“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.”
This is part of the statement from Kune Food’s founder and CEO Robin Reecht as he updated the world that the startup was shutting down. On this, let’s take a pause at the price at which they were selling the food for. $3.
In Kenya, a lot of people prefer to have home cooked meals and only resort to buying food when out with friends, or at work. A lot of Kenyans who are working and buy lunch everyday spend at least a dollar on average to buy food every day.
When Kune Food was launching, this was their target market and they promised to sell affordable meals to Kenyans. The startup even went ahead to launch an app that people could use to order food from and it was good news for Kune food customers who sometimes can not make it to their physical locations.
At the time Kune Food was launching their mobile app in February 2022, everything was going great for the startup. In fact, the start up noted that investing in its own production and its own mobile app had enabled them to scale down on infrastructure costs with the benefits passed on to the consumer through affordable pricing of meals.
“In the past few months, we have seen tremendous growth in demand owing to our dynamic menu and friendly prices. We have invested heavily in research and development where we have a fully dedicated in-house team working consistently on our menu advancement so as to meet the changing demands of customers while also bridging the nutrition and price gap. Our prices range between KES 250 to KES 360 (This is an approximate of $3) for a balanced meal including a fruit salad,” said Faith Mwendia who was serving as the Managing Director for Kune Food at the time they were launching the app.
According to this, Kune Food was doing well at the time, while selling food at $3 per meal, a price they claimed was favourable for Kenyans looking to spend less on food. However, to Kenyans who are looking to spend less on food, there are meals available for less than a dollar with those who go to the extreme spending at most $2 per meal.
However, there is a different market of people who spend up to and even more than $10 a meal. The group that mostly prefer fast food; the KFCs, Galitos, Dominos, Kenchics, etc. This is mostly the group that would find sense in spending $3 on a meal at Kune food and the batch that the startup tapped into.
So Kune Food was selling their meals at affordable prices but not enough to capture the market that looks to spend less on meals. Despite this, Kune food was still selling meals and had enough customers to keep the business in operation.
On top of that, Kune Food secured a lot of money in funding and it had become clear that the only way for Kune Food was up. In June 2021, the startup raised $1 million in a pre-seed funding round led by Pan-African venture capital firm Launch Africa Ventures.
With a funding of $ 1 million, it is very peculiar for a startup to shut down after a year. Let’s have a breakdown of this,
- Kune has sold 55,000 meals at an average of $3 per meal which means they probably collected $165,000 in the time they have been in operations.
- They had gained 6,000 individual customers and 100 corporate customers which would have been a good customer base for the startup to maintain operation.
- How has it managed to shut down?
Kune Food began with a mission to supply Kenyans with affordable meals. However, Is there really an issue of accessing affordable meals in Kenya?
Well, Reecht said that he launched the startup after failing to get affordable ready to eat meals in Kenya. The statement received a lot of backlashes from Kenyans because getting access to cheap meals in Kenya is not an issue.