- Lunchbox offers digital ordering, loyalty, and marketing services for restaurants.
- The startup is led by industry provocateur Nabeel Alamgir, who got his start as a New York busboy.
- On Thursday, the CEO told Insider that the company had grown “bloated” and had to cut 60 employees.
Lunchbox, a New York-based food-tech startup whose CEO is known for speaking against the anti-restaurant tactics of delivery apps like Grubhub and DoorDash, laid off 33% of its employees Thursday.
The company, which has raised $72 million in less than three years, went from 180 to 120 full-time employees on Thursday. One-third were notified in a Zoom call. The other 40 workers were sent messages to their personal emails, Lunchbox CEO and cofounder Nabeel Alamgir told Insider late Thursday.
The layoffs come as food tech investors pressure well-funded startups to trim bloated operations amid turmoil in the capital markets.
“We are all drunk on VC capital, and we needed to sober up,” Alamgir told Insider.
Alamgir said Lunchbox, like other VC-backed companies, had grown too quickly. He said the layoffs hit all divisions, especially engineers and tech roles.
Over the last few months, Lunchbox has acquired companies such as Delish and NovaDine to help automate restaurant onboarding. The CEO said that Lunchbox could operate with a much leaner staff now.
“We were all bloated,” Alamgir told Insider. “We no longer are growth at all costs. I’m no longer going to be dependent on investors. We’re now working towards being in cash positive.”
Two former employees, one who was laid off from the company this week, said the company spent excessively on marketing and promotional materials such as opening a restaurant in the metaverse and holding its own conferences called Lunchbox Roadshows.
“I think the combination of the industry, seeing reductions, and then just the fiscal behavior of the company, like Nabeel especially, is incredibly irresponsible with his money. He spends everything on brand and marketing and, and cool-looking things and does not spend anything on the product.”
Alamgir said the company’s marketing spend was aimed at giving the startup “a strong brand voice” amid a slew of competition.
“Excess marketing spend has not been our issue; overhiring throughout the company and being drunk with my peers on VC money has been,” he said.
Alamgir, whose company is entirely remote, said he has Zoom calls set for Friday and the weekend to talk to those who were notified of their job loss by email.
He said the company is investing $700,000 in severance packages, and he’s personally trying to find jobs for those who got cut.
“It still feels like crap. I’m responsible for a lot of people, and I’m gonna get to have to sleep tonight knowing that.”
Nabeel Alamgir is the CEO of Lunchbox. He laid off 60 people on this birthday – Thursday, July 21, 2022. Lunchbox
Well before the coronavirus pandemic swept the nation in March 2020, restaurant operators began sounding the alarm about the economic hardships they face when working with third-party delivery apps like Grubhub and Uber Eats.
Alamgir, then a marketing chief at Bareburger, often screamed the loudest. He left Bareburger to start Lunchbox in 2019 to erase what he called “injustices” restaurants faced at the hands of delivery apps. Alamgir said it’s always been his mission to help mom-and-pop restaurants reduce their dependence on third-party delivery companies.
Besides offering online restaurant ordering, Lunchbox’s services include loyalty and marketing programs for brands like Mexicue, Fuku, and Bareburger. Last year, Lunchbox launched a NotGrubhub website to promote direct orders from New York restaurants. It also introduced Citizens Go, an online ordering app for virtual brand company C3.
However, LunchBox was seeing churn inside the company, former employees said. Restaurants were leaving the startup, including the prominent virtual brand company Virtual Dining Concepts. “We were shown a scorecard last week during an all-hands that basically said we weren’t meeting any goals,” an employee who was laid off from the company told Insider.
Last year, Insider named him among 33 restaurant tech power players. Today, Lunchbox works with nearly 4,000 restaurants and still plans to grow through acquisitions, Alamgir said.
In June, Lunchbox began offering its basic online ordering software for free to mom-and-pop restaurants. Despite today’s layoffs, that free offer remains, Alamgir said. “Restaurants need it now more than ever.”