Less than a month after announcing a massive roll-out that would see their business expand to 5,000 cities, the meal-delivery service Munchery announced that instead, they would be suspending the majority of their existing service. In a statement to customers1 posted on their website, Munchery president and CEO James Beriker announced that operations would be closed in Seattle, New York, and Los Angeles—all their bases outside of San Francisco.
A Change in Focus
Beriker doesn’t mention April’s planned expansion in his note—a move that would see Munchery reaching a potential 40 million households—but instead discusses the next phase of the company. According to the note, the company will now focus exclusively on their San Francisco market, while still working to improve their business model. While the statement doesn’t explicitly describe what went wrong in the month since their expansion announcement, it seems clear from reading between the lines that money was the root of their difficulties.
Unlike services like Hello Fresh or Blue Apron, which focus only on meal preparation, Munchery’s additional selling point was delivering premade gourmet meals that consumers could then reheat at home. It’s meant to be both a time-saver for busy families, as well as an attractive option for diners who want diet-friendly meals. Whether that diet was vegetarian, low-carb, or just generally healthy, Munchery promised choices for all.
Looking Toward the Future
However, despite the reported $120 million2 in funding Munchery has received to date, they burned through that funding and were losing a reported $5 million a month by 2016. That loss was attributed to unsold meals. The company has since struggled through rounds of fundraising and continued losses. They still apparently expected to turn a profit by 2019, which perhaps explains the planned expansion.
Despite the setbacks, which include layoffs, Beriker ended his statement with optimism. However, he sounded a similar note when the company announced layoffs in 20173. That was when he first began discussing expanding their service to the nation. He also planned to attack the problem of food waste by running data analysis. It seems, though, that any gains they’ve made on that front failed to solve some of their most critical issues. It seems that the biggest issue for Munchery is one of scale. Now that their scale has been reduced, the company is in a much better position to become profitable and sustainable. Future expansion may be on the horizon yet.
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Dr. Rosmy Barrios, MD is an aesthetic medicine specialist whose work focuses on patients who are treated for obesity, metabolic syndrome, and other weight-related issues through nutritional analysis, keto diet programs, and supporting medications.
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