On-demand food delivery startup Munchery has a new chief executive officer. James Beriker, the former CEO of Simply Hired, is taking the place of Munchery co-founder Tri Tran, who is now the company’s chief strategy officer, the company announced today. The appointment comes on the same day Bloomberg reported that Munchery has struggled to improve its margins, makes more food than it sells — and ends up either donating or throwing some of it away — and spends too much money on marketing.
The on-demand food company wastes an average of 16 percent of the food it makes, according to internal documents obtained by Bloomberg. Munchery has also reportedly spent “hundreds of thousands of dollars” just placing on doors flyers offering discounts. But Tran said in a statement to TechCrunch that Munchery donates at the end of the day the food it doesn’t sell, and ultimately tries to keep overproduction of food to a minimum.
Munchery doesn’t waste food. Anything not sold is donated at the end of each day to organizations that deliver them to the homeless and other residents in need. We take deep pride in this.
We try to keep overproduction to a minimum. We have made progress as a startup but we are always trying to do better.
The proper amount of production is a challenge that all food businesses deal with. Restaurants, catering facilities, and even online platforms like ours have to determine how much food to produce ahead of demand. We predict customer demand on a weekly basis, and execute our menu ahead of customer orders. We are continuing to try to strike the right balance.
But tumult is nothing new for Munchery. In March, Munchery lost its chief customer experience officer, La Boulange founder Pascal Rigo, just five months after joining the company. At the time, Rigo said he left because he didn’t share Munchery’s strategy for growth and vision for the future anymore. In a recent interview with Bloomberg, Rigo elaborated, saying that he didn’t think it was worth the time “to chase artificial growth alone.” He also said that Munchery lacked transparency around customer churn.
In the last year, Munchery has tried a few different strategies — from Blue Apron-esque meal recipe and ingredient delivery to corporate lunch plans. In April, Munchery launched its second go at a membership program in order to try to increase its addressable market, Tran told me at the time.
For what it’s worth, Munchery isn’t the only food company struggling. And, to be honest, struggling in some way or another in this space seems to be more of the norm than the exception these days. Blue Apron, for example, has serious health and safety issues in its Richmond warehouses, according to a report by BuzzFeed.
Meanwhile, Munchery competitor Sprig paused its delivery service in Chicago, let go its drivers and kitchen staff in Chicago and laid off seven members across its marketing and operations teams. Though, in Sprig’s case, its CEO Gagan Biyani said those changes were being made proactively.
Munchery has raised about $120 million and is looking to raise more, according to Bloomberg. Munchery says it is profitable in San Francisco, and “contribution margin positive” in its three other markets.
“One would be hard pressed to find a competitor that could make these claims,” Tran said in a statement to TechCrunch. “And even more importantly, our customer base and revenue are growing.”