Munchery, an eight-year-old San Francisco meal delivery startup, announced its shutdown on Monday, becoming the latest to succumb to the harsh realities of the business.
The bigger picture: A number of companies have attempted to cook and deliver their own meals (or meal kits), but most have shuttered or struggled.
- Munchery, founded by Tri Tran and Conrad Chu, was optimistic about its ability to cook, sell, and deliver high-quality meals to consumers, but signs of trouble appeared years ago.
- In 2015, the company added meal kits to its business, signing up high-profile restaurateurs as launch partners. However, just five months later, San Francisco baker and La Boulange founder Pascal Rigo, who had joined as chief customer experience officer, left the company.
- Shortly after, the company rolled out a "membership" model, an attempt to stabilize its order forecasting and revenue.
- But by the end of 2016, the company had replaced co-founder Tri Tran with a new CEO, and Bloomberg reported it had struggled with overproduction of food. Last year, it shut down service in all cities except San Francisco and laid off 30% of its workforce.
- Investors had put in $124 million, per Pitchbook.
Some of the startups that have attempted to cook and deliver meals, and shut down:
Meanwhile, some meal kit startups like Plated and Home Chef sold to large grocers as a way to survive. Presumably, this enables them to tap into their parent companies' supply chains and lager customer reach.
- Blue Apron, which chose to go public in 2017, is currently trading at $1.40 per share and replaced its co-founder with a new CEO in late 2017.
The bottom line: Shuttling meals from restaurants to customers' doors is no easy business (as a slew of companies are finding out), but preparing food and getting it to customers comes with a whole host of additional challenges — often much more than startups can handle.
