Heavily funded startups are harder to keep profitable due to the massive return investors ask for. Meal delivery startups struggle with such despite gathering around 8-figures in investments.
First to fall
Sprig closed in May 2017 after losing $57 million in business. The company promised freshly delivered organic meals in 15-minutes as it operated from 2013 to 2017.
Sprig turned its production space on Van Ness Avenue into a cafe. It began inviting customers to dine in April of the same year.
Competitors such as Maple, Spoonrocket, Bento and Pronto also experienced tough times as it closed down.
The biggest to fall
Food delivery business Munchery closed down. The San Francisco startup announced that it is “closing its doors and ending operations effective immediately” in an email to its customers.
Munchery is an online food ordering and delivery service. The company delivered microwavable dinners and meal kits through parts of San Francisco, Seattle, and New York City.
Munchery shut down operations on January 21, 2019. The company promised that outstanding orders will be canceled and refunded.
“Today, with a heavy heart, we’re reaching out to announce that Munchery is closing its doors and ending operations effective immediately,” the company wrote in an email.
What went wrong?
Munchery was doing well. Their food delivery service was one of the most on demand in the industry. The company tried to do it all from having their own kitchen to creating their own brand names.
The choice to over-invest in kitchen facilities may have contributed to its down fall. Munchery had kitchens in South San Francisco, Los Angeles, Seattle and New York. The business produced more than it sold which is why a lot of food went to waste.
Former Yahoo executive James Beriker replaced replaced co-founder Tri Tran as CEO in 2016. Tran left the company in 2017 for good leaving a revolving door at top position.
Munchery had a problem keeping up with competitors that offer multi-purpose delivery services. Companies like UberEats, DoorDash and Postmates offers the same service with lower overhead costs.
All competitors had to do was offer the same service without having to spend for kitchen facilities and chefs. Costs were less since less maintenance is required.
Still on the rise
Fresh n’ Lean is one of the first self-made startups. It was able to generate a profitable 8-figure revenue business without outside investors. The company is now the largest nationwide and organic ready-to-eat meal delivery service in the United States.
Customers are allowed to choose their weekly meal plan in a matter of minutes. Fresh n’ Lean caters to both large households and people who are diet-conscious.
Meal plans can be modified according to need. The number of meals per day or week can also be set. Fresh n’ Lean has a macro calculator to make sure meals are properly planned.
Dietary restrictions and allergies are also considered during meal planning. The entire menu is gluten and dairy free.
Meals are made-to-order and aren’t frozen. Customers are assured freshness from shipping to delivery. All meals are microwave or stove ready.
Where to find Fresh n’ Lean
Fresh n’ Lean is based in Santa Monica, California. It opened their first retail store at 705 Montana Avenue last February 7.
Visitors can choose from a variety of ready-to-eat healthy meals. Menus include plant-based, low carb, and paleo to name a few.
Founder Laureen Asseo said that “our organic and health conscious store fits in very well with the values and lifestyle of the Santa Monica/Brentwood area.”
Asseo also explains that “a lot of working professionals that are in need of a quick solution for eating healthy on the go.”
