Despite Staff Cuts, Munchery Eyes National Expansion

Food-delivery startup Munchery reduced staff at its San Francisco headquarters last week, and its two founders will leave the company at the end of this month, reports Bloomberg. But, despite the changes, chief executive officer James Beriker is confident in Munchery’s future, and he’s looking to expand into a nationwide brand.

Beriker joined the company in November, and he says the job cuts in San Francisco shouldn’t be taken as an indication of a change in direction. Munchery had 900 employees on its payroll, and the reduction of 30 workers is described as “a normal course adjustment that companies need to make to their cost structure.”

“This is my fifth time [being CEO of a company], and I have to tell you I’ve never been more bullish about a business than I am this one,” Beriker said in a phone conversation with Eater. “This is a really, really interesting opportunity.”

SF Gate notes the delivery sector has seen its share of struggles in recent years: San Francisco-based companies SpoonRocket, Bento, and Din all shut down last year. (Although, SpoonRocket is rebooting in Brazil under new parent company iFood.) Beriker says Munchery’s business grew 60 percent in 2016 over 2015. He attributes the growth to the company finding a sweet spot between delivery services that drop off ingredients and recipes, which must be assembled by the home cook, and those that simply act as couriers for restaurants, whose food is meant to be consumed immediately and might not hold up well to traveling.

Munchery launched in San Francisco in 2010, and it operates three additional commissary kitchens in Los Angeles, New York, and Seattle. Each serves a large surrounding region: Los Angeles covers all of Southern California, New York extends to Washington DC, San Francisco reaches Sacramento, and Seattle extends to Portland, Ore. In total, Beriker says Munchery can deliver ready-to-eat meals to about one-third of the United States population, with customers ordering on-demand or selecting a future delivery date.

The company sources ingredients on both a national and local scale. With such a large operation, and with meals being made in advance of actual orders, food waste is a problem.

Munchery prepared more than 643,000 meals that were not sold between September 2014 and July 2016, according to Bloomberg, and the company was reportedly losing $5 million per month. Beriker acknowledges the issue — “it’s not good for business” — and says food waste is something he is “addressing vigorously” with data science that he hopes will give the Munchery a better idea of how much food it needs to prepare on a daily basis. In the mean time, some of the excess meals are donated to charities.

Even though Munchery has seen some struggles and lost its founders, and even though the food-delivery sector has proven to be volatile, Beriker sees significant growth in the cards. The company may be looking to add four or five more kitchens to its roster.

“We’re definitely going to expand — it’s just a question of planning and sequencing,” he said. “We feel like within a year and a half, we should be able to cover the entire U.S. population.”

• Food Delivery Startup Munchery Cuts Staff, Parts With Founders [Bloomberg]
• Layoffs at Munchery as Food Delivery Industry Struggles [SFG]
• How One Delivery-Only Service Makes Dinner Without a Restaurant [E]