The organic food delivery startup Good Eggs, backed by roughly $30 million from Sequoia Capital and Index Ventures according to CrunchBase, confirms to us that it laid off 15 percent of its workforce yesterday, as a part of its plans to restructure the operations side of its business.
The move came shortly after the San Francisco-based startup brought on former Netflix exec Andy Rendich, who most recently joined then left payments startup Clinkle. Now at Good Eggs, he’s running operations there.
Founded in July 2011, Good Eggs has aimed to make it easier for people to buy organic foods produced by independent farmers and other local vendors. The service works something like delivery startup Instacart, but is focused only on locally sourced organic and sustainable produce, meats and other items. Online, customers can shop nearby farms and vendors, then Good Eggs handles packaging those orders and delivering them to customers.
The company currently services the San Francisco Bay Area, L.A., Brooklyn and New Orleans, offering either free or low-cost delivery to customers in those areas, depending on day and time.
However, grocery delivery services are not without their challenges, with even Amazon (via AmazonFresh) taking years to experiment in this space and still requiring customers to pay a $299 annual fee for the convenience of using its service – a price that indicates making grocery delivery profitable is a more-than-difficult task for even those with large coffers.
Meanwhile, competitors like Instacart, which just raised $210 million at a $2 billion+ valuation, has been growing aggressively in the markets it serves, too, but could also struggle with profitability. Past analysis of its pricing indicated it was marking up some items as much as 20 percent in order to make ends meet.
While Good Eggs isn’t necessarily a full-fledged grocery delivery service, given its focus on routing orders from farm-to-table, so to speak, it likely needed some restructuring as it moves forward, given the financial pressures in this space. Specifically, it’s costly for Good Eggs to enter new markets, since it has to establish infrastructure locally, including food hubs where it stores, receives and packages orders.
As of the time of its $21 million Series B in September 2014, Good Eggs reported having 215 people working at the company.
The full company statement, provided by a spokesperson, is below:
Since day one, Good Eggs has operated as a nimble company, which has fueled our growth and allowed us huge gains in efficiency.
As a result of these gains, we’ve been able to restructure our Operations and have made the difficult decision to reduce the size of our teams in our four locations, even as sales continue their strong weekly growth. While we’re becoming leaner in certain areas, we’re continuing to hire and grow. Although this wasn’t an easy decision, we know that it will allow us to scale effectively and ultimately fulfill our mission for years to come.