Express delivery service Milkrun is cutting headcount by 20% and will consolidate the number of delivery hubs as founder Dany Milham sets up the business to survive until 2024 amid a hunt for additional capital.

In a letter to staff today, Milham said economic and market conditions are changing rapidly and they “need to lead the way and evolve the way we operate to fit the current environment and extend our catwalk.”

Milkrun, which launched in Sydney in September 2021 and also operates in Melbourne, will have more than 12 months of runways as a result of the changes, Startup Daily understands. The number of hubs will be reduced, while still serving all existing markets – approximately 80 suburbs in the two capitals.

The company will also cut about 20% of its positions across the company. Members of the support team are believed to be among the worst affected. The company would not comment on how many people are affected, but it is believed that up to 500 people work for the company.

“This is clearly very difficult news to deliver and receive, and I am sorry to those of you whose roles are affected by this,” Milham said in his message to staff ahead of meetings to outline next steps.

“We started MILKRUN with a promise to treat our people right, and that promise stands. All Milkos whose roles are affected will receive their full legal entitlements, as well as additional ex-gratia payments and ongoing support through our health and wellness partner, including counseling for affected individuals and additional welfare services for partners and family.

Startup Daily understands that cost savings will make all hubs profitable or break even.

The company has also beat its own forecasts since its Series B pitch deck, which was shown to investors last year. The average order value (AOV) is now above $50. The deck talked about AOV in Sydney’s Eastern Suburbs growing from $28.35 in 15 months to $41.72 in June 2023. Eleven months ago it was sitting at $34.

Milkrun is the last local grocery delivery startup still standing, following the collapse of Send in May 2022, after it failed to find additional investor support. Voly suffered the same fate, closing in November after raising $18 million in a Seed round led by Sequoia Capital India.

Voly posted a net loss of $13.6 million in FY2022.Subscription butcher startup Our Cow acquired the Voly brand and other assets from the managers.

Milham’s business is the best capitalized, but it’s also growing rapidly, with the cash burn causing it to lose $10 per order in mid-2022, but then decline.

Milkun hopes to capture a 20% share of the country’s online market share in the grocery, meal kits and alcohol sectors, and is also targeting pet, baby, gift and pharmacy sales.

The CEO said they had been working for the past 18 months “under challenging conditions, never straying from our mission to build a dynamic, sustainable business,” praising his team’s dedication.

“I want to thank everyone for being an integral part of the MILKRUN story. Your hard work, dedication and contribution to creating a vibrant culture have been invaluable,” Milham wrote.