- Fridge No More went out of business in early March after DoorDash pulled out of a store.
- Employees say the startup had big plans for expansion but couldn’t raise another round of funding.
- Problems with bikes and scooters also prevented grocery delivery in 15 minutes.
When Fridge No More’s deal with DoorDash fell through earlier this month, a former employee knew something was wrong when he picked up the phone and heard crying on the other end.
“My heart literally jumped out of my chest,” the clerk said. “At first I thought it was something I did.”
It was a shocking end to the employee’s time at Fridge No More: They had worked their way up from picking orders at one of the startup’s stores to management and expected to move to DoorDash once the deal closed.
The fate of Fridge No More was beyond the control of most, if not all, of the company’s employees.
Insider received emails from the founders of Fridge No More earlier this month, telling their team that DoorDash had agreed to take on the 15-minute delivery launch in February. However, former employees of Fridge No More said DoorDash backed out of the deal on March 9 without giving a reason.
As a result, Fridge No More founders Anton Gladkoborodov and Pavel Danilov were forced to close the store after opening their first store in October 2020.
“They dropped the bomb on us at the last minute,” the former employee added, referring to DoorDash. In all, 670 Fridge No More employees lost their jobs when the company shut down, Danilov told Insider.
A DoorDash spokesperson told Insider, “We have a very high bar for deals of various types. As a general rule, we evaluate deals based on several criteria, including quality of the team, efficient access to new products or markets, and long-term long-term profit potential.”
“If an opportunity doesn’t meet our criteria, we pass it on,” the spokesperson added.
A person close to DoorDash said the delivery service wants to buy Fridge No More assets like equipment and bearings, not the entire company.
Fridge No More was one of two rapid delivery startups that collapsed in March. Buyk, another rapid-delivery startup, also closed this month after sanctions made it impossible to receive funding from its Russia-headquartered parent company Samokat.
After raising millions and growing rapidly during the pandemic, many ultra-fast food delivery startups are facing a more competitive market. In addition to Fridge No More and Buyk, several competitors are trying to expand the model, including Gorillas, Getir and Jokr.
Even Gopuff, which has a several-year lead over the upstarts, is laying off hundreds of employees and dealing with executive turnover that could jeopardize its plans to go public this year, The Information reported on Tuesday.
Insider spoke to seven former employees of Fridge No More and the startup’s co-founder Pavel Danilov. Her work experiences with the company have ranged from packing and delivering orders to more senior staff managing the 30 or so stores that Fridge No More operated prior to the closure.
The employees asked for anonymity in order to speak openly about the company. Her identity is known to insiders.
sign of struggle
At the time of its demise, Fridge No More was delivering groceries and other household goods in New York and Boston.
According to a former employee, the company had also been scouting storefronts in Philadelphia and was about to sign a lease on a former Japanese supermarket in the Long Island suburb of Great Neck.
In Great Neck, Fridge No More planned to use mopeds to deliver groceries to addresses up to 3 miles from its store, the employee said. That would have been three times the radius it served in New York City.
Many of those who ran Fridge No More’s operations worked their way up from couriers and packers. For many it was a chance to get on the ground floor of an interesting startup and a growing industry.
This made the sudden collapse of the company even more difficult.
“It was devastating,” said an employee who has been with Fridge No More since the first Brooklyn stores opened. “But at the same time it was a startup. You know it’s a possibility that can happen.”
The staff Insider spoke to agreed that ultra-fast food delivery has a future in big cities like New York. They also expect more startups to go bust and few companies to stay in business long-term, a view shared by some analysts who follow ultra-fast delivery companies.
In contrast, Fridge No More was funded by DoorDash Capital prior to its failed deal. The company previously raised $17 million, most of it from a Series A round led by private equity and venture capital firm Insight Partners.
Last fall, the startup planned to run a Series B round, according to two former employees. One of them estimated the round could be worth as much as $70 million.
But when Fridge No More couldn’t seal this new funding, it began looking for alternatives.
“The market was perceived as risky by investors,” Danilov said, especially with so many competitors in the ultra-fast delivery space.
“The way they thought about it was more about capital than having the best product,” he said.
Between November and February, some employees noticed signs that led them to believe the startup might be struggling with cash flow.
On three occasions, a former employee said, Fridge No More had to spend weeks paying the company’s street teams, who promoted the company at events and public places across New York.
“You would be willing to work that day and you would call your team leader,” only to find out there was no work that day, the employee said.
Another store official said the company moved from a loose system for buying office supplies and other basic necessities to a much stricter one in early 2022.
“Suddenly everything had to be budgeted, everything had to be approved,” said the employee. “No reason was really given.”
Danilov told Insider that Fridge No More reduced the road team’s hours and began monitoring utility costs more closely to “optimize” the business, especially as its available capital became limited.
The surviving ultra-fast services must solve the same problems that faced Fridge No More, former employees told Insider.
One makes customers buy more with each order. Fridge No More and competitors such as Jokr, Gorillas and Getir have advertised to customers that they can only accept single-item orders, such as B. an apple will deliver.
Danilov said Fridge No More’s average order value was about $30, although the company was keen to increase it and make orders more profitable by scheduling employees after peak periods, getting better deals with suppliers and the Sales increased from its warehouse in New Jersey.
The average Gopuff order value in February was $26.07, according to transactional data company Earnest.
The e-scooters and bicycles the startup uses to deliver orders have also been a source of complications, two employees told Insider.
According to an employee, Fridge No More’s fleet was not designed for the continuous use that the company required.
Individual Fridge No More stores could fulfill dozens of orders per day, each round trip being up to 2 miles long. Scooters and bicycles regularly had to be taken out of service for repairs or, more often, because the batteries were dead.
These breakdowns, as well as thefts of the company’s vehicles from its stores, are the reason for many of the company’s late deliveries, the former employee said.
“They’re not really built for this kind of work,” the employee said. “We can have seven people ready for deliveries, but if the bikes die, there’s nothing you can do.”
At one point, Fridge No More was in contact with a Chinese manufacturer to create customized electric vehicles, but the plan never materialized, the former employee said.
Danilov said Fridge No More tries to use readily available vehicles and doesn’t have the resources to buy “infinite scooters.”
“We’ve tried to use our fleet as efficiently as possible,” he said, adding that the company probably would have bought better vehicles if it had kept opening stores and gotten a better deal in a bulk purchase.
The high turnover among the couriers who prepare and deliver orders is also a problem, an employee said.
But one area where Fridge No More excelled was its merchandising strategy. In a Brooklyn neighborhood home to many Orthodox Jewish consumers, Fridge No More carried kosher Doritos chips — a favorite that regularly sold out, a former employee said.
The remaining ultra-fast delivery companies will similarly need to get creative to survive in the crowded sector, the staffer said.
“If they’re just selling groceries, it’s going to be hard to scale,” they said.
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