
Munchery Shuts Down Operations in LA, New York and Seattle - prostoalex
https://techcrunch.com/2018/05/11/munchery-shuts-down-operations-in-la-new-york-and-seattle/
======
ransom1538
You make food (a competitive, capital intensive, low margin endeavor - all
with rotting inventory) then you deliver it (a man hour intensive, operational
& insurance nightmare). AND after you do all this, the person looks at their
meal and shrugs their shoulders wondering if it was worth the $10. I am not
saying Munchery was _bad_ it was just swimming upstream.

~~~
FullyFunctional
YMMV, but my family relies heavily on Munchery and it's one of those "Silicon
Valley" inventions that has made our life better. Generally the food is good
and _healthy_ and avoids a lot of waste (time and material). It's all about
logistics and I hope they come through the difficult time.

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jonathanjaeger
I'm not surprised -- I bet more will fall. Blue Apron dominates the ad space
(I struggle to understand how the unit economics work out with their podcast
ad spend..), but I'm a fan of their service and started it a few weeks back. I
know not all meal kit services or pre-prepared services are identical in
structure, but just acquiring customers that can be very fickle must be
insanely difficult with a low margin business like food delivery.

~~~
asdsa5325
Blue Apron is burning money like crazy, investors are just propping it up.

~~~
twblalock
Plus they have no moat. If Amazon decided to compete in that space, they could
have a service up and running in less than a year that would destroy Blue
Apron and similar companies.

~~~
SeeDave
Amazon already offers subscription-less premium mealkits via a partnership
with Martha Stewart/Marley Spoon [1] and more affordable options via their
Tyson Tastemakers partnership [2].

[1]
[https://www.amazon.com/b?ie=UTF8&node=14828691011](https://www.amazon.com/b?ie=UTF8&node=14828691011)

[2]
[https://www.amazon.com/b?ie=UTF8&node=16207550011](https://www.amazon.com/b?ie=UTF8&node=16207550011)

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azinman2
Seems like Silicon Valley is learning that “restaurants” are hard, and
thinking of things in terms of “software” and “optimization” doesn’t allow VC
money to magically solve the fundamental problems. All are struggling except
postmates which doesn’t carry any of the real burden themselves. They just
need to make logistics and delivery cheap enough, often enough.

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fluxic
A great in-depth look at the shaky unit economics of the food delivery
business model:

The Food Delivery Death Star [https://medium.com/@review/the-food-delivery-
death-star-85f9...](https://medium.com/@review/the-food-delivery-death-
star-85f9a121313)

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tzs
Pizza delivery seems to be doing fine, and has been doing fine for a long
time, from the largest cities all the way down to small towns.

What is it about the pizza business that lets it thrive with delivery, while
so many of these food delivery startups struggle?

~~~
mayniac
What I've heard from friends who've worked in pizza delivery places, as well
as making it from scratch myself on occasion, the margins are insanely high.
Which makes sense considering it was originally a peasant food.

Pizza dough is just flour. yeast and water. All of which cost pennies. Sauce
is slightly more expensive, but you can make something which tastes pretty
close to fresh with some canned tomatoes and spices which also cost pennies.
Cheese is cheap, there's no need to use fresh expensive mozzarella when you're
blasting it in the oven anyway, the low quality pre-grated stuff will turn out
pretty good too. Toppings are usually fairly low quality, which again doesn't
really matter when they're scattered on a pizza.

When I make it at home it usually costs me about £3, and that's indulging
myself with better quality ingredients like fresh mozzarella and tomatoes.
Delivery places can get it down to £1, including toppings, and sell it on for
£10. The staff are all on minimum wage, you don't need much space if you don't
have seating, and at least where I live in London 9/10 delivery drivers use
mopeds which are cheap to run.

Compare that to Munchery, where looking at the site they're offering fresh
vegetables and cuts of meat for probably similar prices to pizza and you can
see where the problem lies. That and being based in SF I have no doubt they've
gone full Silicon Valley with their offices (communal spaces, very high sq/ft
per employee, high wages etc) and it becomes clear why their business model is
probably not sustainable.

~~~
tptacek
You don't have to work out COGS for a restaurant from first principles. Food
costs are one of the most discussed and reported topics in the restaurant
business, and all major food businesses optimize them.

Which means this isn't a persuasive answer to the question 'tzs asked. Lots of
restaurants have low food cost. And pizza restaurants aren't the most
efficient category of restaurant. Why don't the even-more-efficient kinds of
restaurants deliver too, if pizza's food cost sets some kind of frontier for
viable delivery?

I think factors other than food cost are at play.

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moonka
I used to use it quite a bit when they launched in Seattle, but we stopped as
the menu started to feel very repetitive, and with the price increases we
could order form a variety of other places for the same price.

Oddly enough, there is a farewell item available for delivery Monday for $100.
Wonder if it's an actual item.

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mindfulplay
Amazing concept: where you allow the general public to benefit from investor
money.

Let's enjoy these dirt cheap services while they burn through investor money.
It certainly won't last long. But it's great while it lasts. I enjoy my share
of door dash delivery that's funded by some nice investors. /s I almost
certainly won't use it when they start charging any sort of real money.

Now scale this thinking to millions of people and you have a nice little
disaster.

~~~
rkho
I went to make an order from a restaurant that was about a ten minute drive
from my house. On a $45 cart, I was hit with:

~$8 "service fee"

$8 "delivery fee"

And a variable tip percentage that defaulted to ~$9

Add tax to the matter and this "$45" order quickly ballooned into almost $75.

I don't mind tipping -- I've come to accept that American society refuses to
let that one go -- but at these rates I decided to just place the order myself
on the phone with the place, drive over, pick it up, and tip the restaurant
directly.

~~~
timcederman
And there's often also the hidden upcharge on menu prices.

~~~
rkho
Exactly. Some services will add a variable percentage increase to all menu
prices.

It also turns out the quoted cart that Doordash gave me was $10 below actual
cost at the restaurant, and from past experiences on other platforms I'm under
the impression that Doordash would not have been willing to eat the
miscalculation either.

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Eridrus
That sucks, I liked Munchery quite a bit. Their ready to heat meals were
pretty tasty, especially for something you could just pull out of the fridge
and have ready in 15 minutes.

~~~
adamredwoods
We liked it, too, especially because we're working parents. Their delivery was
excellent, timely, and let you know if they were late.

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vermontdevil
Kroger is offering these meal kits now. The bonus is no subscription. You go
to the nearest one and buy what you like.

I’m sure other large grocery chains are doing the same thing.

~~~
busterarm
Publix is as well. My 75 year old mother saw them in the store by mere chance
and now she's a steady customer.

~~~
toomuchtodo
Publix is a Floridian treasure.

~~~
josephpmay
Publix is a national treasure only available in Florida (and a few other
states) :)

~~~
busterarm
South Carolina! :D

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crsv
Their CEO did an interesting interview a while back on This Week In Startups.
As I recall he seemed to reflect this serene confidence in their ability to
scale and had a keen eye for the unit economics... but that being said the
service just didn't make a lot of sense. I feel like the target demographic is
what actually didn't scale, and the brute force of the sanity check of people
getting ready made food delivered for 12-15 bucks a meal was something that
didn't resonate outside an minority of the upper middle class.

~~~
x0x0
Munchery costs a $10-ish monthly subscription and then 2 meals costs you about
$35-$38 delivered.

We're nothing like upper middle class, and we eat munchery twice a week. It's
only a bit more expensive than pizza around here, and way way better. And much
healthier.

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ggg9990
This entire space will eventually be dominated by Costco for pickup and Amazon
for delivered.

~~~
jdavis703
Why do you think Costco won't start doing deliveries? Amazon can target urban,
suburban and rural customers. Costco -- with their current model -- only
really gets suburban customers.

~~~
ggg9990
I think Amazon’s investment in delivery infrastructure will eventually
outcompete everyone.

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listenallyall
The article mentions "on-demand food delivery" at least twice. What other kind
of food delivery is there? Is there a startup that will bring you food while
you're asleep, or after you just finished eating?

~~~
mynameisvlad
Scheduled food delivery, at a specific time weekly, usually you get multiple
days' worth of food at a time.

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ulfw
Sad to say but that is what happens when you’re in the Silicon Valley bubble
solving nothing but SF/SV problems.

It would be great if more startups start across the US and the globe trying to
solve problem the majority of people face rather than a small group of locals.

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jppope
Munchery was not a good company. Check out Sunbasket and green chef if you
were using Munchery. (just a fan... no affiliation)

~~~
seattle_spring
Can you explain why Munchery is "a bad company," And why those other 2 are
better?

~~~
jppope
Here's some stuff from a google search to substantiate claims on my preferred
food services:

[Buzzfeed]([https://www.buzzfeed.com/hannahloewentheil/meal-kit-
subcript...](https://www.buzzfeed.com/hannahloewentheil/meal-kit-subcription-
boxes-review))

[pcmag.com]([https://www.pcmag.com/roundup/353192/the-best-meal-kit-
deliv...](https://www.pcmag.com/roundup/353192/the-best-meal-kit-delivery-
services))

[reviewed.com]([http://cooking.reviewed.com/best-right-now/the-best-meal-
kit...](http://cooking.reviewed.com/best-right-now/the-best-meal-kit-delivery-
services))

[time.com]([http://time.com/money/4856342/best-meal-kits-
value/](http://time.com/money/4856342/best-meal-kits-value/))

Regarding opinions about Muchery... it's an opinion.

