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Startup Profile: LFS Enterprises Develops Infrastructure for a Local Food Shift in Colorado

December 5, 2011 |

The local food market grew to a nearly $5 billion industry in 2008 according to a USDA report released in November, a figure quadruple previous industry estimates. The report found that local food is most highly valued in the Northeast and on the West Coast.

Aaron Perry and Zane Kessler of Colorado hope to feed a similar appetite in the Rocky Mountains.

Perry and Kessler are CEO and Manager of Business Development of recycOil, a Colorado for-profit waste management company that recycles and processes used cooking oil. RecycOil has teamed up with Transition Colorado, a Boulder-based non-profit promoting education and awareness of local, regional, and sustainable food production, to form Local Food Shift Enterprises (LFS), a local and regional food distribution company.

Kessler said that by combining efforts of two established organizations, LFS will have access to Transition Colorado’s experience with the local food market and community organizing as well as with recycOil’s specialty in transportation logistics, fleets, and distribution systems. He added that by establishing a local food distribution infrastructure, LFS aims to contribute preexisting local programs such as Denver Seeds—Mayor Michael B. Hancock’s initiative to promote local businesses and increase local food production.

Kessler said there are so many local food producers in the region that, “We’re actually having trouble keeping up with all the new producers coming online.”

Joan Brewster, an administrator for the Colorado Chefs Association said that Colorado has a strong appetite for local food and that “the demand is even more so than it ever has been. The question has always been, ‘How do you get the local [produce] to the busy chef?’ That’s where recycOil has stepped up and said that we want to solve that problem.” She added that many similar projects aimed at farm to table initiatives are emerging throughout the state but “I think that recyOil is ahead of everybody.”

Kessler has lofty aspirations for LFS. “We’d love to have trucks running directly from the farms to the restaurants. That might be an ambitious goal, but that’s one thing that we envision.”

At first, LFS will consist of a web-based platform connecting producers and food buyers, a warehouse for housing and minimal handling of food, and refrigerated trucks bringing food from the farm to the kitchen. Kessler said that efforts this winter will focus on securing IT platforms and establishing connections between producers and food buyers to be ready when tomatoes start coming off the vine.

“We have been talking with everybody from the Colorado Chefs Association to individual restaurants as well,” said Kessler. We’re working very closely with food buyers in our region to find out what they need in this platform to make it work.”

Kessler said that LFS has also been working closely with Canadian company, Foodtree, Inc., which has developed a web and mobile application designed to track food from farm to table. The Foodtree application went live in Boulder last June and Kessler said “We’re ecstatic to work with Foodtree and we see the app capability of Foodtree having a significant impact on the business that we are doing in Colorado.” He said that the two companies are currently talking about expanding on ways that their companies might overlap.

Foodtree CEO, Anthony Nicalo sees Foodtree as a tool to bring additional transparency to the LFS’s food distribution model. He said that LFS could register information about where their produce is grown and distributed with Foodtree, which could in turn convey that information to individual consumers in markets and restaurants through its mobile application and scannable labels on menus.

Before LFS trucks can deliver any tomatoes, Perry and Kessler will have to clear several hurdles. In addition to establishing the platform, developing a producer and buyer network, LFS must address issues of seasonality and quality control.

“Seasonality’s obviously something we’re going to be prepared to face,” Kessler said. “A for-profit ideally needs to make profit 12 months of the year. That may not be the case in this, but we’ve got to be able to work around seasonality as well as quality.”

Kessler said that a lot of work would be needed to ensure that produce distributed by LFS meets quality standards. “We’re going to really have to work closely with the food producers to ensure a level of quality that consumers will find appetizing.” He later added that LFS would have to figure out how to implement additional oversight to ensure that no genetically modified organisms (GMOs) find their way into in the supply stream.

Funding for the project came from an anonymous donor found through Slow Money—an organization connecting sustainable food startup companies to investors. Kessler said that he anticipates that LFS will begin to turn a profit within three to four years, although he added that those involved are prepared to stick it out if it takes longer to become profitable.

Thinking long-term, Kessler said that LFS plans to spend ten years focusing on Colorado, but hopes to expand to other areas in the Rocky Mountains soon after. He sees the south end of the region as a potential direction to pursue expansion.

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