Unhinged Borrowing and Poor Management Forced Kune Food to Close

By Mark Kawalya

The journey towards becoming a giant of business is often unpredictable and often requires clear judgement and sober decision making.

Kune Food, a Kenyan cloud-based kitchen, closed, rendering more than 90 employees jobless. But many wonder how the startup fell into this downward trajectory since Nairobi has proven to be a lucrative market for many startups and is still considered an attractive innovation destination by many entrepreneurs.

Kune’s problems started with an interview that CEO Robin Reecht had with TechCrunch during the pre-seed funding. Kenyans felt insulted after the top honcho said he found it difficult to find well prepared meals in Nairobi that were affordable and that everyone around him had told him it was impossible.

He added that while it was possible to make food orders in Nairobi, the food was of very poor quality, something that was untrue.

Kenyans gave him a thorough dressing down on social media while attaching pictures of restaurants that served well made food that was also pocket friendly. This was a public relations nightmare and from the get-go it damaged the firm’s reputation in the eyes of locals who were potential clients of the business.

This is not withstanding that the firm got pre-seed funding of more than $1 million, a sum that is quite substantial for a firm that was not more than 6 months old at the time. The capital injection was by Launch Africa Ventures as well as other members like Consonance and Century Oak Capital GmbH.

Nevertheless, Kune had sizeable funds and was given an opportunity because it had the potential to introduce new ideas into the food delivery business in Nairobi.

After a while, it was said that Kune had fired more than 70 percent of its employees.

The reason they gave was that the war in Ukraine had made it impossible for the firm to raise more cash. Interestingly, the firm had just raised $1 million in mid-2021 and it was shocking how quickly it had burnt through the cash. Kune was reportedly spending $160,000 per month and its directors were given salaries that the firm couldn’t maintain for the long haul.

Kune also employed poor strategies, the most catastrophic being the building of a giga kitchen that could prepare 5000 meals per day. The firm overestimated its demand and hardly delivered 1000 meals in a day.  

The situation became so dire, the firm asked employees to take pay cuts or just leave. They also start selling assets like laptops to cater for payroll needs.

The firm’s official statement was that it was the struggling with the effects of an economic downturn, low investment that made difficult to raise more funds and skyrocketing cost of farm produce.  

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts