A Gramercy-based meal delivery firm has laid off a quarter of its staff less than two years after its $1.5 billion acquisition by food-and-beverage behemoth Nestlé.

Freshly carved out its niche in the crowded meal-delivery space by sending customers prepared meals rather than ingredients to cook. In 2017, Switzerland-based Nestlé, the largest food and beverage company in the U.S., purchased a 17% stake in the firm. It came back for the acquisition three years later to capitalize on Freshly's “specialized consumer analytics platform and distribution network,” according to Nestlé.

The layoffs will hit 48 of 190 local employees as part of an organizational restructuring and will occur in October, according to the company’s filing with the New York State Department of Labor. The company’s headquarters are at 115 E. 23rd Street, and all layoffs are for positions there.

Recent layoffs have hit other firms at the nexus of food and technology. Weight-loss app Noom laid off 495 in April. Two ultra-fast grocery delivery firms that operate in New York, GoPuff and Jokr, also shed staff recently, with Philadelphia-based GoPuff reporting it would close 12% of its warehouses around the country. Food52, a homegrown company at the intersection of media and e-commerce, laid off 25% of its staff in two rounds this spring, even as it plans an expansive new office at the Brooklyn Navy Yard. Los Angeles-based ChowNow, which sells food-ordering systems to restaurants and recently expanded its New York City presence, laid off 100 earlier this month. 

Freshly’s menu of pre-made meals includes dishes like Sausage Baked Penne and Zingy Buffalo Chicken, as well as options that suit vegan or other special diets. It does not make or assemble its meals in New York City, according to its website. “We make our meals in our really, really big kitchens (over 60,000-square feet!) in Phoenix, Arizona, Linden, New Jersey, and Savage, Maryland,” it says.

In 2020, at the time of acquisition, Freshly forecast annual sales of $430 million, according to a press release from Nestlé that announced the deal. Nestlé valued Freshly’s property, plants and equipment at around $72 million, its intangible assets at $564 million and its liabilities at $247 million. (The deal was in Swiss Francs, and these figures are based on today’s franc-to-dollar conversion, which is quite similar to 2020 rates.)

Nestlé does not break out Freshly nor a meal-delivery category in its public filings. For the most recent quarter for which information is available, the firm reported the equivalent of $6 billion in sales for its North American division, which includes Freshly. That reflects 9.9% organic growth—sales less acquisitions—over the same quarter in 2021, driven in part by 5% growth in e-commerce sales. Though the report mentions that “prepared dishes and cooking aids posted low single-digit growth following a high base of comparison in 2021,” it does not call out Freshly as contributing to that strong demand, instead mentioning the brands Maggi and Garden Gourmet.

At the time of acquisition, Laurent Freixe, Nestlé CEO Zone Americas explained the strategy for the purchase.

"At Nestlé we know the at-home food market and we know how to win there,” he said. “With the acquisition of Freshly we are strengthening our position in the U.S. and expanding our ability to deliver a wide variety of delicious food to our consumers when and where they want.”

Staying current is easy with Crain's news delivered straight to your inbox, free of charge. Click below to see everything we have to offer.

Don't miss the chance to get the biggest news first! Stay connected to New York business news in print and online

Crain’s New York Business is the trusted voice of the New York business community—connecting businesses across the five boroughs by providing analysis and opinion on how to navigate New York’s complex business and political landscape.

685 Third Avenue New York, NY 10017 (212) 210-0100