Misfits Market, Imperfect Foods Layoff 20% of Company

Weeks after closing its acquisition of online retailer Imperfect Foods, “ugly” food marketplace Misfits Market laid off over 80 employees last week as it moves to streamline operations.

“The decision to part ways with these individuals was not made lightly, but was an unfortunate reality of our business combination,” Misfits CEO and founder Abhi Ramesh posted to LinkedIn. “These are colleagues and friends who have been integral to our shared mission of trying to build a more accessible, sustainable food system, and I am so grateful for all of their contributions to both Imperfect and Misfits.”

In total 82 employees, roughly 20% of the total workforce, were laid off last week, company spokesperson Ken Shuman told NOSH. The cuts were almost evenly distributed across both Misfits and Imperfect staff, he said, and were not based on tenure or performance. Though all departments were impacted, marketing and engineering, and IT teams saw the biggest cuts, while buying, merchandising, logistics and supply chain teams saw the least turnover.

Jem Wilner, former category manager for Imperfect, noted on LinkedIn that these were “strategic decisions” made by the executive team and “by all accounts, managers were not even consulted and this was instead about filling the correct ‘slots’ of the new organization structure.” Former Imperfect SVP of marketing, Sam Nam, cited “macroeconomic trends” as a cause. To that effect, Shuman said the company will continue to hire in departments that will help the company achieve profitability.

Misfits is launching an alumni network to connect former staff with recruiters and hiring managers.

For brands who sell on either retailer, it should be “business as usual,” Shuman said, with the layoffs having no impact to onboarding or category management. By merging the two platforms, he added, Misfits will ultimately be able to make larger purchase orders, benefitting not only brands but also dropping prices for end consumers.

In addition to corporate teams, Misfit maintains three fulfillment centers while Imperfect has five facilities, as well as a fleet of 550 vans that deliver its boxes in some major markets. Despite beginning to share distribution and delivery facilities, the start of the year will see both websites operating as independent entities and brands. The company is also working to integrate the two inventory systems, allowing for parity across platforms, and bringing items such as Imperfect’s robust private label line over to Misfits.

Longer term, the company is still evaluating its options regarding hosting both retailers. Shuman noted that while some other companies have chosen to merge all subsidiaries together, others, such as Zillow, have maintained separate platforms for each brand.

The goal is to grow the combined companies’ assortments from their current roster of 700 items to 3,000 to 5,00 products. While the retailer may never sell 12 types of peanut butter, for example, it hopes to offer some variety. The goal, Shuman said, is to shift from being more of a “supplemental” shop, instead fully replacing consumers’ entire grocery orders.

Misfits alone ships food to 250,000 shoppers, Bloomberg reported last week, across 40,000 zip codes. The company had $386 million in revenue over the last two years — less than the over $525 million in funding it’s raised since inception, but enough to point to achieving profitability in the next 18 months.

“[The layoffs were] us realizing where the growth potentials are, what that opportunity looks like as a combined company and putting the right team in place to really scale this thing and have a monster year,” Shulman said. “[It’s] unfortunate through this process to lose people but …we’re feeling pretty good about the team that’s in place.”