Philadelphia-born unicorn Misfits Market is closing its South Jersey distribution center in a move that result in 446 layoffs, part of a larger consolidation plan by the five-year-old startup.
In addition to the Delanco location, the grocery delivery company will shutter fulfillment centers in Salt Lake City and Dallas, both of which 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.
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.
The layoffs at the Delanco site take effect April 8. Misfits Market opened the Burlington County facility at 1000 Coopertown Road in summer 2020.
Shuman said Misfits Market will be adding "hundreds of jobs" at the five local facilities it acquired through Imperfect Foods in the coming months.
"Even though Misfits Market has employees in nearly 30 states, the company was launched in Philadelphia and its greater metro area is where many of our employees, including our founder and CEO, call home," Shuman said. "However, following last year’s acquisition of Imperfect Foods, 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 Delanco."
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 products 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 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.
Misfits Markets becomes the latest prominent startup to trim its workforce as widespread layoffs cut into the tech industry. It also comes following a 2022 in which fellow Philadelphia delivery unicorn Gopuff laid off 1,500 workers.
Misfits Market will provide benefits for eligible impacted employees including severance pay for a minimum of three weeks, Shuman said.
