Kenyan food-tech and cloud kitchen startup Kune Foods has announced that it is shutting down its operations. The company, which was founded in December 2020 was trialed last year before commencing commercial operations in late 2021. The start-up prepared and delivered low-cost meals to customers around Nairobi.
According to Kune Foods founder and CEO Robin Reecht, the decision to shut down operation came after failure to raise funds to sustain its operations. He also said the country was experiencing an economic downturn and investment markets had tightened up.
“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,” Reecht wrote in a LinkedIn post.
According to Gadgets Africa, the CEO said in an internal meeting with employees, that the company had run out of money after a French investor pulled out.
“As you know we were supposed to receive an investment of about Ksh30 million from a French investor. Yesterday, I learned from that investor that they will not invest that money, why on one side because we are already running out of money, the is not reassuring for them,” he said.
Last year, Kune Foods announced a $1 million pre-seed funding round to expand factory capacity and improve delivery strategies. They stated in February of this year that they needed an additional $3.5 million to increase production capacity.
Initially, the startup handled everything, including delivery, but in recent months, it had begun to use third-party apps such as Uber Eats, Glovo, and Bolt Food to fulfill orders.
Kune had hoped to increase production capacity and expand its operations beyond Kenya’s capital, Nairobi, prior to the indefinite closure. It aimed to have a nationwide presence by 2024.
Reecht trended on social media last year after he said in an interview that he started Kune food after he was unable to find affordable meals in Nairobi. Kenyans on Twitter responded citing several places where one could get affordable food.
The shut down has affected about 90 employees, some of whom were hired as recently as last month.