Shock closure as MilkRun wraps up delivery service in Melbourne, Sydney

One of the country’s most popular delivery services announced it is closing on Friday, with one industry expert warning similar start-up companies could follow.

The shock collapse of the once heralded start-up business MilkRun busted because of its rapid growth, according to an industry expert.

The delivery company MilkRun will be permanently ceasing operations by Friday, leaving workers reeling from the news of the business closure.

“I’m writing to let you know that we have made the difficult decision to wind down the business, and as a result, MilkRun will cease trading this Friday,” Founder Dany Milham sent an email to the company’s 400 employees on Tuesday.

Fast delivery grocery app MilkRun will close its doors for good after two years of operations.

The Motley Fool chief investment officer Scott Phillips told the Today Show it “doesn’t take long” for start-up companies that expanded too quickly to got bust.

“It turns out if you run out of money you can’t keep things going,” Mr Phillips said on Wednesday.

“This is was a land grab story. We know plenty of these guys have gone broke over past 24 months.

“They wanted to get big quickly and lost a fortune. Meant it had to keep raising money.

The popular grocery delivery service raised $11m before launching in September 2021 and became one of the fasted growing start-ups in the country last year.

It’s a very sad day JC.
Our final order has just arrived . . .
😞🙏🏻 #[e-mail]/BQv9t0k8as

— Melissa Hoyer (@melissahoyer) April 11, 2023

Despite banking an impressive $75m funding round led by a US venture capital firm in 2022, Mr Milham blamed worsening economic conditions for the shock collapse.

Mr Phillips said the latest closure should be a big warning sign to other type of price delivery companies.

“When tech companies aren’t making money who are running out of cash, there’s no money to go around,” he said.

“No- one will throw cash at these guys anymore. With rates so high, that’s the big challenge.

“You have to get big fast. If you will lose money you have to find a way to make profit.

“Think about Uber. If Uber had started today they’d be in the same situation.

“They relied on this money thrown at them. It dried up so dramatically you can’t find cash to fund the start-ups.”

Milkrun has gone bust with all staff made redundant. It’ll close doors on Fri. 😭

I loved moonlighting as a #Milkrun courier. They were exceptional b/c they paid per hour, not per delivery. It disincentivised us from breaking road rules.

And it got me away from my laptop! pic.twitter.com/YhGrNBKGZG

— Gary Nunn 🏳️‍🌈🚴🏼🇬🇧🇦🇺 (@GaryNunn1) April 11, 2023

The business had already cut 20 per cent of its workforce in February was let go in an attempt to save the business.

Milkrun have slashed all their stock to get rid of it all by Friday, including packs of Remedy Kombucha listed for $6.90 on the app on Tuesday.

The company has also cut prices on alcohol by 30 per cent in an bid to reduce its stock.

The CEO reassured his 400 employees that there would be enough money to provide severance packages and pay suppliers.

“We’ve always been committed to doing things the right way, and winding down the business while we still have a sufficient cash balance enables us to ensure our people and suppliers are paid in full,” he wrote.

Originally published as Shock closure as MilkRun wraps up delivery service in Melbourne, Sydney