Modern Food Holdings Inc. is returning to its roots and cashing out of business-to-consumer (B2C) ecommerce.
The U.S. seller of specialty foods to skilled chefs is selling its consumer ecommerce business igourmet.com. The sale is for $700,000 in money, plus the idea of roughly $350,000 of gift card liabilities, to an unidentified buyer.
The corporate didn’t include Modern Food’s Pennsylvania facility within the transaction. Sampford Advisors Inc. and Erben M&A Advisors functioned as seller agents.
Modern Food sells D2C ecommerce business
“The money for this sale will likely be used to speculate into our recent retailer business, as we ramp up working capital and install recent automated machinery to chop, wrap, and label our gourmet cheese at a fraction of the fee of our previous manual operation,” says Modern Food CEO Bill Bennett. “We’re excited to leverage our expertise and capabilities in gourmet cheese in a significantly more profitable sales channel and expect to deliver sizable top and bottom-line impact for the corporate.”
Modern Food acquired the assets of igourmet.com in 2018.
On the time of the deal, Modern Foods acquired igourmet.com to “leverage igourmet’s current available capability, including 19,000 square feet of underutilized space available within the igourmet 65,000 square foot warehouse, in addition to capability available as a consequence of the seasonality of the present igourmet business, to drive additional revenue growth opportunities, including additional foodservice opportunities in recent geographic markets and locations.”
But consumer ecommerce has been a long-time money loser for Modern Foods.
“I just wanted to focus on here what a very important strategic step forward that is for the corporate,” Bennett told analysts in a recent earnings call. “Within the six years that IVFH has owned our consumer ecommerce business, we’ve lost greater than $12 million. To place that in context, that far exceeds our entire outstanding long-term debt as an organization. Removing that profit headwind is a critical step in our evolution and turnaround efforts.”
For the second quarter ended June 30, Modern Food generated sales of $16.65 million. That’s a decrease of 10.1% from sales of $18.52 million within the second quarter of 2023. Modern Food ecommerce sales totaled $1.05 million. That’s down 52.2% from ecommerce revenue of $2.20 million within the prior 12 months.
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