On May 16, the on-demand platform for room service and amenities sent an email to vendors that may have reassured them. We are writing to let you know that the room service and Catering will not change. The email said that all collateral is still functioning. We want you to stick with us through this time.
The problem was that the roughly 1,000 person workforce had been laid off. According to interviews with a number of former employees, the company had been dissolved.
There are both opportunities and challenges to be found in the world of on-demand startup. There may be gaps in the market for services that seem easy to use. They can be buffeted by economic, social, and public health problems. Those who work there are the first to leave.
The New York-based company was founded in 2016 as a "ghost kitchen" operator. In-house guests at one property would be able to get meal delivery from the hotel kitchen leased by butler.
Gjonbalic has worked in hotels. He opened his first restaurant at the age of 19 in a big box hotel in New York City. Fast Acquisition Corp., a special-purpose acquisition company, tried to take Fertitta Entertainment public, but failed.
In a 2020 interview, Gjonbalic said they were coming in to show what the experience should be. You don't need a cart in the room to deliver food To be able to track their order, guests want a good menu and good packaging. It should have been happening many years ago.
Standard by butler is a casual bar and grill, Prime by butler is an American brasserie, and Super Franc is a Tuscan steak. The integration, experience, menu design, and packaging were handled by butler. It promised to deliver orders in under 30 minutes and charged directly to the customer's hotel bill.
A seed round and funding from Gjonbalic led to a Series A funding of 15 million dollars. The company raised $30 million from backers, bringing its total raised to $50 million
In a press release issued last October, it was stated that it wanted to more than double its presence to 12 markets in the U.S. with plans to service rooms in Boston, Dallas, Houston, Los Angeles, Philadelphia, and Pittsburgh. The company said that it had over 400 partners in the hotel industry.
Some ex-employees say there was trouble going on.
As a result of the Pandemic, service and hotel spending was depressed. The company got a $600,000 loan in April 2020. New hotel restaurant lease costs continued to be taken on by butler.
$500 Visa cards were offered for every hotel partner that referred them.
According to Gjonbalic, butler expanded its national footprint in order to take advantage of the travel recovery. The startup found that COVID-19 had both direct and indirect lasting effects, including labor and supply chain shortages, closed international borders, and delays of corporate and group travel.
Inflation, the war in Ukraine, interest rate hikes, and the bigger pressure on tech finance all created challenges for the startup. Gjonbalic said that commitments fell through "abruptly" due to this.
The severity of the situation was not communicated by Gjonbalic and the rest of the company's senior leaders. The ex-employee claims they were told that the next financing round was coming and that they had no cash flow issues. The company's board of directors will give six months of runway regardless of how the next fundraise goes, according to one person.
The complaints have been made public. In June, Kelly Buerger, a former launch manager for the company, filed a class action lawsuit against the company, accusing them of not giving employees enough notice of their firing. Companies with 50 or more employees are required to give at least two weeks' advance notice of mass layoffs.
Hundreds of its employees were terminated within 90 days. The WARN Act requires thatButler giveBruger and the class members at least 60 days' advance written notice of their firing.
An email was sent a week after the dissolution to former employees who were promised health benefits.
The remaining capital was being preserved by extraordinary measures. An employee at one of the company's hotel customers said that the company discontinued services without warning. The delivery company began charging for deliveries that had been free.
There was a round of layoffs early in the year that management said was a one-time thing. About 50 people were put on leave a few weeks later.
Due to the circumstances faced by the company, we have made the difficult decision to place you on a temporary leave of absence. We want you to return to your position with us by no later than November 9, 2022.
After hiring a new COO and chief revenue officer, the layoffs began. The company ceased to exist on May 13th.
The company was dissolved on May 12 after the board and the legal counsel at the law firm explored several options.
Delaware counsel was retained to assist with the shutdown and to liquidate the business assets and the employees were terminated on May 13th. It's not operational. Several excess liability hubs were assigned or transitioned back to hotel ownership in order to assist with shutting down the company as quickly as possible.
The laid off employees were told in a three minute call from the internet. Guests at a hotel with a butler contract were unable to order room service after the company ceased to exist.
The company's vestiges are still there. An ex-employee with knowledge of the situation said that people who used to work for the company were asking about missing payments on the company's social media accounts. The shutdown has not been reflected in the profiles of many of the senior leadership at Butler, and the website does not mention it.
Gjonbalic said that his father assumed two of the remaining lease obligations and debts from the company. All post-dissolution matters are being handled by anassignee.
A lot of food delivery companies have fallen on hard times recently. Last month, the company slashed its valuation and slowed hiring. Over the past year, the stock prices of DoorDash and Deliveroo have fluctuated a lot. In the last few months, several delivery startups have let go staff despite raising money. Fridge No More, 1520 and Buyk have all been forced to close.
As investors tighten their belts and fear a downturn, stories likeButler's are playing out more and more. The demand for growth was so high that it eventually proved to be foolish. Unrealistic expectations and changes in direction were caused by inflating valuations.
The staffer said that the whole company went under because of the layoffs.
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