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Munchery Replaces Co-Founder and CEO on a Quest for Profitability

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The company reportedly has very high food waste

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Munchery, the on-demand meal startup, has a new CEO at the helm, as of yesterday. Co-founder Tri Tran has been replaced by start-up vet James Beriker, who joins the company from his most recent post at Simply Hired; Tran will take the position of Chief Strategy Officer, and remain on the company’s board of directors.

Beriker joins amidst reports that the company is struggling to turn a profit, with a hefty 16 percent food waste and staggeringly high budgets for aggressive marketing campaigns. According to a Bloomberg article published on the same day that the company announced the CEO shuffle, Munchery “has begged its cooks to bring down the cost of the ingredients,” which means lower quality, and fewer organic options. It’s part of the company’s push to attract another round of financing, though it is currently the highest financed start-up of its kind, having raised $120 million; competitors like Maple and Sprig reportedly have much lower backing.

Apparently the food waste has cost the company over $1.9 million, producing 653,400 unsold dishes between September 2014 to July 2016 at an average of 16 percent of the total production. That’s compared to an average of four to ten percent waste at restaurants, according to Bloomberg. Employees who spoke up about the waste said that the overproduction was to “ensure that the startup had enough food in case a new marketing campaign increased sales.” Tran told TechCrunch that unsold food is donated, and that “the proper amount of production is a challenge that all food businesses deal with.” In the meantime, Munchery maintains that its San Francisco kitchen is profitable, and is “contribution positive” in at least three other markets (the company currently delivers to over 1,000 cities).

This is not the first high-profile staff change for the company: La Boulangerie founder Pascal Rigo resigned as Munchery’s Chief Customer Experience Officer in March after five months on the job. At the time he told Eater "I just did not share anymore their strategy for growth and their ‘vision’ for the future." Rigo had signed on to focus on the company’s food quality by tying in chef partnerships like a “Ready-to-cook” meal kit from Charles Phan. "I still believe that if there is a future for that segment and if one company could locally succeed in it, Munchery is ideally positioned to be that company," he said in March. (Since then, Rigo has gone on to revive his brand as La Boulangerie de San Francisco, buying back six of his old La Boulange locations around SF.)

Meanwhile, the food delivery business continues to struggle to find footing in the on-demand market. In July, Sprig “paused” service in Chicago and laid off kitchen staff and drivers; Blue Apron’s commissary facilities are “unsafe” and “violent”; Berkeley-based delivery company shuttered in the spring, only to have its proprietary platform purchased for other applications. Other companies like Caviar, Doordash, Uber Eats, and Amazon Prime Now continue to expand, offering restaurant dishes delivered on-demand.

Eater has reached out for more comments from Munchery; stay tuned.