Research shows the unintended consequences of food waste apps

A whopping one-third of all food in the U.S. ends up in landfills, where it generates more greenhouse gas emissions than the entire aviation industry. This waste represents an economic loss of $1.2 trillion each year. 

So when Assistant Professor Luyi Yang learned about the Too Good to Go app, which allows customers to pre-order $3.99 “surprise bags” of unsold food from a specific retailer, he was intrigued by the chance to reduce waste while getting good deals. While he appreciated the element of surprise in both the quantity and content of food inside a surprise bag, he grew curious as a researcher about whether the approach was truly effective when it came to cutting waste.

Working with Man Yu from Hong Kong University of Science and Technology, he built a mathematical model that compared the impact of surprise-bag clearance, traditional mark-down clearance where customers choose items, and no clearance sales at all. 

The results, published online today in the journal Management Science, surprised him: Rather than reducing waste, both types of food clearance sales could actually generate more waste than having no clearance sale at all. This happens because clearance sales can tempt retailers to overproduce and consumers to overbuy—and with surprise bags, consumers toss what they don’t need or like.

“Once you take everything into account, these clearance strategies are not necessarily a universally beneficial market-based solution for combating food waste,” Yang says. 

That said, under certain conditions, surprise bags can present a win-win-win solution—reducing waste, generating extra profits for retailers, and getting food into the hands of budget-conscious consumers.

Modeling uncertainty

Launched in Denmark in 2015, Too Good To Go now has 100 million users across 19 countries worldwide. The researchers’ model not only compared the food-waste implications of clearance sales, but the profits generated by each type of clearance. It also analyzed how much of the resulting food waste would be the responsibility of retailers versus consumers. 

In considering all these perspectives, Yang says, the model had to account for uncertainty among all actors: how much food retailers should produce in the first place, how they should price it, and how much consumers should buy.

“Uncertainty is a key component in the model—and also in reality,” Yang explains. After all, stores don’t want to overproduce, but they also don’t want to run out of stock. Consumers want to have enough groceries on hand at home, but they also want to accept an unexpected dinner invitation from a friend should it come up. “It is exactly these types of uncertainties, both at the store level and consumer level, that really drive the presence of food waste and surplus food in general.” 

A thumb on the scale of production

It turned out that clearance sales—whether surprise bags or traditional clearance—subtly change the equation for the various actors confronting uncertainty.

This is because stores produce more food when they’re anticipating offloading extra inventory—and surprise clearance actually motivates them to produce even more. Retailers intuitively understand that surprise bags help them more easily salvage their leftover inventory, which makes them less concerned about overproduction.

From the store’s perspective, surprise clearance does the best job of diverting waste into the hands of consumers. It also generates the most profit for the store of the three pricing schemes. The problem is that the surprise clearance approach also often means that consumers can buy more than they need, ultimately tossing it into their own trash bins. 

Still, it’s worth noting that surprise bags do have the potential to help mitigate food waste when they target a specific customer segment: people who are particularly price-sensitive and unlikely to overbuy when presented with a deal. 

On the other hand, the surprise-bag approach is most likely to backfire on food products with narrow profit margins. In these cases, surprise clearance is most likely to function as a thumb on the scale encouraging more production, and the additional food in stock leads to more consumer purchases during regular sales and ultimately more consumer waste.

Where surprise works

Yang and Yu offer guidance in terms of which types of stores are most likely to see food-waste benefits from embracing surprise bags. 

“For high-margin products—think food sold at high-end restaurants or premium bakeries—it seems that surprise clearance is going to be very effective,” Yang says. “But when it comes to those product categories where the profit margin is razor thin—for example, in grocery stores—then surprise clearance may not be so effective and can actually be counterproductive to reducing food waste.”  

Yang also found that a key factor in food-reduction success is whether the products in surprise bags are more homogenous—such as different flavors of bagels. Mixing disparate products creates more waste. “When consumers have strong preferences, they’ll just throw away whatever they find in a surprise bag that’s no good for them,” Yang says. 

While carefully targeted clearance strategies can be effective, profitable, and a benefit to consumers, sometimes the most effective overall pricing strategy for reducing food waste is simply no clearance at all, Yang concludes. That forces retailers to manage food production based on straightforward predictions of sales numbers—and feel less comfortable overproducing food than they would if they had clearance as a fail-safe option.

“They’re definitely doing their job in certain scenarios—but my research finding is also telling a cautionary tale that it doesn’t always work as intended, because of all the subtleties involved,” he says.

Read the full paper:

Too Good To Go: Combating Food Waste with Surprise Clearance

By Luyi Yang and Man Yu

Management Science, July 2025