Chef’d, a the meal-kit operator, has halted its business operations after using up all its cash and failing to line up more of it.
The Wall Street Journal, citing people familiar with the matter, reported that during the past few months the startup, which was valued at about $160 million last year, burned through its cash from venture capitalists and food companies including Campbell Soup and Smithfield Foods. At the same time that it was burning through its cash, executives and junior level employees were jumping ship. Executives tried to secure new funding from private investors and banks, but nothing came of the negotiations. “Due to some unexpected circumstances with the funding and business, I regret to inform that Chef’d has ceased all operations until our investors and lenders decide the final fate of the company,” the company’s chief technology officer wrote in an email to a supplier Tuesday (July 17), reported the Wall Street Journal. “Consequently, please cease all work associated with Chef’d.” Meanwhile, a spokeswoman for Chef’d told the paper she was not longer under a retainer by the company.
Chef’d isn’t the first meal kit company to struggle in a marketplace that is crowded and costly to keep customers coming back. Chef’d was an early player in selling boxed meals both in stores and via the Internet. While it was able to ink deals with large food companies and diet plans, it was tough to run the operation — and thus the cash burn rate. Citing an analysis of anonymized credit and debit card transactions by Second Measure, the data firm, the Wall Street Journal reported Chef’d sales declined by a large amount since March. Peter Testa, president of the Chicago-based Testa Produce Inc., a major wholesaler that has supplied Chef’d said the accounts have fallen behind. “They are definitely having growing pains,” he said. “It is a tough business.”
The shuttering of operations comes just a few weeks after it entered into distribution deals with Costco, Harris Teeter, Tops, Hy-vee, Weis and Gelson’s Markets. The push came via a partnership with Smithfield Foods — a brand best known for its meat processing — which has invested $25 million into the meal kit startup.