- Fridge No More went out of business in early March after DoorDash pulled out of a deal.
- Employees say the startup had big expansion plans but wasn’t able to raise another round of funding.
- Problems with its bikes and scooters also got in the way of delivering groceries in 15 minutes.
When Fridge No More’s deal with DoorDash fell apart earlier this month, one former employee knew something was wrong when they answered the phone and heard crying on the other end.
“My heart literally came out of my chest,” the employee said. “At first I thought it was something that I did.”
It was a shocking end to the employee’s time at Fridge No More: They had worked their way up to management from picking orders in one of the startup’s stores and expected to join DoorDash after the deal closed.
Fridge No More’s fate was out of the control of most, if not all, of the company’s employees.
Insider obtained emails earlier this month from Fridge No More’s founders telling their team that DoorDash had agreed to acquire the 15-minute delivery startup in February. But former Fridge No More employees said that DoorDash walked away from the deal without citing a reason on March 9.
The result: The Fridge No More founders, Anton Gladkoborodov and Pavel Danilov, had to shutter the business after opening their first store in October 2020.
“They dropped the bomb on us 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 the quality of the team, efficient access to new products or markets, and long-term profit potential.”
“If an opportunity doesn’t meet our criteria, we pass on it,” the spokesperson added.
A person close to DoorDash said the delivery operator was looking to buy Fridge No More assets such as equipment and warehouses, not the entire company.
Fridge No More was one of two rapid-delivery startups to fold in March. Buyk, another rapid-delivery startup, also folded this month after sanctions made it impossible to get funding from its parent company, Samokat, which is headquartered in Russia.
After raising millions and growing fast during the pandemic, many ultrafast-grocery-delivery startups are facing a more competitive market. In addition to Fridge No More and Buyk, there are still several competitors trying to expand the model, including Gorillas, Getir, and Jokr.
Even Gopuff, which has a several-year head start over the upstarts, is laying off hundreds of employees and dealing with executive turnover that could threaten its plans to go public this year, The Information reported Tuesday.
Insider spoke with seven former employees of Fridge No More and the startup’s cofounder Pavel Danilov. Their work experiences with the company extended from packing and delivering orders to higher-level employees who managed the roughly 30 stores that Fridge No More operated before shutting down.
The employees requested anonymity to speak frankly about the company. Their identities are known to Insider.
Signs of struggle
At the time of its demise, Fridge No More delivered groceries and other household goods in New York and Boston.
It had storefronts picked out in Philadelphia, too, and was close to signing a lease on a former Japanese supermarket in Great Neck, a suburban region of Long Island, according to a former employee.
In Great Neck, Fridge No More planned to deliver groceries to addresses up to 3 miles away from its store using mopeds, the employee said. That would have been three times the radius it serviced in New York City.
Many of those who managed Fridge No More’s operations worked their way up from couriers and order packers. For many, it was a chance to get in on the ground floor of an interesting startup and a growing industry.
That made the company’s sudden collapse even harder.
“It was devastating,” one employee who had been with Fridge No More since it opened its first stores in Brooklyn said. “But at the same time, it was a startup. You know it’s a possibility that can happen.”
The employees Insider spoke with agreed that ultrafast grocery delivery has a future in big cities like New York. They also expect more startups to fold, with just a few companies staying in the business in the long term, a view shared by some analysts who follow ultrafast-delivery companies.
Fridge No More, by contrast, was being funded by DoorDash capital before its failed deal. The company had previously raised $17 million, most of it from a Series A round led by the private-equity and venture-capital firm Insight Partners.
Last fall, the startup planned to raise a Series B round, according to two former employees. One of them estimated that the round could have been worth up to $70 million.
But when Fridge No More was unable to seal that new funding, it started looking for alternatives.
“The market was perceived as high-risk” by investors, especially with so many competitors in ultrafast delivery, Danilov said.
“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 made them think that the startup could be struggling with cash flow.
On three occasions, one former employee said, Fridge No More went weeks without paying the company’s street teams, who promoted the company at events and public areas around New York.
“You’d be ready to work that day, and you’d call your team lead” just to find out there was no work that day, the employee said.
Another employee in charge of stores said the company went from a relaxed system for buying office supplies and other basic needs to a much stricter one early in 2022.
“All of the sudden, everything had to be budgeted, everything had to be approved,” the employee said. “There wasn’t really any reason given.”
Danilov told Insider that Fridge No More cut the street team’s hours and started watching its supply costs more closely in order to “optimize” the business, especially as its available capital became limited.
The surviving ultrafast services will have to solve the same problems that Fridge No More faced, former employees told Insider.
One is getting customers to buy more in each order. Fridge No More and rivals like Jokr, Gorillas, and Getir have told customers in advertising that they will deliver orders as small as a single item, such as an apple.
Danilov said Fridge No More’s average order value was about $30, though the company was interested in increasing it as well as making orders more profitable by scheduling workers according to peak order times, getting better deals with suppliers, and increasing distribution through its warehouse in New Jersey.
Gopuff’s average order value was $26.07 in February, according to the transaction-data firm Earnest.
The electric scooters and bikes that the startup used to deliver orders were also a source of complications, two employees told Insider.
Fridge No More’s fleet wasn’t designed for the constant use that the company needed, according to one of the employees.
Individual Fridge No More stores could fill dozens of orders a day, with each round trip up to 2 miles long. Scooters and bikes regularly had to be taken out of service for repairs or, more frequently, when their batteries ran out.
Those outages, plus thefts of the company’s vehicles from its stores, were the reason behind 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 to do deliveries, but if the bikes are dying, there’s nothing you can do.”
At one point, Fridge No More was in contact with a Chinese manufacturer about producing custom-made electric vehicles, but it never went through with the plan, the former employee said.
Danilov said that Fridge No More was trying to use readily available vehicles and didn’t have the resources to buy “infinite scooters.”
“We’ve been trying to use our fleet as efficiently as possible,” he said, adding that the company would have likely bought better vehicles if it had continued to open stores and gotten a better deal on a bulk purchase.
High turnover among the couriers who prepared and delivered orders was also an issue, one employee said.
But one area where Fridge No More excelled was its merchandising strategy. In a Brooklyn neighborhood home to lots of Orthodox Jewish consumers, Fridge No More stocked kosher Doritos chips — a favorite that sold out regularly, one former employee said.
The remaining ultrafast-delivery companies will need to get creative in similar ways in order to survive in the crowded sector, the employee said.
“If they’re just selling groceries, it’s going to be hard to scale,” they said.
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