MONTREAL — Meal-kit and grocery-delivery company Goodfood laid off 70 staff members this week and is shuttering its Ontario distribution centre as it struggles with inflation, supply-chain issues and labour shortages, The Logic has learned.

“The global pandemic, combined with the most serious geopolitical crisis since World War II, has led to increasingly dramatic disruptions to supply chains, input costs (food & oil), and labour market. The result of these disruptions is seen in the record rate of inflation we’re experiencing—a once-in-a-generation challenge none of us have had to deal with before,” its co-presidents, CEO Jonathan Ferrari and COO Neil Cuggy, wrote in a an April 4 letter to “all Goodfoodies,” a copy of which The Logic obtained.

This is the third round of cuts at the Montreal-based company since October, according to two sources familiar with the matter. The Logic isn’t identifying the sources so that they may speak freely. 

This round, affecting 70 employees, represents about 2.8 per cent of Goodfood’s workforce, according to the company. An email to Goodfood CFO Jonathan Roiter, the company’s publicly listed contact for investor relations, elicited an unsigned response from a general investor-relations mailbox. 

It brings its employee count to 2,500, according to the company—nearly 25 per cent less than the 3,200 it had when it ended its fiscal year on Aug. 31, according to its most recent annual report.

“We’ve made great strides to accelerate our march towards profitability, including consolidating ON1 volume into QC1,” Ferrari and Cuggy wrote in the letter this week. (ON1 is Goodfood’s Ontario distribution centre. QC1 is one of its Quebec-based facilities.)

Founded in 2014, Goodfood was among the first Canadian meal-kit companies, billing itself as a healthier, time-saving alternative to takeout. The company went public on the Toronto Stock Exchange in June 2017, and saw a near tripling of its active subscriber base the following year.

The company saw further explosive growth during the pandemic, with a 40 per cent year-over-year increase of active subscribers to 280,000, by the end of its 2020 fiscal year. It also launched a private-label food division in 2019 and a one-hour grocery-delivery service in Montreal and Toronto last November.

Yet the company had a round of layoffs in October 2021, and another two months later. “We have $120 million of cash [sic] & liquidity available to continue our growth, and Goodfood’s largest investors are excited by the progress we are making towards becoming the #1 online grocer in Canada,” Ferrari and Cuggy wrote to employees following that round of layoffs, in a Dec. 10 letter obtained by The Logic. More recently, Goodfood shut down its “ready-to-eat” kitchen and subcontracted the production of its prepared meals, according to an employee with knowledge of the matter. The company’s share price has tumbled by more than 70 per cent from its August 2021 peak. 

Its first-quarter financial results, released Jan. 18, showed a net loss of $22 million, with $78 million in net sales and 254,000 active customers. That month, it announced plans to increase its number of micro-fulfillment centres—facilities that let it offer its customers one-hour delivery—from three to six, financing the expansion by raising $30 million via convertible unsecured debentures. It announced the opening of one of those new facilities in Ottawa on Monday, the press release saying it would result in over 200 new jobs. The company is scheduled to report its next quarterly earnings on April 14.

This week’s letter says the company has provided support for employees affected by the most recent cuts. “We thank them for their contribution and look forward to keeping in touch with them as part of our alumni network,” it reads.

“The actions we’ve taken, although not easy, are putting us in an enviable position to be profitable and in control of our own destiny in fiscal 2023, while staying focused on our big hairy audacious goal to revolutionize grocery shopping in Canada,” Ferrari and Cuggy wrote in the letter. “The revolution is just beginning!”