The West Coast meal-delivery service Sprig shut down on Friday. In a message sent to customers, CEO Gagan Biyani wrote that “the demand for Sprig’s convenient, high-quality food was always incredibly high, but the complexity of owning meal production through delivery at scale was a challenge.” The shutdown was first reported by The Information.
Sprig joins a growing list of shuttered startups, including SpoonRocket and Maple, which sought to deliver meals made in large, centralized kitchens. Similar services Munchery and Zesty have cut staff recently. About 200 Sprig staffers are said to be affected by its shutdown.
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Sprig had raised more than $56 million from investors including Greylock Partners, Accel Partners, and Battery Ventures, but struggled to find a sustainable model and expand. Sprig had not only its own kitchens, but its own drivers, and in some cases sought to deliver to customers within minutes.
Last July, Sprig ‘paused’ its service in Chicago, leaving it serving only San Francisco. Even with that smaller footprint, Bloomberg recently reported the company was losing a staggering $850,000 per month – though even that pales in comparison to Munchery, which has lost as much as $5 million a month.
Sprig’s shutdown casts further doubt on whether surviving meal delivery services, most of which have pursued funding from tech-focused venture capitalists, can eventually show the same scalable growth as actual technology companies. Meal services are labor- and logistics-intensive, and startups that design and cook their own food have struggled for efficiency. Many meal-service startups have relied on venture funds to deeply subsidize their prices to customers.
Some companies that provide a portal for deliveries from local restaurants, rather than owning their own kitchens, have shown better performance. Grubhub Inc., which also owns the Seamless app, reported $13.6 million in profit on $137.5 million in revenue in 2016.