FDA Public Meeting on Food E-Commerce (Part 6): Definitions for “Produce and Meal Kit Subscription Services, Ghost Kitchens, Dark Stores.”

Every food company has experienced the rapid evolution of e-commerce. While B2C e-commerce is a broad category, the FDA Public Meeting emphasizes “e.g., produce and meal kit subscription services, ghost kitchens, dark stores.” FDA also mentioned types of delivery models, “e.g., third-party delivery, autonomous delivery models.” This post will review the concepts in detail.

This is the sixth blog post in our multi-post series that focuses on the FDA “New Era of Smarter Food Safety” (SFS) blueprint. Other blogposts include a review of the FDA public meeting, an e-commerce and food fraud overview, a review of ISO cybersecurity definitions, a video Lecture on Cybersecurity and the Food Safety Manager, an introduction to supply chain mapping and criminology hot spot analysis, a country-level vulnerability assessment, and possibly others.

The focus of the FDA public meeting on food e-commerce has a goal of “Ensuring the Safety of Foods Ordered Online and Delivered Directly to Consumers.” Further, the FDA meeting is scheduled “to help ensure the safe production and delivery of human and animal foods sold through new e-commerce business models.” In addition, the summit is “to identify courses of action to address potential food safety vulnerabilities, including those that may arise in the “last mile” of delivery.” Further, “We are particularly interested in how those risks are managed during the “last mile” of delivery to its final destination using third-party delivery services and autonomous delivery models.”

Summarizing these FDA statements, the focus of the public meeting is:

• Foods ordered online
• AND
• Delivered from a food preparation site to the consumer at another location
• AND
• The food preparation is from new business models including “e.g., produce and meal kit subscription services, ghost kitchens, dark stores.”
• AND
• Uses third-party delivery “such as the U.S. Postal Service, UPS, FedEx, Uber, Lyft, DoorDash, etc.”

Definitions of Terms from the FDA Public Meeting on Food E-commerce

Note: the FDA-published definitions are noted (cited as FDA public meeting). Where there are no FDA definitions, a supplemental literature search was conducted.

FDA’s “New Business Models”

• New Business Models (FDA Public Meeting): “Types of B2C e-commerce models (e.g., produce and meal kit subscription services, ghost kitchens, dark stores)”
  
  
  • Definitions of examples:
    • Produce Subscriptions (produce boxes, including Community Supported Agriculture/CSA): consumers are members or subscribe to receive local produce harvested throughout the growing season. Also could include other agricultural products such as meat.
    • Meal Kit Subscriptions: “a service designed to deliver fresh, pre-measured ingredients to the doorsteps of consumers.” (REF)
    • Meal Kit Pickup: this is a variation of the meal kit subscriptions where meal kits are offered for on-demand pickups, such as at a food retailer.
    • Ghost Kitchens (FDA public meeting):(also referred to as dark kitchens, blackbox kitchens, cloud kitchens, and virtual kitchens) “food production spaces that do not have a storefront or a dining area and are used mainly for delivery and/or catering.”
    • Ghost Kitchens (General): (also referred to dark kitchens, virtual kitchens, or shadow kitchens) “a commercial facility that prepares and cooks restaurant-style food for delivery directly to customers or one or more dine-in restaurants.”  (REF) “The term ghost kitchen refers to a food establishment that exists to cook food for delivery, rather than dine-in or takeout.” “(REF) “The concept goes by a number of other names, including virtual kitchen, shadow kitchen, and cloud kitchen, all terms that draw attention to the enterprise’s lack of physical space.” (REF)
    • Dark stores (FDA Public Meeting): “traditional retail stores that have been converted to local fulfillment centers to fulfill delivery and pickup orders.”
    • Dark Stores (General): Another term for ghost kitchen, including virtual kitchen
      
      
  • Other related examples:
    • Commissary: “a place where food is stored, processed or packaged and prepared in individual portions for service at a food service establishment. A commissary supplying vending machines, mobile food service establishments, or owned and operated by an owner operating the food service establishment exclusively served by the commissary, is to be operated under permit and in accordance with this Subpart.” (REF)
    • Cottage Industry or Home Cooked: “make and sell specific foods in their own home without being subject to inspections or purchasing a food license. […] Possible places to sell cottage foods in Michigan are farmer’s markets, roadside stands and craft fairs. The key is that the food must be sold directly to the consumer; it cannot be sold to a retail establishment and then sold to the consumer.” (REF)
    • Food Establishment: As per the Food and Drug Administration’s (FDA) Model Food Code, an operation that (a) stores, prepares, packages, serves, vends food directly to the consumer, or otherwise provides food for human consumption such as a restaurant; satellite or catered feeding location; catering operation if the operation provides food directly to a consumer (b) relinquishes possession of food to a consumer directly, or indirectly through a delivery service such as home delivery of grocery orders or restaurant takeout orders, or delivery service that is provided by common carriers. (REF)
    • Food Processing Establishment (Commercial kitchen): “a commercial establishment operated under license, permit or with the approval of an appropriate regulatory authority, where food is manufactured or packaged for human consumption at another establishment or place.” (REF)
    • Food Trucks/ Concession Stands/ Pushcarts: portable or mobile operations that serve food. (REF)
    • Fulfillment Center (FC) including micro-fulfillment center, local fulfillment center, E-fulfillment center: “distribution facilities that are specialized for processing and shipping e-commerce orders directly to home or businesses.” (REF)
    • Omni-Channel: a distribution strategy in which customers can place orders and receive and return purchases in different ways. (REF)
    • Online Grocery (FDA public meeting): “refers to foods ordered through grocery (e.g., supermarket) websites, directly from the grocery manufacturers’ websites and from third-party online grocery providers. It does not include restaurant type, ready-to-eat meals that are ordered online for pick-up or delivery.“ (REF)
    • Pop-Up Kitchens or Restaurants/ Temporary Food Service Establishment: a temporary food operation (REF)
    • Food Fraud/Fraudsters: intentional deception for economic gain using food, and in this case, illegal or unregulated operations that utilize some form of deception to trick a consumer or infiltrate a legitimate supply chain while pretending to be a legitimate business. (REF)
      
      
  • Definitions of B2C and related terms:
    • B2C E-commerce (FDA public meeting): is the manufacturing, packaging, labeling, storage, and delivery of human and animal foods sold directly to consumers through commercial transactions conducted electronically on the internet. (REF)
    • Business-to-Consumer (B2C): Generally, when a business sells directly to a consumer. This is often interpreted to be a “product that is sold online from manufacturers or distributors directly to consumers.” (REF)
    • Business-to-Business (B2B): “a sector of business activity that focuses on commerce performed between businesses rather than between a business and a consumer.” (REF)
    • Business-to-Business-to-Consumer (B2B2C): Generally, a producer sells to a distributor who takes ownership and then sells to the consumer. For example, “Instacart is an excellent example of how B2B2C works for newer tech start-ups and legacy grocery stores to add a service that’s beneficial for consumers.” (REF)
      • White-label product: remove the label from a generic or commercially available product and replace the label with your own brand
      • Private label product: contract with a manufacturer to create a product that only you will brand and sell
    • Consumer-to-Consumer (C2C): consumers sell or trade directly to other consumers, the sale is typically conduct in an online environment with the connection through social media (E.g., Facebook, WhatsApp, etc.)  or an online auction provider (e.g., Etsy, eBay, etc.).

FDA’s “Types of Delivery”

• Types of Delivery (FDA public meeting): “Types of delivery models (e.g., third-party delivery, autonomous delivery models):”
  
  
  • Third-party logistics (3PL): “a common term used in industry to describe firms that provide a variety of services, including transportation, distribution, inventory management, packaging, and international freight forwarding.” (REF) E.g., you contract with a lawn care company that owns their equipment and hires their employees to mow your lawn as needed.
    
    
  • Other Logistic systems:
    • First-party logistics (1PL): all assets and services are managed by the manufacturer. E.g., the manufacturer owns their warehouse, services support, and trucks to conduct the delivery. E.g., you own your lawnmower and then mow your yard based on your schedule.
    • Second-party logistics (2PL): the assets are owned by another company, but the management and services are under the manufacturer’s control. E.g., the manufacturer uses the transportation assets of another company such as railroad, airplanes, or sea-going vessels. E.g., you lease your lawnmower and then mow your yard based on your schedule.
    • Fourth-party logistics (4PL): “specialize in providing comprehensive information services that facilitate supply chain arrangements. Such fourth-party service providers arrange services, often integrating third-party asset operators on behalf of their customers.” (REF) E.g., essentially, this is a coordinator that the manufacturer contracts with to manage all aspects of transporting the finished goods from manufacturer to customer. E.g., you contract with a services company that arranges for your yard to be mowed whenever needed.
    • Fifth-party logistics (5PL): this is a company that coordinates the logistics of several companies to create bulk volume discounts or establish specialized distribution networks.
    • Food Fraud/Fraudsters: intentional deception for economic gain using food, and in this case, illegal or unregulated operations that utilize some form of deception to trick a consumer or infiltrate a legitimate supply chain while pretending to be a legitimate business. (REF)
      
      
  • Modes of delivery:
    • Consumer Select and shop: the consumer physically enters the location and selects or orders the product for purchase and consumption.
    • In-store Pickup: the retailer selects the product, and the consumer acquires the completed order inside the establishment.
    • Curbside Pickup: the retailer selects the product, and the completed order is delivered to the consumer who is waiting outside the establishment.
    • Food Delivery Companies: businesses that only conduct the delivery of the food products, and own or control their transportation assets. The FDA public meeting examples include “U.S. Postal Service, UPS, FedEx,” and presumably proprietary vehicle fleets like Amazon.com.
    • Food Delivery Services: businesses that only manage the sales transaction of the food products, and utilize other transportation assets to conduct the deliveries. The FDA public meeting examples include “Uber, Lyft, DoorDash, etc.”
      
      
  • Level of food preparation:
    • Food for Home Preparation: Food delivered to a consumer where the consumer is expected to prepare/cook the food. (REF)
    • Food for Immediate Consumption: Prepared food delivered to a consumer where the expectation is that the food will be consumed without extensive preparation and consumed shortly after arrival. (REF)
    • Food for Later Consumption: Food that is delivered to a consumer where the expectation is that the food will be consumed without extensive preparation and may be stored for some time and/or consumed shortly after arrival.  (REF)
      
      
  • Types of Logistics Storage: there are many nodes where incoming or outgoing goods are stored. (REF)
    • Raw materials waiting to be processed
    • Incoming goods waiting to be picked for an order
    • Finished goods waiting to be shipped
    • During delivery and transportation
    • Delivered but waiting for consumer to pick-up

Now that the broad food e-commerce concepts have been reviewed in relation to the scope of the FDA public meeting on food e-commerce, the subsequent risk management step can occur. While it may seem tedious to review the federal register notice and define the key terms, this is a critical activity. When following the ISO 31000 Risk Management standard, the first step is to “establish the content,” which includes defining all the variables. To support the FDA public meeting goal, the next step in this research is to understand how these variables or attributes are connected in a food supply chain map. The food supply chain map can be expanded to identify where there are system weaknesses or concerns. This priority setting can utilize the criminology hot spot analysis to consider the most efficient use of resources to reduce the risks. 

Don’t forget that food fraud occurs in every food supply chain… so including food fraud and fraudsters is vital for protecting your food supply chain (and supporting the FDA public meeting on food e-commerce).

The industry speakers at the FDA Public Meeting on Food E-Commerce

• Caravetta Domenic, Head of Microbiology, F&R, R&D, NA, Unilever North America
• Ashley A. De Smeth, Director of Federal Affairs, Grubhub
• Charlean Gmunder, Chief Operating Officer, Blue Apron
• Jorge A. Hernandez, Vice President of Quality Assurance, The Wendy’s Company
• Carletta Ooton, Vice President for Product Assurance, Risk and Security, Amazon
• Howard Popoola, Vice President of Corporate Food Technology and Regulatory Compliance, Kroger Company
• Dilshika Wijesekera, Director, Food Safety & Regulatory Compliance, Instacart