

Munchery Shuts Down - kposehn
https://techcrunch.com/2019/01/21/munchery-shuts-down/
Got this via email:<p>Since 2010, we have been committed to bringing fresh, local, and delicious meals into your homes along with all our customers across the country. We’ve been delighted to work with world renowned chefs, experiment with diverse and unique ingredients and recipes, and be a part of of your holiday feasts and traditions. We have also enjoyed giving back to our community through meal donations, volunteer service, and so much more.<p>Today, with a heavy heart, we’re reaching out to announce that Munchery is closing its doors and ending operations effective immediately. Any outstanding orders with Munchery will be canceled and refunded. Please allow 2-3 business days for these refunds to process.<p>More than anything, we want to say thank you. Thank you for all of the love and support you have shown us over the years, for sharing us with your friends and family, and for including us in your special life moments.<p>We are so grateful to have had the opportunity to share our dream with you-- it has been truly wonderful. Happy Eating!<p>Team Munchery
======
smohnot
On demand food delivery has several major problems that were all very
predictable

1) you can't predict how much food to make. On demand food companies were
throwing away 30% of the food they made every night

drivers cost ~$25 an hour, and only do ~6 drop offs.

2) lots of idle driver time

3) routes can't be optimized (or only minor optimizations in real-time)

4) on average they are only dropping off 1.3 meals per delivery, making each
meal very expensive to deliver

I helped start [http://Thistle.co](http://Thistle.co) (only in California) to
fix these problems; people order their meals for the week (doesn't work for
everyone obviously) and we drop off 3x/week, with optimal routes and many more
meals per dropoff. The company has been really capital efficient in doing so,
hardly raising any money but doing 10s of millions in revenues.

~~~
tnolet
Wait, why are all pizza, Indian, Thai, Sushi etc. places in my city doing this
and have been for ages if it is so difficult?

~~~
Lazare
At least around here:

1) Pizza is made on demand, quickly, from a small number of relatively non-
perishable, cheap ingredients. You won't throw away a significant dollar value
of raw materials. Also, pizza is popular, and your delivery drivers can stay
busy. Pizza is _so_ suitable for delivery that it's the ur-example.

2) Indian does have long lead times (the sauce cannot be made on demand), but
the core food item is rice (which can be made in advance in bulk, and is also
very cheap), and sauce, but the way the restaurant works is they make up a
small number of sauce bases, cook up some meat, and then combine when the
order is made. You don't necessarily know how much butter chicken will be
ordered in a night, but you can cook batches during the night to adjust to
demand.

3) Thai, around here, is always run out of an existing successful Thai
restaurant, so they can piggy-back off the volume of the restaurant. It also
tends to be a bit pricier, probably to reflect the higher margins. It also
tends to centre around stir-fry, which again is cooked mostly on demand from a
small-ish number of prepared ingredients.

4) Sushi...not popular around here (sushi is, but there is ZERO delivery
options), but sandwiches, mexican, and turkish kebabs are. Again, you can get
a bunch of cheap bread, tortillas, or pitas, a small number of mostly cheap,
mostly non-perishable, mostly interchangable ingredients, and churn out
chicken quesadillas, beef burritos, etc. Leftover bread is a small cost, and
if you're careful you can minimise loss of meat, as you prepare more batches
over the night.

5) Fish and chips (very popular around here), made from frozen ingredients and
a VERY small selection of fresh ones, deep friend on demand.

See a pattern? A lot of "combine cheap starch with some fresh vegetables
and/or meat that can be prepared quickly, ideally from frozen", where in many
cases on-demand labour (putting the sandwich together, putting toppings on the
pizza) will be a major chunk of your inputs, and ingredients will be minimal.
In all cases you're looking at cuisines where it's relatively popular, the
ingredients are relatively cheap, and _critically_ you have a lot of
interchangeability, a small number of ingredients, and low preparation times,
etc. The fish and chip shop doesn't care if they sell 80 scoops of chips or
40, they've got tons spare in the deep freezer, and they're being cooked on
demand; no wastage. Their main concern is just selling enough of _anything_ to
cover the cost of the oil in the deep fryer.

What will NOT work is something like a steak, roasts, ribs, fancy fish; stuff
that has expensive ingredients and (especially) long lead times. You can't
just cook up 40 plates of ribs on spec to see if you'll sell any tonight.
(Well, not and stay in business for long.)

And if we look at the screenshot of Munchery's menu, item 1 is Corn Husk
Roasted Salmon, item 2 is Honey Glazed Pork, item 3 is a side, item 4 is
Roasted Chicken. These are the exact sorts of thing that will wreck your
economics. No doubt they were popular; people are sick of pizza, indian, thai,
mexican, etc as delivery options, especially at $11 a plate! But as the joke
goes, if you lose money on every sale, you can't really make it up in volume.
:)

Edit: Munchery tried to work around this by closing orders early, I think at
2pm, but 1) that's going to lose you some volume and 2) that's still not
enough lead time.

> why are all pizza, Indian, Thai, Sushi etc. places in my city doing this

They're doing something _very_ different.

~~~
ricardobeat
> They're doing something very different.

I don't buy this explanation. I can easily get roasted chicken, honey glazed
pork, salmon, bbq ribs and a ton of other 'complex' dishes delivered with no
fuss and for similar prices. Pizza, thai etc are popular because, well, people
enjoy the food. There is nothing radically different about doing other
cuisines, except messing up logistics or not meeting consumer demand...

~~~
adventured
These VC subsidized delivery businesses are all built to artificially scale
rather than built to necessity, with almost comically predictable results.
Webvan showed us how that works in practice 20 years ago and most of these
latest companies are still repeating its mistakes. Then whoops the cash is
gone and it turns out they never actually had a real business at all (they
were merely net delivering money to customers, a truly extraordinary business
model).

The winners are going to be giants like Amazon that can absorb zero or
negative real margins and can play a very long game until vehicle improvements
(automation + electric) cuts into the delivery cost (and or they'll just find
a way to bundle in other products/services to produce a broader profit).

~~~
Spooky23
Exactly. There isn't a billion dollar market to tagging $5-10 on each Five
Guys order for a 30-75 minute delivery. I order food delivery from these
places about twice a month, and almost never pay anything, due to competitive
pressure. End of the day, I'm never, ever paying $10 to get $20 of burger
delivered.

Even Amazon gave up on paying me to deliver groceries to my home. They would
have a guy in a deli in New Jersey (~200 miles away) slice ham and turkey cold
cuts in the middle of the night, and deliver via USPS by 7:30AM. Truly a
marvel of modern logistics, except they couldn't figure out how to not put big
cans of olive oil on top of eggs or bread.

We probably got an average of $50/week in refunds.

------
lordnacho
As someone who grew up in a restaurant, this seems crazy to me.

This appears to be a restaurant that tries to make every kind of meal, and
deliver it.

"Restauranteur" might well be the second oldest profession. There should be
dozens of people in everyone's network who could tell you how the business
works. The Everything Delivery is also a business model that most people in
the business could critique.

A friend of mine runs a very popular sushi chain in central London. It works,
but only because everything is highly controlled. They know exactly how much
fish people are going to want, and they know when. They know where to deliver
to as well. Having all this knowledge means they are able to cut that fine
line between the minimum cost and the revenue.

------
pbreit
TechCrunch on the shutdown: [https://techcrunch.com/2019/01/21/munchery-shuts-
down/](https://techcrunch.com/2019/01/21/munchery-shuts-down/)

The meal delivery companies all seemed to expand too fast. There were no
economies of scale to be had by geographical expansion. These companies needed
to absolutely nail one or two big metros before even thinking about expansion.

~~~
pfranz
I didn't realize that the name recognition was so regional in this space. I
remember traveling internationally years ago and looking at Yelp for
recommendations. After reading a few reviews and seeing what restaurants had
the highest ratings I could tell that it was mostly used by tourists, not by
locals.

I know for restaurants the real money is made by expanding and sharing the
suppliers, management, advertising, but for something like a delivery app I'm
not sure what the benefit of growing quickly is if you have competition
outside of being first to (that local) market.

------
dawhizkid
With more actual restaurants delivering through Postmates/Door Dash/Uber Eats
there are just a lot more options available from _known_ restaurants. At a
similar price point, I would rather order from a restaurant that I either have
already ordered from or that has good reviews vs a non-restaurant food
delivery service that I don't know anything about.

------
mzmusic
Interesting that on the SAME day I received an email from the Dept of Public
Health re: my complaint re: Munchery's food handling standards, Munchery
announces that they're closing--immediately. It's a shame that, what once was
a really good food delivery service, Munchery lost its 'successful charm'. The
DPH stepped in because I complained that our meals were delivered way after
scheduled time and they were NOT under refrigeration. Unfortunately, my meal
contained raw tune which eventually led to serious food poisoning. After that
incident, I didn't trust Munchery and never ordered from them again. Munchery
began to overload their drivers with far too many orders which made deliveries
late. This indicates a lack of sound infrastructure, greed, and a lack of
concern for their hard-working drivers, as well as the customers who are
receiving meals that are going to make them sick.

~~~
inferiorhuman
I've used Munchery a handful of times back when they were prominently
featuring local chefs. The sushi was always done by these two guys and it was
always mediocre. The only other problems I've had came up later and were:
they've shifted the menu to exclusively bland recipes by the Munchery kitchen
and the delivery became unpredictable.

------
shay_ker
It seems like they just did too much. GrubHub, UberEats, DoorDash are all
significantly difficult without the cost of making food at scale. I'm
impressed that they raised the amount of money they did.

The most interesting work in the food delivery space, IMO, are companies that
want to bring the Deliveroo model to the US:

\- [https://www.cloudkitchens.com/](https://www.cloudkitchens.com/) (aka City
Storage Systems)

\- [https://2ndkitchen.com/](https://2ndkitchen.com/)

It'll be really interesting to watch this space evolve. I wonder if prices
will drop in the long run without sacrificing quality (I'm hopeful, but my
rational side says otherwise)

~~~
atombender
Isn't Deliveroo's model exactly the same as that of GrubHub/Seamless,
DoorDash, Postmates, Caviar, etc.? In Europe, there's also Just Eat and
Foodora in the same space.

Deliveroo has started expanding to use local kitchens (that have no physical
restaurant where diners can go), though you'll also find examples of those on
GrubHub/Seamless.

~~~
shay_ker
> Deliveroo has started expanding to use local kitchens (that have no physical
> restaurant where diners can go), though you'll also find examples of those
> on GrubHub/Seamless.

Not nearly to the same scale as GrubHub. Deliveroo's prep kitchens (called
RooBox or Deliveroo Editions) are a lot more ubiquitous. Additionally,
Deliveroo actually provides & helps prep kitchens, whereas GrubHub is fairly
hands-off when it comes to whether a restaurant has a retail location or is
delivery-only.

Their ability to provide prep kitchens works twofold: 1) Help drive down cost,
and, more importantly, 2) Gets more restaurants on Deliveroo to drive sales.
This is also a perfect touchpoint to sell all sorts of things a restaurant
would want: packaging, point of sale, marketing materials:

[https://restaurants.deliveroo.com/en-
gb/](https://restaurants.deliveroo.com/en-gb/)

The fundamental difference is that GrubHub & UberEats are (mostly) just
delivery. Deliveroo is full vertical integration. I would not be surprised if
they start impacting & controlling supply chains soon.

~~~
FuckOffNeemo
Delvieroo here in Australia doesn't prepare their own food, they just deliver
food in the same light as Ubereats and Menulog. Interesting they have a
different business model internationally.

------
alangpierce
My office has been using them for years for dinner orders, sad to see them go.
We used to use Sprig and Munchery (anyone staying for dinner gets to pick),
but then Sprig shut down, so we moved to a choice between Munchery and a group
Caviar order. Realistically, Munchery hasn't been as popular: we've had maybe
1-5 people order Munchery and 5-15 people order Caviar each day, but it was
nice to have the extra options. One notable downside to Munchery compared with
others was that the food is cold and you need to heat it up yourself. Now with
Muchery gone, I guess we'll try to find some alternative. Definitely sounds
like a tough market.

~~~
jasonkester
Can we take a step back and talk about the management, scheduling, and
boundary issues that are resulting in your needing to order _dinner_ at your
workplace, seemingly _every single night_?

Sounds like something must have gone seriously off the rails over there.

~~~
kkarakk
how else are you going to feed a group of people in a big city? e,having
people make their own food is irritating(and can't be included in "perks"),
having a staff kitchen/canteen is a cost center.

how would you do it better?

~~~
Angostura
> how would you do it better?

I was lucky enough to have bosses who would come around at 5:30 and say 'Oi,
what are you still doing here, go home'

~~~
swish_bob
Quite. We sat down as a team and spoke about sustainability to the one guy who
was working late regularly. And pointed out when he wasn't quite grasping it
that we weren't going to allow code he had written on his own into the
codebase.

You might think it's a sprint. You're wrong.

------
evoheyax
As a driver and biker myself, Munchery had a great culture. We worked really
well together as a team to complete challenging routes in heavy traffic, and 3
months of the year are rainy, which complicates everything.

I think 30% is low. I’ve seen 100+ lobsters, 100+ steaks, 200+ salmon, and
more in a single night. It was very frequent, no one who worked there paid
much for food since you could live on the Munchery diet as we called it. Every
Wednesday, Thursday and Friday (and Sunday at one point too) were big giveaway
days. At least 2000 meals per week were given away.

Best side job ever. But I said this years ago when I started, “how can they
keep giving away this much food?”. I was told it was never a profitiable
buisness and it was kept alive by investors. They did pad the tip pool,
especially around the holidays. But typical pay was between $20-$25 an hour
with tip, $15 without tip. It was less but it’s always been minuniun wage for
SF.

The one thing the food did do was keep everyone very happy and loyal to the
company. Most have been there for 5+ years, a few since near the beginning.

I never understood why they missed the mark so much in predicting the amount
of food. The last few weeks, they have been making less food, letting items
sell out.

My biggest complaint is I didn’t even get notification ahead of time. In the
middle of the shift, they shutdown and told us we’re being laid off. Everyone
is scrambling to find new jobs as no one is getting paid anymore and no one
knew it was coming this quickly, we all thought at least another 6-8 months.
Even a 2 week notice would have been nice. I found it very disrespectful to
just close one day with no notice to your employees that this is coming.

~~~
zizhouwang
Wow that's a lot of food waste! Was upper management really disconnected with
the kitchen staff and delivery drivers? They must have known burning through
that much cash and wasting food is incredibly wasteful and unsustainable
right? I'm really having a hard time getting my head around why management
simply didn't just tighten the belt buckle...

Also assume you were paid by the hour? How many deliveries would you typically
do since traffic is so terrible around the times they deliver?

------
twblalock
It's time that companies who put food in a box and mail it to peoples' houses
stop claiming to be tech companies.

They are just food delivery companies who happen to have websites. Like all
other food delivery companies and restaurants, they are in a cutthroat low-
margin business and a few bad months can kill their company. They have no moat
because anyone else can also deliver food.

~~~
manigandham
Technically, there is no such thing as a tech company. They are all selling
something, usually software directly or better software-powered versions of
existing industries.

Amazon is retail, AWS is IT, Google/Facebook are ad networks, Microsoft/Apple
is hardware and software, etc.

~~~
twblalock
Let me put it this way:

Could people have put food in a box and mailed it to your house before the
invention of computers? Yes.

Could people have offered computer hardware and software before the invention
of computers? Of course not, that's silly.

Of course Microsoft and Google and Apple and Facebook are tech companies. It
requires ridiculous reductionist contortions to argue otherwise.

On the other hand, Munchery could have existed at any time the USPS and
Visa/Mastercard were operational. Restaurants have been delivering food for
far longer than computers have existed.

~~~
solveit
The point is that the boundaries are being blurred. Is Amazon a tech company?
Is Netflix? Is Netflix a tech company if they mailed you CDs instead of
streaming the material?

Doing anything at scale pretty much turns you into a tech company these days.

~~~
twblalock
No, doing things that you could not do without the benefit of technology is
what makes you a tech company. Obviously you can stretch the definition of
technology to mean pretty much anything if you are not arguing in good faith.

I think all of us in 2019 have a fairly standard consensus understanding of
what technology means in the context of this conversation and it would not be
good to hijack that to mean anything you want it to mean.

~~~
manigandham
_> > stretch the definition of technology to mean pretty much anything_

The actual definition[1][2][3] of technology is applied science and knowledge
for practical means. Narrowing the scope to fit arbitrary companies seems like
the real stretch to me.

1\.
[https://en.wikipedia.org/wiki/Technology](https://en.wikipedia.org/wiki/Technology)

2\. [https://www.merriam-
webster.com/dictionary/technology](https://www.merriam-
webster.com/dictionary/technology)

3\. [https://www.open.edu/openlearn/science-maths-
technology/engi...](https://www.open.edu/openlearn/science-maths-
technology/engineering-and-technology/technology/what-technology)

------
twic
> Founded in 2010, the San Francisco-based business had raised a total of $125
> million in venture capital funding, reaching a valuation of $300 million
> with an $87 million round in 2015, according to PitchBook. Munchery was
> backed by Greycroft, ACME Ventures (formerly known as Sherpa Capital), Menlo
> Ventures, e.Ventures, Cota Capital, M13 and more.

I would absolutely love to hear some of these VCs rationales for investing.

~~~
manigandham
Portfolio theory. VC is not about in-depth rational understanding, it’s about
getting into as many deals as possible. Due diligence costs too much.

~~~
tomhoward
They do due diligence to ensure what the founders are pitching is based in
reality - i.e., current sales and growth figures, unit economics, industry
data, general trends.

But they know they can't accurately predict the future so they don't spend
much time trying to do that.

------
ricardobeat
I'd really, really like to see a breakdown of expenses for the company's
operating lifetime. In my mind this amount of funding should let you build
functional nationwide delivery infrastructure, not only three cities, maybe
open 100+ locations; but I'm likely wrong and would love to see how. My first
guess would be most of it is burned on marketing and software development (?).

~~~
notyourday
They overpaid for:

salaries

No one in the restaurant business makes the salaries that restaurant logistics
companies pay.

------
eindiran
For people who might be like me and not know what Munchery is:
[https://munchery.com/](https://munchery.com/)

Curiously, no mention of shutting down on their site that I could see.

~~~
ACow_Adonis
I read their website and I'm still concerned i don't get it. (or maybe that's
why they're shutting down).

So they deliver you the food from their menu? So its just a professional food
business with delivery but without the restaurant/dine-in option? So
presumably their competition is actual professional restaurants and they're
just in the professional food business?

I'm still struggling to understand how this is different from just ordering
food delivered from any other food business? The fact that they
say...presumably with a straight face...that you reheat their meals suggests
to me that they must be pitching to sacrifice quality for convenience, but
they seem to want to believe they're upmarket...

Forgive me, it just doesn't compute?

~~~
x0x0
I've ordered over 200 times.

Munchery is pretty good food, with better variety than sf peninsula
restaurants, and definitely much healthier, delivered cold to your house. The
value is it's waiting when you get home. You reheat it and have a good
(sometimes great!) meal in 5 minutes.

As for local restaurants, there's not great delivery options here,
particularly if you don't want pizza or sandwiches.

------
k_sh
I could've sworn that they closed down a year or two ago. Are you sure you
just got this?

Edit: yeah, looks like this happened 8 months ago
([https://munchery.com/blog/a-letter-to-the-munchery-
community...](https://munchery.com/blog/a-letter-to-the-munchery-community/))

Edit 2: oops, that was only NYC and Seattle - looks like I remembered
incorrectly!

~~~
dman
Maybe they are shutting down by geography?

~~~
amaterasu
Looks like 3 cities, [https://www.fastcompany.com/40571483/munchery-is-
shutting-do...](https://www.fastcompany.com/40571483/munchery-is-shutting-
down-in-three-cities-and-cutting-staff)

------
brianbreslin
This is unfortunate. I would hope we see a postmortem to get a better
understanding of what went wrong. This information could be incredibly
valuable to other founders working on similar challenges.

~~~
fmajid
The business model of losing money on every sale, but making up for it with
volume, turned out to be unsustainable, who knew?

It was nice to get VC-subsidized dinners while it lasted.

~~~
exogeny
It's amazing to me how few companies get this, and even more amazing that they
ever find funding, much less multiple rounds.

------
rchaud
$125 million raised, and they only cover the Bay Area, the most competitive
market for this kind of service?

Is there even $126m of value in delivering food in an area with a population
of 7 million?

------
bluejellybean
This is a sad announcement for a service I didn't even know existed.

Over the last few months my schedule has gotten extremely busy and I haven't
had time to do any of my normal cooking. I've been just grabbing fast food and
putting on more weight than I would like. Toying with the idea of hiring a
personal chef along with a nutritionist to plan/prepare meals, I was hoping to
have a high quality meal served within seconds of walking in the door.
Basically eliminate the stress of dinner and poor diet. I seriously wish I
would have heard of this service as it solves my problem in a vastly less
expensive way.

So yeah, sorry to hear of the closure and I wish everyone over there the best
of luck on future projects.

~~~
seibelj
I don't know where you live, but most places there are healthier options for
takeout (like salad). A personal chef is much more expensive than you think.

~~~
xfitm3
I’ve hired a chef to do meal prep, it’s not that expensive and the food was
fantastic.

~~~
twic
This conversation is pretty meaningless without numbers on "not that
expensive" and "more expensive than you think".

~~~
xfitm3
You’re right. I paid $300 plus food costs for a week of meals.

~~~
UncleMeat
15,000 a year. That's a lot.

------
Mtinie
Does anyone have a rough idea what proportion of expenses Munchery spent on?

* marketing and promotional costs

* management overhead and office expenses

Perhaps I’m naive, but looking at their fundraising history, $125M in
investment should have been more than adequate to cover launch and build-out
costs, considering their core food supply costs would have been covered by
actual customers’ order fees.

Is this another example of scaling prematurely and hoping you can recoup all
of the massive promotional expenses you’ve employed once you have major
regional markets under your thumb?

Generally expensive corporate office space rates in the Bay Area, Los Angeles,
Seattle, and New York don’t often help, either.

Edit: Added clarification of questions.

------
randomacct3847
I’m waiting for a “book the cook” food delivery service where I can ask a chef
to cook whatever, get a quote, pay for it and have it delivered.

------
Balgair
Word is that all the 'employees'(1099ers) found out this morning. In somewhat
understandable angst, they've cleaned the place over, bringing in trucks to
take all the now un-used heaters, ovens, and all the soon to be spoiled food.
Rent is due in 10 days afterall.

So, if you are in the market for some industrial grade kitchen supplies, now
is the time to act on that impulse!

------
Smushman
There goes my $500 gift certificate... Any suggestions on how I can recover
that, or have it returned to the initial buyer?!

~~~
ThrustVectoring
Ask the initial buyer to file a chargeback if it was purchased via credit
card. At least in the US, there's good protections that way for preventing
folks from owing money for goods and services they didn't receive.

~~~
brianpgordon
But they did receive the gift card. Why should the payment processor assume
the risk that, possibly years later, someone doesn't honor the gift card?

~~~
ThrustVectoring
They're not assuming the risk, the merchant bank is. And the merchant bank
should be mitigating that via holding back a portion of credit card receipts
from companies for the specific purpose of honoring chargeback demands.

------
x0x0
Edit: I read a stale link. My bad.

\---

I live in the bay area, have ordered over 200 times with Munchery, and haven't
gotten any shutdown email.

All meals are shown as sold-out through Friday. Normally you can order up
until 2pm the day of.

------
robjan
One thing that I don't understand is why the Social Team are still posting
food porn even after this message. Have they not been informed yet?

~~~
coke12
They're probably using this:
[https://hootsuite.com/platform/scheduling](https://hootsuite.com/platform/scheduling)

~~~
Kye
They're using Twitter Media Studio according to the app tag in TweetDeck.

[https://media.twitter.com/en_us/articles/products/2018/media...](https://media.twitter.com/en_us/articles/products/2018/media-
studio.html)

------
stratigos
youve released some great talent into the world. munchery developers are some
of the best ive worked with :)

------
masonic
(deleted)

~~~
drblue
That article is from May of last year.

(I also just got the email that OP quoted.)

~~~
masonic
I did check their own site first. The lack of indication of problems
misdirected me. They even have job postings still up.

