The high cost of groceries is a hot topic nowadays, and one Toronto-based entrepreneur has started to use AI to help consumers save money.

But instead of using the technology to simply pick the lowest prices in a basket, Tre’dish is starting from the beginning of where our food comes from.

“What really makes us different is that we rebuilt the supply chain underneath it first, so the AI can actually optimize around price, quality, and household behaviour in a very meaningful way,” Peter Hwang, founder, president and chief executive officer of Tre’dish, said to FoodNX in an interview.

“We operate a direct-to-consumer grocery platform around wholesale pricing and wholesale sourcing for recurring grocery subscriptions.”

Regular deliveries from producers

The company allows consumers to choose a food basket for weekly or biweekly delivery. Instead of the food and other consumer products coming from a traditional grocery store, it sources product directly from the producers.

“We decided to pivot the model in 2023 to build a business around the direct grocery supply chain, so essentially providing wholesale groceries direct to consumers and really eliminating the middleman and cost in the supply chain,” Hwang said.

“Our goal is to remove as many of those unnecessary middle layers as possible.”

The new model was launched in Jan. 2024. Customers in the GTA, as well as Hamilton, Waterdown, Grimsby, Brantford, Kitchener, Waterloo, Cambridge, Guelph and St. Catharines in Ontario, can access the service.

Tre’dish began life in 2021 for home-based chefs to source ingredients and operate a home business more efficiently, Hwang said, but when grocery prices really started to rise, the switch to the direct-to-consumer model was made.

“We’ve always been a tech company at heart but what we wanted to do is rebuild the supply chain first, and then ultimately have AI personalization to help consumers access better quality groceries at significantly lower prices.”

New AI tool

It recently introduced Sprout AI to optimize its grocery basket offerings.

In researching how to best maximize benefits, he noticed some commonalities, Hwang explained.

“The same patterns happen where a family sets a budget; they set their food preferences, we know what their staples are, and then ultimately Sprout learns their household patterns over time, and then builds smarter grocery baskets and makes more intelligent recommendations.”

While customers have the opportunity to pick and choose for each basket, Tre’dish has also implemented a subscription model that will automatically deliver baskets.

“They normally shop and buy one-off, kind of a la carte items, but we launched a groceries-on-autopilot feature back in November last year that allows households to automate recurring essentials either weekly or biweekly,” he said.

Currently, the company has serviced 10,000 households across Ontario, and has 1,200 subscribers on its “autopilot subscription service” in its 18 months of operation, Hwang said.

“Right now, there’s no subscription fee that people have, we just have them on a recurring order sequence, and they typically get their essential items from us, and now with Sprout AI, we’re recommending any other item that they might want to have as smart predictive swaps for product that might be on sale.”

Tre’dish earns its revenue by “retaining a sustainable margin on each basket,” according to the company.

Expanding into more grocery products

Initially, the company only offered meat and produce for delivery, “but as we expanded our customer base, and we realized that in order to get the average order size and the value up to the customer, we really had to negotiate tons of procurement deals with tons of different suppliers that really represent your entire grocery cart,” Hwang said.

“Now we work directly with wholesalers, butchers, farmers; importers of product, direct CPG (consumer packaged goods) companies.”

Tre’dish also doesn’t have a large warehouse for storage, which helps to reduce overall costs, he said. Typically, consumers save around 25 per cent to 30 per cent per grocery order.

"Emotional connection" when opening packages

Reaction to the firm’s model is positive so far but for some, there is an “emotional connection” when the first package arrives.

“When people post their unboxing experience, they don’t just talk about saving money, they talk about the feeling of relief: they feel happy and proud, the fact that they can get still great quality products but not feel the stress about what’s going on the grocery bill.”

If all goes well, the company plans to expand from its current roster to all of Ontario, and two other regions in Canada and eventually into the U.S., Hwang said.

“We want Tre’dish to become the operating system for household groceries. We don’t want to be just another place to buy food, we want to be a platform that genuinely helps families manage the second largest expense in their household far more intelligently.”