Philadelphia-based unicorn Misfits Market is closing distribution centers in DFW, South Jersey and Salt Lake City as part of a larger consolidation plan by the five-year-old startup.
The distribution centers in Salt Lake City and Fort Worth both opened in the past two years. The closures will ultimately result in the company trimming its workforce by 649, or 33% of its employee base, said Ken Shuman, a spokesman for Misfits Market.
Misfits Markets filed a WARN notice with the Texas Workforce Commission on Monday that said it was laying off 121 workers on April 8 at its distribution center in Fort Worth and shutting down operations.
The move comes following the acquisition of San Francisco-based Imperfect Foods in September and the implementation of a new strategy centered on leveraging smaller, local fulfillment centers, Shuman said. He added that Misfits Markets' headquarters will remain in Delanco through at least mid-May. It's unclear where the headquarters will relocate to.
“We arrived at a consolidation strategy built around a distributed network of smaller fulfillment centers to support our first-party delivery by Imperfect Foods’ own driver network, reducing the need for large centralized facilities like the one in Fort Worth,” Shuman told The Dallas Morning News. “As tough as this decision was, we believe this will positively impact our customer experience and help us streamline our operations, better leverage our capacity and reduce costs and waste.”
Shuman said Misfits Market will be adding "hundreds of jobs" at the five local facilities it acquired through Imperfect Foods in the coming months.
At the time of the acquisition, Misfits Market CEO Abhi Ramesh said Imperfect Foods was "heavily West Coast-based." He said the combined company would maintain its headquarters in the Philadelphia area for the time being though many employees would work remotely or in a hybrid format.
Misfits Market launched in North Philadelphia in 2018 as a subscription box service that partners with farms to rescue organic, oddly-shaped fruits and veggies typically rejected from grocery stores and deliver them to customers’ doorsteps. The company expanded its product offering and quickly grew to a valuation in the billions before acquiring competitor Imperfect Foods last fall. Prior to the acquisition, Misfits Market raised more than $526 million, including a $225 million Series C-1 in September 2021. The company at the time had a valuation of $2 billion.
Ramesh said that the deal with Imperfect Foods moved the startup's timeline for profitability up about a year. He said the company is projected to hit $1 billion in sales and be profitable in 2024. Shuman, the company spokesman, said Misfits Market is seeing about a 10% increase in gross margin value so far in 2023, with customers making larger orders and treating the delivery platform as their primary grocery store.
