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Hitting the bottle: Grocery delivery startup Milkrun looks to alcohol to turn profitable while looking for more money

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Milkrun, the cashed-in market leader of three local express delivery services launched last year, is cutting operations and chasing more funds amid a broader economic downturn.

The 10-month-old Sydney startup will cut overtime, cut the use of casual workers and hope alcohol sales will boost margins and reverse ongoing losses.

The changes follow the failure of Send, which collapsed into voluntary governance last month, and news last week that Sydney-based rival Voly has halved its workforce, closed warehouses and suspended expansion plans in Melbourne.

The Report nine newspapers that Milkrun, which banked $75 million from Tiger Global in January, is abandoning its 10-minute delivery promise and is already chasing more money in another capital raise.

The papers obtained pitch documents from investors showing that the company generates approximately $4 million in monthly revenue and hopes to double that to an annual run rate of $100 million by the end of 2022. But the pitch, drafted in April, caused the company to lose $13 a year. to order. Milkrun founder and CEO Dany Milham said the figure is now $10 and he believes they will be in the black in a few months, making $1 per order.

Milham told Startup Daily it was “very misleading” to say the startup was moving away from fast delivery.

“Our average delivery time is 11 minutes and my email to customers on Friday was directly related to this, promising that we will only get faster,” he said.

Losing $10 on each other “is actually a good number compared to international peers,” he said.

“This is in no way a bad thing for our business at this stage and the fact that it was $40 and even $13 two months ago shows that we are meeting our goals and scaling up as planned,” Milham said.

The pitch deck outlines that Milkrun, which operates in Sydney and Melbourne, will generate more revenue per customer than Amazon’s US retail business and expand into areas such as insurance and takeaway, predicting average order value in Sydney’s eastern suburbs to increase. increase over 15 months from $28.35 to $41.72 in June 2023, including alcohol. It currently sits at $34, excluding booze.

To improve margins, the company plans to cut staff costs, which are currently around $42 per hour, by more than 25% to about $30.

It is unknown how much runway the startup has left after the $75 million raise five months ago.

Milkrun’s local backers include Sydney VC AirTree Ventures and the family investment funds of Atlassian co-founders Scott Farquhar and Mike Cannon-Brookes.

In addition to competition from global tech startups such as Ubereats, Doordash and Aircart, Milkrun also faces a challenge from supermarket giant Woolworths, which plans to introduce a 60-minute delivery service on top of its existing same-day online ordering offering.

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