This is the fifth entry in our Shutdown Files series. Most of the stories in this series focus on founders and investors. This one is worth telling because of who got hurt instead, the small businesses and workers who had no say in the company’s decisions.
The Company
Munchery was a prepared meal delivery service based in San Francisco, offering chef made dinners delivered to your door, positioned as a step above typical takeout and a step below cooking from scratch. At its peak the company operated in multiple major cities including Los Angeles, New York, and Seattle, and raised well over 100 million dollars in venture funding.
What Actually Went Wrong
The economics of cooking fresh meals, storing them safely, and delivering them before they went bad never fully worked at scale. Food waste, inventory forecasting, and delivery costs ate into margins constantly. The warning signs were visible well before the end. In an earlier round of cuts, Munchery laid off 257 employees, about 30 percent of its workforce, and shut down operations in Seattle, Los Angeles, and New York, retreating back to its home market in an attempt to survive.
When They Decided to Give Up
The end came suddenly. On January 21, 2019, CEO James Beriker told employees the business was closing immediately, that day would be their last, and there would be no severance. Final paychecks were reportedly handed out in person rather than through normal payroll, a detail that gives some sense of how little runway the company had left by the time the decision was made.
What Investors Got
Investors lost the bulk of the more than 100 million dollars put into the company, with no acquisition or meaningful asset sale on record. But the more striking damage was closer to the ground. Former employees sued the company for unpaid wages under laws requiring 60 days notice before mass layoffs. Small food vendors were left owed real money, in some cases tens of thousands of dollars, with no notice that the company was about to stop paying them. One bakery owner was reportedly owed more than 20,000 dollars for an order delivered before Thanksgiving that was never paid for. Another vendor had entered a 14 month payment plan to recover close to 150,000 dollars in debt that Munchery never finished paying back.
What Happened Next
The legal fallout continued well past the shutdown itself, with lawsuits from both former employees and vendors working through the courts for actual compensation owed to them. Munchery is frequently cited in later discussions of startup failures specifically because of how it closed, not just that it closed, as an example of how abruptly ending operations can push the real cost of a failure onto the people with the least power to absorb it.
Why We Wrote This
This is the fifth entry in our Shutdown Files series, following Quibi, Homejoy, Secret, and Sprig. Learn more about how we approach stories like this on our Brand Guidelines page, or read about what Wolvra stands for on our About Us page. Have a shutdown story we should cover? Reach us through Contact Us.