Munchery Shuts Down Operations in LA, New York and Seattle

We've ordered (I just checked!) 170 times. Pretty much twice a week since mid 2016.

They deliver pretty good, pretty healthy food that is worlds better than anything frozen that is ready to eat with 5-ish minutes of effort. It's awesome for two working adults.

Logistically it’s not on demand, but rather delivery with reasonable advanced notice.

For me the value proposition is very high quality meals and a forcing function to do something mindful in making them ... typically my wife and I make them together. This is helped tremendously by the fact I work from home.

I do hope the market is there to keep sun basket going.

Blue Apron is not bad tho

What I will miss most about Blue Apron after they go out of business are their Pod Save America ads.

-pizza is still good when it's merely warm (whereas pasta/chicken aren't)

-pizza doesn't come in individual servings (you don't order $2.50 slices. pizza delivery has effective $10+ order minimums)

-margins on pizza are huge (it's literally just a cheese sandwich. the cost of a large domino's pizza is <$2.50 iirc; margins on fancier food are not as high)

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.

I don't know the LA market if you take New York, there is already an extremely efficient low-cost food delivery market where the vast majority of restaurants do take-out and various ordering services (seamless etc) are available and very frequently used. It's going to be extremely difficult to get good market penetration with unit economics that allow for a profitable business in the long term.

A lot of people focus purely on an improved user experience (eg the magic of uber where you click and a car comes, and you just get out without paying at the end) but "disruption" of the established UX isn't enough - you need to provide goods and services at a price point where there is demand and yet somehow you still make enough to stay in business.

Blue Apron spends about a million dollars on marketing. Every 2 days. I am using them as an example because they're publicly traded and so that number is conveniently available; I don't believe them to be grossly out of line with the other delivery startups.

(To be fair to the startups: they're attempting to change a core cultural ritual! That's not a quick or easy sell.)

~$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.

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.