Food delivery pioneer FreshDirect may be nearing its expiration date as its big-money parent company, Getil, considers letting go of its Big Apple grocery stores – buy the company The Post found out just six months later.
Turkey-based Getil, which acquired Fresh Direct from Stop & Shop owner Ahold Delhaize USA in November last year, is jointly owned by Abu Dhabi sovereign wealth fund Mubadala Investments, Tiger Global and Sequoia Capital. The company is said to be under pressure to cut costs from investors such asGo to Sky News report.
Getir, a delivery service that operates in some US markets as well as the UK, Netherlands and Germany, burns through as much as $50 million every month, according to one study. Bloomberg reporting.
The company was once valued at $12 billion at the height of the pandemic boom, as many shoppers turned to online services for food delivery.
“Getil is pulling out of every city except their home base. They don’t have the capital to pay for everything. They can’t afford FreshDirect,” former Amazon executive and industry consultant Britten Rudd said in a post. told the paper.
“In my opinion, if FreshDirect is unable to raise additional capital to modernize and invest in the company, I don’t see it lasting more than a year.”
That bodes well for the 3,200 employees employed at FreshDirect, which was founded 25 years ago by former Fairway Market CEO Joe Fedele and investment banker Jason Ackerman. isn’t it.
And despite its loyal customer base, some believe FreshDirect’s long run may soon be over.
“I don’t think there’s any reason for FreshDirect to exist anymore,” Dan Glickberg, a retail technology consultant whose family co-founded Fairway Market, told the Post.
“The company was an early pioneer, but the business hasn’t evolved much since then.”
FreshDirect did not respond to multiple requests for comment.
A spokesperson said in an email that Gettil declined to comment on “market rumors.”
Fresh Direct had been looking for a buyer for years before Ahold made a bid in 2021.
But at the time Getir called, FreshDirect was so unprofitable that Ahold had to pay the Turkish company to take it off its balance sheet, people told the Post.
Terms of Getir’s acquisition were not disclosed.
Rudd said he was told by Gettier and Wall Street bank officials that Ahold “gave Gettier $151 million to acquire Fresh Direct.” [its] hand. In addition, Rudd said, Ahold invested $30 million in Gettil.
Gristedes owner and billionaire John Catsimatides, who has considered buying Fresh Direct multiple times over the years, also posted that he had heard that Ahold was “paying people to buy the company.” told the paper.
A third source, a top commercial food executive who requested anonymity, told the Post that Getir paid FreshDirect $1.
“Ahold wanted to let go so badly that he was willing to let go,” the source said.
Ahold did not immediately respond to a request for comment, but its fourth-quarter 2023 financial results show it lost about $270 million on the sale of Fresh Direct.
Part of FreshDirect’s financial crisis stems from its 2018 move from Long Island City to a larger facility in the Bronx.
In addition to increased overhead costs, FreshDirect struggled with new technology that frequently broke down, causing failed orders, and ultimately led to the firing of CEO Ackerman in September 2018.
Two weeks after Mr. Ackerman was fired, new CEO David McInerney sent an email apologizing for the sloppy work and criticized the transition “not being as smooth as planned.”
A Manhattan customer who has been using FreshDirect for 15 years says the service hasn’t improved since Getir took over.
“Last December, we started having all kinds of problems with the deliveries. They kept making mistakes: wrong amounts, delays, missing items,” Lucia Guimarães told the Post.
