San Francisco-based food startup Munchery has shut down operations in New York, Los Angeles, and Seattle, retreating to just the Bay Area from all the other cities where it’s delivered meals. The company announced the news on Friday, which means a reduction of 30 percent of its workforce, or laying off more than 250 workers. CEO James Beriker wrote that he was “saddened by this development,” but that the team will “focus on growing our business in San Francisco.”
Munchery launched locally in 2010, delivering fully-prepared meals on-demand from its commissary kitchen to customers. According to Crunchbase, it’s received more than $125 million in funding, but was reportedly losing as much as $5 million a month in unsold meals in 2016. In 2017, the company laid off 30 of its then 900 San Francisco-based employees in a “normal course adjustment,” with Beriker projecting that Munchery would expand nationally nevertheless.
A source familiar with Munchery’s operations in Seattle tells Eater SF that the market there was too small to be successful. It never gained traction after an initial sales spike following a later series investment of $85 million, the source claimed.
While Munchery’s future in its most viable market of San Francisco remains to be seen, its retreat from other cities is further evidence that the food delivery market is a difficult one in which to prosper. Last year, another competitor in the market, Sprig, shut down entirely despite $57 million in funding. Other players, like Bento and Spoonrocket, met similar fates, while competitors like Thistle continue in the space.
Munchery’s CEO nonetheless concluded his announcement on a positive tone, writing that, “I fundamentally believe in the opportunity that exists in food e-commerce, fresh food production and home delivery — and in our position as a leading innovator in this market.”
- Munchery Blog [Official]