Meal Delivery Company Freshly Ceases Operations
Freshly has revealed that it is ceasing its direct-to-consumer meal delivery service. The company updated its website in late December with the news.
The fresh-prepared meal delivery provider was founded in New York in 2015 and was acquired by Nestlé in late October 2020. The deal valued Freshly at $950 million, with potential earnouts up to $550 million contingent to the successful growth of the business.
The following year, as the company was riding the COVID-19 meal delivery wave, Freshly revealed that it would open additional facilities in New Jersey and Georgia in 2022 to increase production and order fulfillment capacity. During the time, the company was shipping more than 1 million meals per week to customers in 48 states.
However, since then, the nation has been hit with record high inflation. Consumers are analyzing their spending habits, and luxuries like meal kit delivery are no longer deemed a necessity for cash-strapped shoppers.
Signs of the demise of Freshly’s consumer business appeared in November 2022. Nestlé and finance company L Catterton partnered to combine Freshly and Kettle Cuisine, a manufacturer of fresh artisanal foods for retail and foodservice customers, and gave L Catterton a majority stake in Freshly. The combined company is focused on offering a wide assortment of fresh food products to customers across geographies and a variety of channels.
Following this news, Freshly shut down facilities and reduced its staff by hundreds across the country, according to PYMNTS. A notice filed with the New York State Department of Labor in early December revealed that the company was laying off 138 employees in relation to a plant closure. Additionally, a similar notice filed in Phoenix added another 329 employees to that total, and another notice, as reported by ABC15 Arizona, showed that the company was laying off 454 workers in Maryland.
Other meal delivery companies are also strategizing to stay afloat amid the drop in pandemic-related demand for meal kits. For example, as part of its cost-cutting plans, New York-based Blue Apron said in early December that it was downsizing its corporate workforce by 10%. The news followed a disappointing third quarter as the number of Blue Apron customers fell by 7.7%.
Berlin-based HelloFresh released plans in October to shut down its Bay Area production facility in San Francisco. A letter to the California Employment Development Department, dated Oct. 10, relayed the company’s decision to permanently close the plant on Dec. 11, resulting in the termination of 611 employees, according to reports from MarketWatch.
HelloFresh’s third-quarter performance came in slightly below analyst expectations, with the adjusted EBITDA measure of core profit falling 10% to nearly $72.3 million in U.S. dollars. High marketing costs contributed to the decline.
Meanwhile, according to Freshly’s website, consumers can continue to place orders through Jan. 17, 2023. The final date of shipping will be Jan. 21, 2023.
