Freshly Ending Direct Delivery As Meal Co Pivots To Retail
Nestlé-owned ready-made meal delivery platform Freshly appears to be shutting down its direct-to-consumer business, according to media reports and a LinkedIn post from the company’s co-founder.
Just a few weeks ago in November, Freshly’s parent company Nestlé shared an update on the brand, announcing a partnership with private equity group L Catterton to create a joint venture under which both Freshly and Kettle Cuisine brands will be housed. The combined entity “will focus on offering a wide assortment of fresh food products to customers across geographies and a variety of channels,” according to a press release. Nestlé would retain a minority stake with L Catterton as the majority shareholder.
However, in a note posted to the site on Tuesday, Michael Wystrach said the company “will be winding down operations for good.”
“I want to express my sincere empathy for those who will be affected by this decision,” Wystrach wrote. “Building Freshly from the ground up was a labor of love, and I am grateful for the hard work and dedication of the team over the years. Together, we were able to achieve a billion-dollar-plus outcome (the largest in the category) just a little over two years ago, and I am proud of all that we accomplished.”
On Reddit, a Freshly subscriber posted the text of an email allegedly sent to subscribers which announced the meal delivery service “will be winding down in early 2023.” Orders can continue to be placed as usual through January 17, with the final shipments being sent January 21. Subscribers will be billed four days prior to the final shipment and then automatically removed from the auto-renewal system.
At the time of publication, Freshly has scrubbed its Instagram and Facebook accounts from the social media sites and access to the company website has been restricted to a landing page posting the company’s announcement of dissolution.
Founded in 2012 by Wystrach and Carter Comstock, Freshly was one of the leading names in the once-hot fresh meal delivery market, alongside brands like Blue Apron and Hello Fresh. After an initial minority investment in 2017, Swiss food giant Nestlé acquired the brand in a $950 billion deal in 2020. At the time, Nestlé reported that Freshly would surpass over $430 million in sales that year and had been profitable for roughly a year. The belief, Nestlé said, was that Freshly could reinvigorate its frozen meals segment, which had been on a sales slump.
When asked about the change in strategy for Freshly, a company representative responded by saying, “we have made the decision to pivot Freshly’s business to serve the rapidly growing consumer demand for fresh prepared meals in the retail channel, where we see significant opportunity going forward. While Freshly’s direct-to-consumer business will be regrettably impacted as a result of this shift, we hope to soon resume serving our customers fresh ready meal solutions, just in the retail channel.”
Over time, Freshly has widened its scope beyond home delivery: in September, the brand announced FreshlyWell, a new B2B sales platform that will include vending machine-like fridges, mini-markets and integration into meal programs for hospitals, cafeterias and senior living facilities.
In recent months, the company has announced a spate of job cuts across its regional warehouse facilities, including laying off 454 workers in Maryland, 329 employees in Phoenix and 138 workers in New York.
A Freshly representative told Crain’s this month that the decision to shutdown in New York was motivated by a desire to serve the rapidly growing consumer demand for fresh prepared meals in the retail channel, where we see significant opportunity going forward.”
In a Worker Adjustment and Retraining Notification log filed with the New York State Department of Labor on December 5, the reason for dislocation cited was “a strategic shift in business strategy following change in control.”
“While it is difficult to see Freshly come to an end, I remain optimistic about the future and the opportunities that lie ahead,” Wystrach wrote. “I am grateful for the support of our community and the memories we have made together.”
