By Antony Mutunga
Kenya’s economy has been in a slump for a while. Things started going down hill even before the pandemic hit as many companies in the country were closing down. In 2014, Eveready, a dry-cells manufacturer shut down its manufacturing plant in Nakuru citing unfavourable competition. Two years after the battery maker coiled, and died, Sameer Africa shut down its Nairobi tyre plant.
Since then, matters have only gotten worse. With the pandemic, business closures have only increased further. In the 2019/2020 financial year, a record of 1,255 companies closed down, with the following financial year, 2020/2021, the number increasing to total of 2,540 companies. Even as the economy recovers from the pandemic, companies are still facing a difficult time to survive in the market.
Download Nairobi Business Monthly Latest Edition
One of the latest victims is Kune Foods, a start-up founded in December 2020 in a bid to offer ready to eat affordable meals to Kenyans – it started operations earnest in 2021 following a trial since it was founded. The company cited the deteriorating economy, rising food prices and lack of investments as the main challenges that lead to its closure.
“With the current economic downturn and investment markets tightening up, we were unable to raise our next round. Coupled with rising food costs deteriorating our margins, we just couldn’t keep going,” said Robin Reecht, founder and chief executive officer the Kenyan based cloud kitchen.
The company had previously raised $1 million pre-seed funding in 2021 and it was in the process of raising an additional $3.5 million to ramp up its operations with the promise of preparing and delivering to online clients freshly made meals at affordable prices as well as increasing their production capacity.
The start-up set out to break through in Nairobi at a low-margin price of $3 per meal while managing the value chain from preparation to on-demand delivery. With economic disturbances, this wasn’t possible.
“Since the beginning of the year, we sold more than 55,000 meals, acquired more than 6,000 individual customers and 100 corporate customers. But at $3 per meal, it just wasn’t enough to sustain our growth,” Mr Reecht said, adding that about 100 employees lost their jobs as a result of the closure.
