Kune, a Kenyan food start-up founded by Frenchman Robin Reecht in 2020, has closed its doors after failing to raise Sh30 million from a French investor for operations amid rising costs.
Mr Robin Reecht, who is also the firm’s CEO, announced Wednesday that inflation, which has seen the costs of food rise, has made their operation untenable.
The firm has also failed to raise money to finance operations, suggesting that investors mostly from the developed world are pulling back investments due to fears of recession and interest rate hikes.
Kune which recently announced plans to expand to other Kenyan towns in the next 12 months as the demand for home-made healthy meals on order gained momentum said it was unable to keep up with rising operations costs.
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"With the current economic downturn and investment markets tightening up, we were unable to raise our next round. Coupled with rising food costs deteriorating our margins, we just couldn’t keep going," said Mr Reecht in a statement.
"My first thoughts go to my team. You put your heart and soul into building the Kune that so many people loved. I’m deeply sorry it didn’t work out."
Founded in December 2020, Kune said earlier it had the capacity to deliver up to 8,000 freshly made meals per day with food prices ranging between Sh250 to Sh360 for a balanced meal including a fruit salad.
The closure will affect 90 employees who operated from seven distribution hubs.
Its meal hubs included Nairobi’s central business district along University Way among other areas.
"Since the beginning of the year, we sold more than 55,000 meals and acquired more than 6,000 individual customers and 100 corporate customers. But at $3 (Sh351) per meal, it just wasn't enough to sustain our growth," he said.
Global fundraising in capital markets is tipped to shrink as surging inflation, the war in Ukraine and volatile asset prices delay stock listings and hamper deals.
Kune had this year been looking to raise Sh409.5 million ($3.5 million) from local and international investors to increase production capacity.
Kune had earlier told Business Daily that the Sh117 million ($1 million) pre-seed funding raised last year had enabled the company to develop its factory capacity, boost research capabilities and strengthen the delivery system.
Its expansion coincided with the Kenyan food industry witnessing the entry of local and foreign players, attracted by growing spending on restaurant and takeout food by the country’s rich and middle-class households.
Food prices have hit record highs led by a surge in vegetable oils and other essential commodities.
The war in Ukraine and prolonged drought have sent global prices for grains, cooking oils, fuel and fertiliser soaring.
Kenya’s inflation hit a 27-month high in May on the back of a jump in the price of essential items like cooking oil, food, fuel, and soap, squeezing household budgets and demand for goods and services.
The cost of living measure rose to 7.1 percent in May from 6.5 percent the prior month, according to the Kenya National Bureau of Statistics (KNBS).