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Munchery is shutting down in three cities and cutting staff

Munchery is shutting down in three cities and cutting staff
[Photo: chuttersnap/Unsplash]

San Francisco-based meal delivery service Munchery will shortly stop operating in New York and Seattle, and is notifying employees that it will shut down the service in Los Angeles in mid-July. Its original on-demand, heat-up-in-the-microwave meal delivery service will be offered only in three Northern California areas: San Francisco, San Jose, and Sacramento. With this reduction, it’s laying off 30% of its staffers.

Munchery says it will centralize West Coast operations in San Francisco, where its meal delivery service began, and which remains its biggest and most successful market. The company points out that it will still be able to next-day ship cooking kits to customers in Seattle and Los Angeles.

Like other prepared-meal delivery services, Munchery hasn’t had an easy go of it. It was valued at $300 million as of May 2015. It did a broad expansion into Blue Apron-style cooking kits, and into several new markets, in May 2016. (The company continues to serve Arizona, California, Colorado, and Nevada with that service.) But by the beginning of 2017, it was running out of cash. In January 2017 it changed CEOs and laid off 30 people, some of which had been around from the start. With the 30% reduction in employees, the headcount will be down to 350, Munchery says.

Bloomberg reported that in March of last year the company raised another $5 million to stay afloat, and that the equity shares owned by many of the company’s original employees had been rendered virtually worthless.

The new CEO James Beriker originally said he hoped for Munchery to turn itself around by the end of 2017. As part of its strategy, the company began offering more food options at higher prices. It now says it’s in the final stages of a two-year process to get to profitability, and that it will reach that goal within three months of the closures announced today.

“I am saddened by this development, but I am also incredibly hopeful and excited by what we can accomplish in this next phase,” Beriker says in a LinkedIn post today. “I fundamentally believe in the opportunity that exists in food e-commerce, fresh food production, and home delivery.”

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