An Australian grocery startup has seemingly ditched a rapid delivery pledge as it faces ballooning food prices and rider costs.
Delivery firm Milkrun, which operates in Sydney and Melbourne, appears to have scrapped its 10-minute delivery pledge as it admits to losing around $10 per order during a particularly trying time for startups.
The news comes as founder and chief executive Dany Milhan this week said there had been an “unacceptable decline” in customer experience due to several factors, including “ongoing Covid cases affecting the availability of riders and hub staff, record rainfall in Sydney, and the challenges involved with scaling a fully employed workforce faster than anyone has ever tried before.”
Camera IconMilkrun has scratched its 10-minute delivery pledge following the rising cost of living. Supplied. Credit: NCA NewsWire
“I want to take this opportunity to apologize to you if you have recently experienced late delivery or a poor experience,” Mr. Milhan said in an email to customers.
“No excuses; you deserve better, and I want you to know that I am committed to ensuring we make good on our promise and continue to deliver the best experience you’ve ever had.”
In an update on Tuesday, the company moved to assure investors it was in a comfortable financial position, even though it was still losing money.
An investor pitch obtained by Nine newspapers reportedly showed that while Milkrun was making $4m a month in revenue, it was losing $13 for each order it took.
In response, Mr. Milhan told the Sydney Morning Herald document was from April and out of date, hence not representative of the company’s current fortunes.
Mr. Milhan said the company had been losing $40 per order at one point and had improved drastically.
He also insisted investor interest remained strong as the company edges to profitability, citing hopes it will make $1 per order within a few months.
Camera IconMilkrun founder and chief executive Dany Milham has apologized to consumers experiencing lengthy delivery delays. Supplied. Credit: News Corp Australia
The entrepreneur also detailed several cost control measures as part of Milkrun’s overhaul, including shaving down rider pay and limiting expectations on delivery speed.
Where Milkrun previously promised deliveries in 10 minutes, the Milkrun site says “in minutes”.
NCA NewsWire has contacted Milkrun for comment on its operations.
Milkrun, which launched in September and has boasted that it is “flipping the grocery game on its head,” is also reportedly expanding its alcohol delivery service to raise funds from investors.
Mr. Milhan, worth around $150m, raised more than $11m before Milkrun’s launch in September last year, with major tech giants and Atlassian billionaires Mike Cannon-Brookes and Scott Farquhar backing the company.
Camera IconCory Jimmieson, head of growth at delivery brand startup, Send. NCA NewsWire / Wayne Taylor. Credit: News Corp Australia
In January, Milkrun raised another $75m from investors, although it is unclear how much money the company has left.
Milkrun’s competitors have also been forced to slash jobs and services, some even going under.
One such competitor was Send, another startup aiming to deliver groceries in under 10 minutes.
After chewing through $11m in just eight months, it was liquidated in May.
Mr. Milhan told the Sydney Morning Herald that Milkrun’s economic business model differed from Send, adding they were in a comfortable position.
Last week it was revealed that Sydney based-rival Voly had slashed its workforce, closed warehouses, and scrapped its planned Melbourne expansion.
Milkrun has previously said it is not troubled by the launch of Woolworths’ one-hour delivery service for a five-dollar fee.
The Metro60 app service quietly kicked off in Sydney last week, offering more than 4000 products delivered by Uber couriers.
