Farmstead signed a lease for a new, greatly expanded microhub space in Burlingame, Calif., that is six times larger than Farmstead’s previous microhub in San Francisco. The company will be transitioning operations to the new facility in July, and will soon have the capacity to serve tens of thousands of Bay Area households per week.
“Our new facility, coupled with our continued hiring spree, will help us immediately quadruple our delivery capacity, and grow it by 10x in the coming months,” says Farmstead CEO and co-founder Pradeep Elankumaran. “Grocery delivery has now passed the tipping point. The recent shelter-in-place accelerated adoption of grocery delivery by 3-4 years. In the Bay Area, we went from 5% adoption to 30-40% adoption in a matter of weeks, and are gaining confidence that most new customers will continue weekly service through and after the COVID-19 pandemic. Farmstead’s model enabled us to handle the increase in volume from just one microhub. Traditional grocers struggled with capacity and per-order economics, and are already pulling back on delivery and offering order pickup instead.”
According to Elankumaran, Farmstead’s microhub model and proprietary software have enabled the company to deliver groceries at prices lower than local stores, with no delivery fees, with net-profit per order targets that are 4-5x higher than traditional grocers.