NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, June 26, 2014

Imagine for a minute that you can invest in one of two companies:

Both provide lunch to schools. Company A is very large and operates to minimize costs: it uses cheap ingredients and serves processed food that doesn’t spoil. It classifies many of its regular workers as part-time to avoid paying benefits.

Company B provides healthy food with fresh ingredients. Its regular workers get full employee benefits including health care, stock options and opportunity for advancement. It also provides nutrition education programs to school districts to tackle childhood obesity.

In the past, the first company would have perhaps been the obvious choice forinvestors reading Forbes. Its balance sheet allows the company to charge lower prices in selective competitive situations, and thus one might expect it to maintain its market share. And yet, Revolution Foods, a company that provides healthy food for schoolchildren and benefits for its regular workers, is rapidly taking market share from established traditional food providers. In doing so, it is providing one million healthy, affordable and fresh meals a week for a population that is two-thirds low-income households.