An Australian grocery startup has seemingly ditched a fast-delivery promise as it faces rising food prices and rider costs.
Delivery company Milkrun, which operates in Sydney and Melbourne, appears to have scrapped its 10-minute delivery promise as it admits to losing about $10 per order during a particularly difficult time for startups.
The news comes as founder and CEO Dany Milhan this week said there was an “unacceptable decline” in the customer experience due to several factors, including “ongoing Covid cases affecting rider and hub staff availability, record rains in Sydney and the challenges that come with scaling a full-time workforce faster than anyone has ever tried.”
Camera IconMilkrun has caught up with its 10-minute delivery promise after the rising cost of living. Delivered. Credit: NCA NewsWire
“I would like to take this opportunity to apologize if you have recently had a late delivery or a bad experience,” Mr. Milhan said in an email to customers.
“No apologies; you deserve better, I want you to know that I’m committed to ensuring we deliver on our promise and continue delivering the best experience you’ve ever had.”
On Tuesday, the company released an update to reassure investors that it was in a comfortable financial position, even if it was still losing money.
An investor pitch obtained by Nine Newspapers reportedly showed Milkrun was making $4 million in monthly revenue but losing $13 for every order it took.
In response, Mr. Milhan told the Sydney Morning Herald that the April document was outdated and thus not representative of the company’s current fortunes.
Mr. Milhan said that the company had lost $40 per order at one point and improved dramatically.
He also urged investor interest to remain high as the company moved closer to profitability and hoped it would earn $1 per order within a few months.
Camera IconMilkrun founder and CEO Dany Milham have apologized to consumers who have been dealing with lengthy delivery delays. Delivered. Credit: News Corp Australia
The entrepreneur also outlined several cost containment measures as part of Milkrun’s review, including reducing rider pay and limiting expectations regarding delivery speed.
Where Milkrun previously promised deliveries in 10 minutes, the Milkrun site says “in minutes”.
NCA NewsWire has reached out to Milkrun for comment on its activities.
Milkrun, which launched in September and boasted of “turning the grocery game upside down,” is also reportedly expanding its alcohol delivery service to raise investors’ money.
Mr. Milhan, worth about $150 million, raised more than $11 million ahead of Milkrun’s launch last September, with major tech giants and Atlassian billionaires Mike Cannon-Brookes and Scott Farquhar backing the company.
Camera icon Cory Jamieson, head of growth at the delivery brand startup, Send. NCA NewsWire / Wayne Taylor. Credit: News Corp Australia
In January, Milkrun raised another $75 million from investors, though it’s unclear how much money the company has left.
Milkrun’s competitors have also been forced to cut jobs and services, with some going under.
One of those competitors was Send, another startup that aims to deliver groceries in less than 10 minutes.
After chewing $11 million in just eight months, it was liquidated in May.
Milhan told the Sydney Morning Herald that Milkrun’s economic business model differed from Send’s, adding that they were in a comfortable position.
It was revealed last week that Sydney-based rival Voly had cut its workforce, closed warehouses, and scrapped its planned expansion in Melbourne.
Milkrun has previously said it will not be affected by the launch of Woolworths’ one-hour delivery service for five dollars.
The Metro60 app service quietly launched in Sydney last week, offering more than 4,000 products delivered by Uber couriers.
