Gopuff celebrates 10 millionth delivery and opens new delivery hub in Center City
“Anywhere outside Philadelphia, this business would not have been as successful,” one of its founders says.
Gopuff, the Center City-based snack and home-goods delivery firm forced to trim costs with job cuts and shutdowns earlier this year, returned to its roots Tuesday as founders Rafael Ilishayev and Yakir Gola opened a new center at North Sixth and Callowhill Streets.
The founders noted that the newly painted warehouse and its half-block of shelving marked an upgrade from Gopuff’s cramped, improvised Center City locations of years past, which sparked neighboring residents’ traffic and noise complaints.
The new site is in the former Philadelphia Ball & Roller Bearing Co. building in an industrial neighborhood near where I-676 connects to I-95 and the Ben Franklin Bridge to New Jersey. The building sold for $5.1 million at the end of 2020, as the company, then flush with investors’ cash, was opening new centers fast.
The founders met at Drexel and started the business as students on a shoestring. They offered a kind of “Wawa on wheels,” delivering snacks to students at all hours.
At a time when Amazon and other delivery services were growing rapidly, Gopuff attracted more than $1 billion from investors in Silicon Valley, New York, Japan and Saudi Arabia, and used the funds to open new centers in college towns and city neighborhoods that attracted young professionals. The pandemic boosted delivery demand further, though analysts say store reopenings and higher finance costs have slowed the industry’s near-term prospects.
“It took six years to get our first million deliveries,” Gola said. Gopuff just passed 10 million orders in Philadelphia and marked the occasion by asking Sixers star James Harden to make the delivery Tuesday in a car decorated with Gopuff branding.
At Tuesday’s ribbon-cutting, Mayor Jim Kenney painted Gopuff’s early days in a romantic light. “This company marked the beginning of the ‘young-ing’ of Philadelphia” — and the return of young people and their energy into city neighborhoods.
Kenney also claimed credit for the city’s “decriminalization of marijuana,” which he said helped attract the company and its young fans. That was a nod to Gopuff’s early marketing campaigns linking snack orders to pot smokers’ midnight appetites. The company has since distanced itself from any association with getting high.
Philadelphia has been a “model market” for the company, Ilishayev said. The original centers lacked loading docks, parking, and other amenities, but “we had a lot of grit. That’s what this city represents — a lot of grit,” he said. “Anywhere outside Philadelphia, this business would not have been as successful.”
Earlier this year, Gopuff announced that it would cut 10% of its 15,000 global workforce and 76 distribution centers in marginal markets as it sought to ease losses, while waiting for securities markets to improve so it could go ahead with a long-delayed initial public stock offering (IPO) that would have enriched its early investors.
According to a Wall Street Journal report last month, Gopuff was burning more than $100 million a month more than it brought in before the cuts, but still had more than enough investor cash to last through the year. The Journal added that the company is trying to borrow $300 million to boost its cash cushion.
“When you come from a background of not having money, as we do, you plan for this,” said Gola, adding that the company also had astute advisers among its investors, which include Japan’s Softbank and Silicon Valley-based Accel Partners, along with a group of New York hedge funds.
National companies such as Gopuff also face pressure from the end of the COVID-related shutdowns that had sent many consumers home to order deliveries. With business back to normal, fewer need to pay extra for delivery.
Gopuff charges $2.95 per delivery and also prices items to cover its costs. Tips are an important part of drivers’ income.
The pandemic also gave a boost to local, tech-enabled rivals, including such as Dan Tsao’s RiceVan and Victor Tejada’s Delivery Guys, both based in Philadelphia, as well as tech-enabled efforts such as Conshohocken-based Zuppler, whose order technology promises lower expenses to food providers that use it.
Gopuff has worked to keep customers’ loyalty by adding new branded and partner-made snack lines, baby products, and “plant-based” foods such as porkless pork rinds.
Lately, it’s become a little easier to find workers in some cities, as the economy slows, he said. “We are a global business that’s local everywhere.”