Pandemic Bellwether Services Like Food Delivery Go Out of Business

Decline of the Nice-to-Have Economy

Goodbye, used-car vending machines and 15-minute meal delivery. It’s the decline of what columnist Christopher @mims calls the “nice-to-have” economy. https://t.co/w8nnmDlCQg

— The Wall Street Journal (@WSJ) January 28, 2023

The Wall Street Journal discusses The Decline of the Nice-to-Have Economy

• In 2020, Nestlé bought Freshly, a home-meal delivery service, for $950 million. At its peak during the pandemic, Freshly said it was delivering more than one million meals a week to Americans. Yet Nestlé is shutting down home delivery of Freshly meals this month, citing shifting consumer demand. Nestlé didn’t respond to requests for comment.
• Meal-kit startup Blue Apron‘s revenue has declined and its valuation has collapsed, and the company is now in danger of being delisted from the New York Stock Exchange as its share price lingers below $1. Blue Apron didn’t respond to requests for comment.
• The meal-kit market leader, Berlin-based HelloFresh, has fared better. The company saw a spike in demand during the pandemic, and anticipates continued growth in revenue of at least 25%, year over year, according to a spokeswoman. HelloFresh’s profits have shrunk due to higher food and marketing costs, however, as it tries to retain customers who are rethinking their household budgets, the company has said.
• In the so-called 15-minute delivery category, the ultimate pandemic-era indulgence, many startups have already thrown in the towel. In March, New York and Chicago instant delivery startup Buyk declared bankruptcy. In June, Jokr ended its operations in the U.S. And in December, embattled delivery startup Gorillas sold itself to larger and more successful rival Getir.
• As for companies delivering hot food from restaurants, DoorDash has said its customers are changing their behavior by ordering fewer items or choosing cheaper options, such as fast food. This has contributed to slower revenue growth for DoorDash and competitors such as Uber Eats. 

Other Services 

Disruptions and bankruptcy woes go beyond food services. 

• Peloton Interactive’s Revenue has been falling and its stock price is down 92% from its all-time high in January 2021. Chief Executive Barry McCarthy said in October that if his plan to cut costs doesn’t succeed, Peloton isn’t viable as a company. 
• Online used-car shopping startup Carvana seemed a perfect fit for the pandemic era, with its zero-touch, haggle-free sales and delivery straight to buyers’ doors. Now it is suffering. Sales, which grew throughout the pandemic, are now shrinking, and its stock has dropped 98% from its peak in 2021. The company has accumulated more than $7 billion in debt, laid off more than a fifth of its staff in 2022, and is continuing to quietly terminate positions. 
• The valuation of Stitch Fix, an online personal-styling service that delivers clothes, is down more than 95% since its peak in early 2021. Its CEO has stepped down, and it recently announced it will cut 20% of its salaried workforce. 

This post originated at MishTalk.Com.

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