Exclusive: Farmigo sells its Bay Area operation after July’s surprise shutdown
Farmigo, which two months ago announced that it was abandoning the food-delivery business in order to concentrate on providing software to other companies in “farm-to-table” delivery, has sold its Bay Area operations to a local outfit called Eating With the Seasons. Farmigo is shopping its other regional operations—in New York and Seattle—to potential buyers.
Farmigo’s CEO, Benzi Ronen, caused a stir in July with the abrupt-seeming decision. Customers and suppliers were shocked, especially given that Farmigo had just landed $16 million in financing the previous September, and Ronen had been aggressively promoting the delivery business right to the end, with bold claims that Farmigo’s business model would “replace” the traditional grocery business.
When Becky Herbert, owner of Eating With the Seasons, saw the company’s initial statement—in which Ronen said he’d “look for partners to take over our logistics and delivery operations”—she quickly reached out. Herbert says she had been considering expanding her footprint in the Bay Area, and taking over Farmigo’s customers, and some of its suppliers, would be a relatively easy way to do that. According to her, “every competitor in the Bay Area wanted it.” She specifically cited Farm Fresh to You, another California operation, and Good Eggs, a major player that last year laid off nearly 140 people and abandoned all of its markets other than the Bay Area before receiving a $15 million capital injection in July to finance new expansion.
A Good Eggs spokeswoman said the company didn’t bid on Farmigo’s “operations,” and doesn’t plan to do so in the future, but said the company “did place a bid on a segment of their customer list”—presumably, the Bay Area segment. Farm Fresh to You did not respond immediately to a request for comment.
“I kind of expected Benzi to pick one of those companies,” Herbert said. Neither she nor Ronen would discuss terms of the sale. Herbert is backed by a single financier, Cienega Capital of Paicines, Calif.
Ronen said Farmigo “reached out to a bunch of companies to find partners” and is “in discussions with everybody” to unload operations in the company’s other regions: New York/New Jersey and Seattle/Tacoma. He chose Eating With the Seasons, he said, in part because its service is similar to Farmigo’s. It delivers food from local suppliers to pick-up points managed by volunteers. Ronen also cited the fact that Eating with The Seasons was among the first customers of Farmigo’s back-end platform, CSA Software Management, which the company is now solely focused on. “Becky helped us get started,” Ronen said. He declined to comment in specifics on what might happen with Farmigo’s other markets. Herbert said she would continue using that platform.
The abruptness of Farmigo’s departure from the delivery business caused some speculation on social media and elsewhere that an investor had pulled out, perhaps spooked by the troubles at Good Eggs and elsewhere as competitors have piled into a friction-filled business that has proved to be more challenging than many—including, by his own admission, Ronen—had anticipated. But Ronen denies losing any financiers. “Our investors were fully supportive of us continuing,” he said. Pulling out “wasn’t for lack of financing.”
In his July announcement, Ronen wrote that Farmigo could “no longer continue our community delivery operations sustainably.” Later, he told Food+Tech Connect that Farmigo is “great at building software to solve problems, but we don’t think we’re great at building logistics to solve problems.”
Herbert says an official announcement of the sale is coming next week. Eating with The Seasons will be renamed Farmhouse Foods, and “Eating with the Seasons” will be the company’s motto (the logo has already been changed on its website). Much of that company’s business overlaps regionally with Farmigo’s former operations in San Francisco and Silicon Valley, but she’ll be adding lots of new territory, including Marin and Contra Costa counties, to the north and east of San Francisco.
Surprisingly to Herbert, however, adding Farmigo’s operations to her own will only double the size of the business, from about 1,000 weekly deliveries to about 2,000. Farmigo’s business in the Bay Area was much smaller than Herbert had realized. Ronen would not confirm whether that number is correct, saying “that’s Becky’s business now.”