Kune Food, a Kenya-based cloud kitchen has closed down today, affecting 90 employees — some of whom were hired as recently as last month.
The startup, founded in December 2020 to offer ready-to-eat affordable meals, conducted a trial in Kenya in the early months of 2021 before officially beginning operations later that year.
In a LinkedIn post, Robin Reecht, the startup’s founder and CEO, announced the closure after failing to raise funds to keep up operations, while blaming the “economic downturn and investment markets tightening up.”
A year ago, Kune Food raised $1 million pre-seed funding and also borrowed an undisclosed amount from a bank in Kenya. Earlier this year, the startup said it was raising $3.5 million from local and international investors to ramp up their production capacity.
“Since the beginning of the year, we sold more than 55,000 meals, acquired more than 6,000 individual customers and 100 corporate customers. But at $3 per meal, it just wasn’t enough to sustain our growth … Coupled with rising food costs deteriorating our margins, we just couldn’t keep going,” he wrote.
The cost of food in Kenya hit record highs recently as prices of some commodities almost doubled over the last few months. This is against the backdrop of the country’s rising inflation, which hit a 27-month peak last month, as cost of living measure kept an upward trajectory reaching 7.1 percent in May too, according to the national statistics bureau.
Kune’s take-off in the East African country was shaky, with founder Reecht irking Kenyans with remarks indicating that he launched the startup after failing to get affordable ready-to-eat meals in the country.
His statement received immediate backlash, with many Kenyans taking to online spaces to showcase the numerous restaurants serving affordable meals around the country, as some also argued that the startup was solving a non-existent issue. Kune issued an apology, expressing regret for how the statement came out.
Afterward, and buoyed by the $1million 2021 funding, the food tech startup ramped up its operations with the promise of preparing and delivering to online clients freshly made meals at affordable prices. Initially, the startup handled everything including delivery but over the last few months it began using third-party apps like Uber Eats, Glovo and Bolt Food to fulfill their orders.
Until the indefinite closure, Kune was hoping to increase production capacity and to expand its operations beyond Kenya’s capital, Nairobi. It had targeted a countrywide footprint by 2024.
The startup said in a past statement that it had invested heavily in research and development to ensure it had a “fully dedicated in-house team working consistently on menu advancement so as to meet the changing demands of customers while also bridging the nutrition and price gap.” It had also established hubs across Nairobi to be closer to its target client.
Kune’s investors included the pan-African venture capital firm Launch Africa Ventures, who led its pre-seed round last year, Century Oak Capital GmbH and Consonance.
Below is Reecht’s full statement.
Sad day. Kune Food closed down today.
Since the beginning of the year, we sold more than 55,000 meals, acquired more than 6,000 individual customers and 100 corporate customers. But at $3 per meal, it just wasn’t enough to sustain our growth.
With the current economic downturn and investment markets tightening up, we were unable to raise our next round. Coupled with rising food costs deteriorating our margins, we just couldn’t keep going.
My first thoughts go to my team. You put your heart and soul into building the Kune that so many people loved. I’m deeply sorry it didn’t work out.
To all my fellow entrepreneurs, please check the Kune “employee page” on LinkedIn and see if your recruitment needs could be filled by some of our team members. I know those are difficult times for you too. But they are terrific people who will bring tremendous value to your company. You can call me if you need any reference on a Kune employee.
My second thought goes to our investors. Some of you joined the Kune journey when it was just me and a Chef, delivering food on foot to a nearby office. Some others joined later and helped us grow into a foodtech startup with a tech platform, a factory, a kitchen studio, 7 distribution hubs, 6000 customers, and a team of 90 people. Not only did you invest in Kune but you gave us your time, brain-width, connections, and emotional support. I am deeply sorry that Kune’s vision didn’t come true. To betray your confidence is something for which I will never forgive myself.
My third thought goes to suppliers, customers, bankers, and partners of any sort who supported us along our way. I’m sincerely sorry for the outcome.
Many things could have been done differently, better certainly. The coming months will allow us to reflect on Kune’s failure, and I hope to share about it when the time will be right.
If you know anyone who could be interested to acquire Kune’s IP or Assets, please reach out by PM.
Sincerely yours,
Robin
