We were early supporters of Munchery in multiple markets. But as competition heated up, service and quality didn't keep pace and real-world logistics threw a wrench in operations.
— Jason Clampet
Munchery Inc., a startup that has struggled to keep up with competition in the costly business of food delivery, said it’s closing operations in three cities and cutting staff.
In an effort to achieve profitability, Munchery will cut about 30 percent of staff, all outside the San Francisco headquarters, a spokeswoman said. Chief Executive Officer James Beriker has been making cuts since last year as he was seeking as much as $15 million to keep the business afloat, Bloomberg reported at the time.
Munchery will cease delivery in Los Angeles, New York and Seattle. The startup said it will focus on San Francisco, the company’s biggest market for microwave dinners and meal kits.
“I am saddened by this development, but I am also incredibly hopeful and excited by what we can accomplish in this next phase,” Beriker wrote in a company blog post. “I fundamentally believe in the opportunity that exists in food e-commerce, fresh food productiongo and home delivery.”
The meal-delivery business, once an overheated market for venture capital, has mostly served up pessimism in recent years. Sprig, a venture-backed food delivery startup, closed its doors last year after burning through close to $1 million per month. Postmates Inc. and Zesty Inc. have also cut workers.
With the rise of Amazon.com Inc. in food delivery, investors are being more selective about which startups to bet on. One is DoorDash Inc., which recently got $535 million in a funding round led by SoftBank Group Corp. to deliver food from restaurants.
Munchery has burned through some $120 million since starting in 2010. The startup’s major backers include Menlo Ventures and Sherpa Capital.
©2018 Bloomberg L.P.