# Munchery (2010 – 2019)

- URL: https://girisimcikafasi.com/en/startup-graveyard/munchery/
- Sector: Food and drink
- Country: United States
- Total funding: $125 million
- Cause of closure: Business model failed

## What did it do?

Munchery was a service that delivered meals from chefs who prepared ever-changing menus to people's homes, ordered online. Meals could be ordered up to 6 pm the same day or several days in advance, and were delivered chilled in a chosen one-hour window between 17:00 and 21:00. The company operated in cities including San Francisco, Seattle and New York.

## Why did it shut down?

Although Munchery was said to have reached a valuation of around $300 million with a large round in 2015, it never achieved profitability in on-demand meal delivery. The company tried many models, from ready meals to meal kits, from an $8.95-a-month membership to a sales outlet in a train station. In May 2018 it closed its Seattle, Los Angeles and New York operations and laid off 257 people, or 30 per cent of its staff. The plan to turn a profit in San Francisco failed, and the company abruptly ceased operations on 21 January 2019. In its bankruptcy filing in March 2019 its debts far exceeded its assets.

## The story

Monday, 21 January 2019. Munchery customers received an email saying the company was ceasing operations immediately. Founded nine years earlier in San Francisco and having raised $125 million in investment, the start-up left the stage within a day.

Founded in 2010 by Tri Tran and Conrad Chu, Munchery tried to carve out a space between restaurant food and home cooking. Chefs prepared ever-changing menus and chose their own ingredients, and users could rate the dishes and message the chefs directly. Orders could be placed up to 6 pm the same day; the chilled meals arrived at the door in a chosen one-hour window between 17:00 and 21:00 and were reheated at home. In 2015 the company closed an $85 million Series C and was said to be worth $300 million; a company spokesperson did not confirm the figure. Investors included Greycroft, Sherpa Capital, Menlo Ventures, e.ventures and Cota Capital.

The following years were a search. In 2016 a corporate lunch programme was launched and James Beriker replaced co-founder Tri Tran as CEO. According to TechCrunch, the company tried many formats to survive, from ready meals to meal kits, and from an $8.95-a-month membership plan to an outlet in a BART station in San Francisco. In May 2018 the Seattle, Los Angeles and New York operations were closed and 257 people, or 30 per cent of staff, were laid off. The plan was to turn a profit quickly in San Francisco, its largest market.

The plan did not work. In its bankruptcy filing in March 2019 the company reported assets of between $1 million and $10 million, while it owed lenders $28.5 million in secured debt and 230 suppliers $6 million in unsecured debt. In May 2019 its roughly 6,500-square-metre headquarters in South San Francisco was sold for $5 million. In 2020 the Munchery name was reused by another company for a site that only publishes recipes.

Munchery is one of the examples that show how hard on-demand meal delivery is. Every order carried both kitchen and logistics costs, and the profitability question, put off while capital was plentiful, turned into a sudden shutdown when the money ran out.

## Lessons

- In fresh meal delivery, calculate the kitchen, cold-chain and courier cost of every single order; higher volume does not bring these costs down by itself.
- Frequent model changes are a sign of searching; validate each new format profitably in one market before taking it to new cities.
- Prioritise your obligations to suppliers and staff in your cash plan; sudden shutdowns magnify the reputational damage.

## Sources

- [Munchery](https://en.wikipedia.org/wiki/Munchery)
- [After raising $125M, Munchery fails to deliver](https://techcrunch.com/2019/01/21/munchery-shuts-down/)
- [Meal-delivery startup Munchery shuts down](https://www.marketwatch.com/story/meal-delivery-startup-munchery-shuts-down-2019-01-21)
- [https://www.wikidata.org/wiki/Q22907109](https://www.wikidata.org/wiki/Q22907109)