Russian sanctions claim NYC rapid delivery startups

Buyk, Fridge No More ceased operations after war in Ukraine derailed funding

From left: Fridge No More CEO Pavel Danilov; Buyk CEO James Walker (LinkedIn/Pavel Danilov, LinkedIn/James Walker, Buyk)
From left: Fridge No More CEO Pavel Danilov; Buyk CEO James Walker (LinkedIn/Pavel Danilov, LinkedIn/James Walker, Buyk)

Sanctions against Russian entities have claimed two unlikely victims: rapid delivery startups.

Buyk and Fridge No More, among a handful of on-demand grocery services that proliferated across the city last year, have both shut down in recent days, at least partly because of Russian sanctions, Patch reported. Buyk, backed by sanctioned Russian lender Sberbank, furloughed 650 staffers this week, including its CEO, according to the New York Post. A message on the startup’s Instagram account confirmed that it ceased operations March 10.

“The war in Ukraine and subsequent restrictions in funding have unfortunately made it impossible to continue operations,” CEO James Walker said in a statement Thursday, announcing the company’s Chapter 11 filing.

Fridge No More, meanwhile, informed staffers last week that it was closing its doors after a deal to sell the company fell through, according to Patch. The would-be buyer, San Francisco-based Doordash, passed on the deal in part due to concerns over the startup’s ties to Russia, Bloomberg reported.

Combined, the two companies operated nearly 70 “dark stores” — delivery warehouses functioning in retail storefronts — across the city. Fridge No More had 31 fulfillment centers, while Buyk had 38, according to a Patch analysis.

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Largely concentrated in Manhattan and Western Brooklyn the startups recently drew the attention of local politicians who feared the fulfillment centers were neighborhood blights that harmed local delis and convenience stores. Some had begun converting the warehouses to more traditional retail spaces to help avoid scrutiny, the Post reported last month.

City Council member Gale Brewer recently asked the Departments of Buildings and City Planning to examine zoning problems with the companies. The former Manhattan borough president is reportedly also considering introducing legislation to better enforce retail zoning.

The shutdowns of Buyk and Fridge No More may be the tip of the iceberg as startups promising 15-minute delivery times begin to sense the end of their 15 minutes of fame. Instant delivery startup 1520 bit the dust in December after running out of funding less than a year after its launch. Jokr also reportedly began talks to sell its New York operations, though the company has denied that such discussions have taken place.

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[Patch] — Holden Walter-Warner