors who do not want to be associated with a competitor’s “project.” Some foundations support the 4RDC financially, though to a very small extent. Reducing cost and providing an income for redistributors can be enabled through the use of work training.

The third step in the analysis addresses the second part of the purpose − “to identify ways to balance costs and benefits to secure sustainable food supply chains.” This step consists of two parts. First, bundling the identified benefits into aggregated dimensions following the logic in Gioia et al. (2012) (see Figure 3). Second, potential mechanisms, as means to balance the benefits and costs, are identified within each dimension. Definitions of sustainable supply chain management (see, e.g. Seuring and Müller, 2008) propose that not only the management of material (here surplus food), but also the capital and information flows, must be managed to reach sustainability. Considering the identified imbalance of benefits and costs among the actors in FRDSC, there is a need to change the management of financial flows and identify the necessary financial linkages between the various actors in order to create income streams to secure financial viability. An important enabler for sharing costs and benefits is that all involved actors understand the different roles they must play, and here the importance of managing information flows through relevant communication channels is key.

Considering the many second-order themes included, this dimension is the largest and is the only one that had value propositions consisting of both well-being and added value, as presented in Figure 3. From a company perspective (e.g. food donors), enabling creation of well-being and added value can likely also lead to generating economic benefits since this information can be used to attract new customers (i.e. show the company’s sustainability work), create a more productive company culture due to, e.g. more motivated employees, and increase the potential of attracting talent, in line with Boons and Lüdeke-Freund (2013) and Osterwalder and Pigneur (2010).

The association with a brand is a common value proposition directed at businesses (Osterwalder and Pigneur, 2010), since the information can be used in branding and campaigns. However, the actors receiving this value need to understand that this association comes with a price. Association value can be allocated to all financially supporting actors in and outside the FRDSC, not only food donors. This is especially the case if the food donors do not cover the costs associated with redistribution. Thus, any enhanced sustainability performance can also emerge at other supporting organizations. This is in line with Boons and Lüdeke-Freund (2013), highlighting the importance of an appropriate distribution of costs and benefits among the actors involved. However, as put forward in this study, the relevance of these potentials depends on the awareness of food waste and poverty in society.

FRDSC generate value propositions to society, which can lead to reduced societal costs in several ways. The two aggregated dimensions regarding well-being, i.e. reduced societal costs and improved state budget, provide an important contribution to society. These dimensions are enabled by bundling several elements of well-being, as displayed in Figure 3. However, despite their potential, mechanisms that can balance costs and benefits were not found, as these two dimensions neither reduce redistributors’ costs nor generate income for them. Instead, the role of these dimensions is to contribute to society in the long term (as put forward in the introduction), to maintain or strengthen their well-being.

When designed appropriately, FRDSC can contribute to the state budget in several ways. For example, added work training and increased employment result in tax income from the people who work, from reduced financial aid through unemployment benefits, and from reduced spending for government-funded vocational training within areas relating to restaurants, store operations and logistics. Work training enhances knowledge in society, something that otherwise would probably have been financed governmentally, for instance, through schools. Better food hygiene, as a result of the 4RDC initiative being registered as a food organization, decreases the risk of food poisoning, which in turn reduces the strain on public healthcare. These effects can all be seen as unapplied value for the government. These findings provide more concrete examples of the value propositions for society on how redistributors can create value, which adds to the sustainable business model literature (e.g. Alkire et al., 2019; Boons and Lüdeke-Freund, 2013). Furthermore, Boons and Lüdeke-Freund (2013) argue that offering such social benefits is directly necessary to make socially oriented enterprises, such as 4RDC, self-sustaining.

The increased operational value for food donors is based on the bundling of added value (see Figure 3). For example, added value through changes in internal logistics costs can be achieved through more efficient operations. This has been highlighted in a general context (e.g. Osterwalder and Pigneur, 2010), in a logistics setting (Sandberg et al., 2011), and indeed in food redistribution (e.g. Michelini et al., 2018). However, routines and practices to efficiently handle food to be donated must be in place to ensure that operational efficiency is gained.

Another mechanism balancing costs and benefits extends to the comparison of food donations vs selling the products to biogas production. Biogas production does not follow the food hierarchy but enables an income and is logistically less challenging to organize. However, food donors that design efficient handling operations for the donated food can experience an increased operational efficiency and simultaneously follow the food hierarchy.

Overall cost reductions for food donors come through operational efficiencies. Such benefits cannot easily be distributed since they appear in food donors’ operations, but can instead be viewed as a motivator for food donors to be involved in FDRCS and even help to finance the system.

Redistributors and recipients experience cost reductions in several ways (see Figure 3). First, decreased food purchasing costs and decreased transportation costs lower the costs of redistributors. Decreased food purchasing cost is a consequence of the food being donated instead of bought. However, other redistributors, i.e. those outside the focal organization, have limited access to money, act within the same mission as the 4RDC, and are likely unable to pay for what they gain. Even if other redistributors could support the 4RDC initiative financially − if, for example, 4RDC started to put a price on the food delivered to other charity organizations − there is too great a risk that 4RDC will lose the interest of food donors who may want to support several charity organizations, not only 4RDC. Therefore, no mechanisms for balancing the costs and benefits are suggested here.

Reduced costs for redistributors also stem from decreased transport costs, and as the empirical findings highlighted, this can be enabled through the mechanism of implementing a social transport tariff provided by LSPs. Using social tariffs means that LSPs offer broader delivery time windows but can thereby schedule deliveries more freely and utilize empty space on trucks instead of organizing separate deliveries. This, in turn, increases their fill-rates and even lowers the aggregated environmental impact of transportation. The results point to a potential to reduce costs for actors, which is highlighted as a sought-after value proposition (Osterwalder and Pigneur, 2010) and can lead to their increased willingness to participate in redistribution systems.

This study set out to increase the understanding of the uneven distribution of costs and benefits among actors within and outside the FRDSC, as well as to identify ways to balance costs and benefits to secure sustainable food supply chains by applying a business model logic to social enterprises. A comprehensive overview of value propositions is presented, featuring as many as 14 elements of well-being and seven types of added value for actors, both in and outside of the studied FRDSC. The uneven distribution of costs and benefits among the actors points to the need to find sources of income streams for redistributors as they spend massive amounts on resources and activities to enable the redistribution of surplus food. Besides the existing income stream from, e.g. the social supermarkets and a restaurant, the following mechanisms are proposed for a better balance of costs and benefits for FRDSC actors:

1. Environmental and social association values must be redistributed to all supporting actors, and should not be taken for granted by food donors who are not supporting the logistics needed for the benefits of food redistribution to be realized.

2. Reduced societal costs and improved state budget provide great benefits to society, but these need to be translated into income for redistributors.

3. The realization of increased operational value for food donors can be a strong motivator to participate in food redistribution, as it provides a direct return on their investment.

4. Development and inclusion of a social tariff for freight transport of surplus food is an important mechanism to better balance the cost and secure the realization of benefits.

This article contributes to logistics and SCM research by focusing on social not-for-profit enterprises. Here, the main goal of the supply chain is to increase social and environmental value, as opposed to maintaining the traditional focus on profit. The empirical findings from the complex and innovative distribution design of the 4RDC with the four distribution channels (its own and other organizations’ food banks, social supermarkets and public restaurants) contribute to the literature in several ways. First, they provide a comprehensive overview that demonstrates that a considerable amount of value propositions can be created in terms of well-being and added value. These results confirm previous studies, while adding new types of identified value propositions. Second, the study outlines the unfair distribution of costs and benefits among actors both within and outside the FRDSC. This is one important point of departure in proposing ways to balance costs and benefits among actors by suggesting mechanisms by which they can be balanced. Specific mechanisms were identified and formulated for potential replication and analytical generalization, such as the potential of finding revenue-providing value offerings based on association value, operational value, and cost reductions as a result of social transport tariffs. Other findings could be more context-dependent, for example, government-supported work training might not be applicable outside the Nordic context, and the use of restaurants and social supermarkets as distribution channels may not be available distribution channels in all FRDSC. Third, by applying a business model logic to social, this study adds insights and provides concrete examples of how such organizations can shift their mindset, which can strengthen such organizations’ ability to attain long-term financial viability. Thus, this study contributes to bridging the gap regarding the lack of a business mindset in food redistribution systems, as suggested in the literature (e.g. Pullman et al., 2018). Finally, this study shows the important role of adding value for the environment and society to sustainable business models, as important tools to enhance well-being while maintaining or improving financial stability, as also proposed by Alkire et al. (2019).

One of the most important managerial implications of this study is the need to understand how different actors, in and outside the FRDSC, benefit from and must financially contribute to achieving a sustainable FRDSC. In other words, the benefits of this supply chain extend beyond its members to society at large, and yet there are also important economic considerations in the food redistribution chain. This study provides the first steps toward developing mechanisms that provide stable and long-term sustainability for redistributors. For food donors, the study highlights the different types of added value they can gain from being part of redistribution systems, which span across internal efficiencies and potential for cost savings, to external reputational value. For redistributors, this study points to the necessity to create an understanding regarding the value they create for companies and society, to further manage the challenge of calculating and allocating environmental and social gains generated, and to bundle added value and well-being for different actors, which could be used to motivate them to contribute to financing the initiative.

The business model literature, such as Osterwalder and Pigneur (2010), emphasizes the need to identify customer segments because treating each customer separately is not feasible. Segmentation in the context of food redistribution presents a challenging area for future research. To exemplify this point, the empirical data indicate that food donors are more interested in environmental value, while other actors might be more interested in social value. This points to the need to understand what different actors value in order to communicate the “right” positive effects. From the perspective of FRDSC viability, attention needs to be paid to truly benefit from this, to find a balance between costs and benefits.

The empirical findings confirm, to some extent, the importance of measurable environmental and social well-being (Boons and Lüdeke-Freund, 2013) as a basis for the development of value offerings.

Overlooking the need for logistical resources and services is a common problem in many charity-based and humanitarian supply chains, where material donors do not want to contribute to the logistics costs. There is still a lack of understanding of how important, and how costly, it is to deliver such materials. A stronger focus on LSPs and their role is needed in the transformative supply chain agenda and has only been recently addressed by Lowrey and Boyer (2023). While Lowrey and Boyer (2023) focus on pick-up times and their variability, the novelty here is the LSP’s development of the concept of social tariffs. This area deserves more attention in future research.

Funding: This work was supported by VINNOVA (Swedish innovation agency) (Grant number: 2017-03156).