The Billion-Dollar Hope for School Lunches

AOL co-founder Steve Case knows the score on the school-lunch debate. “I’m not running into anybody, on the Republican side or the Democrat side, who’s saying, ‘We believe in unhealthy meals,’” he tells TIME. “The debate on the House side has been some people saying these new requirements are too difficult for schools to meet. It’s too hard to provide healthy options at affordable prices that kids will love, and so we should relax the standards essentially to give them more time to transition.”

But he’s not buying it. “Our view,” he says, “is the market can solve this problem. Revolution Foods is demonstrating that.”

He is putting his money where his mouth is, announcing Wednesday that his Revolution Growth fund (co-founded with other AOL alums; the name is a coincidence) has invested $30 million in the school-lunch company. For eight years, Revolution Foods has impressed many with its healthy alternatives to the run-of-the-mill cafeteria food that meets federal guidelines, but is either not very good for kids or not very tasty. Their meals, by contrast, are made from whole foods with organic components, served with a fruit and vegetable, minimally processed, without high-fructose corn syrup or artificial colors, flavors or additives—and they meet all the regulations to be fully reimbursable.

The method is definitely working. When TIME reported on the company in 2010, Revolution Foods was feeding 30,000 students. Now, they’ve expanded to 1,000 schools serving over 1 million meals a week to 200,000 kids—breakfast, lunch, snack and supper. Almost all of its clients are public schools, with a fairly even spread across the age range from pre-Kindergarten to 12th grade. Most important: 80 percent of the students they feed are on the free and reduced meal program. That means the best food is, for once, making it to the kids who are most in need of a healthy meal at school.

Revolution Foods co-founder Kristin Groos Richmond says the testimonials from parents, students and teachers couldn’t be better: “better concentration, less disciplinary action, less trips to the nurses, less absences.” In some districts, the growth rate of participation in the free and reduced meal program increased in the double digits. Administrators report decreased food waste, Richmond says.

While the company’s goals are altruistic, they also present a desirable market for the likes of Case to invest in. “The school lunch business is a $16-billion business in the U.S. alone,” he says. Revolution Foods has had over 100 percent compound annual growth rate since the day they started, says Richmond. It’s currently a $100 million-revenue business, but Case says he thinks it will be possible to grow to $1 billion.

The money from Revolution will allow the company to open new culinary centers where the meals are prepared. The company currently operates seven in cities around the country, and it is expanding into San Antonio, Baton Rouge, Austin and Philadelphia. Eventually, they would like to plant a flag in the Midwest.

It will also help them expand their retail business, a kind of healthy Lunchable that was born out of parents’ demand for a weekend equivalent to the healthy foods their kids were getting during the week at school. Those meal kits will now be available in even more grocery stores—they’re currently in more than 2,000.

Many public schools are currently in the process of selecting their vendors for the next school year; if all goes according to plan, Revolution Foods will be turning up on even more trays throughout the nation’s cafeterias.