Thirty years after first launching in the Chicago area, online grocery delivery pioneer Peapod is ending its service in Chicago and the rest of its Midwest markets as the company shifts focus to the East Coast.
Peapod owner Ahold Delhaize USA announced Tuesday afternoon that the company will close Peapod's Midwest division, ending service in Illinois, Wisconsin and Indiana effective Feb. 18. Its Midwest operations account for $97 million in revenue out of the $1.1 billion in total online revenue the company does in the U.S., Ahold said.
As a result of the Midwest departure, Peapod will shut down a food preparation facility in Lake Zurich, distribution facilities in Chicago, Milwaukee and Indianapolis, and a pick-up location in Palatine. The closure is expected to affect approximately 500 jobs in the Chicago, Indianapolis and Milwaukee areas, the company said.
Peapod's Chicago headquarters, which houses in Digital Labs team, will remain open.
Peapod was founded in the Chicago area in 1989 and was the first online grocer in the U.S. It was acquired by Ahold in 2000. The company, originally headquartered in Skokie, moved its office to downtown Chicago in 2018.
“This was a difficult decision given Peapod’s rich history in the Midwest,” Kevin Holt, CEO of Ahold Delhaize USA, said in a statement. “We know changes such as these are never easy for consumers and communities. We appreciate the loyalty of associates and customers in the Midwest sales business over the past three decades."
Ahold said it expects "no significant impact to reported operating profits or free cash flow" as a result of the move, and it doesn't anticipate a change to its previously stated outlook of 30 percent e-commerce growth in 2020.
While Peapod pioneered the online grocery delivery industry, it's faced strong competition in recent years from companies like Amazon and Instacart. The U.S. online grocery market has grown from $12 billion in 2016 to $26 billion in 2018.
