In an abrupt decision, Miami-based The Fresh Diet, a gourmet food delivery service, closed shop Friday without informing most employees and clients, many of whom paid for the service months in advance.
The national company had been sold back to founder and Miami food entrepreneur Zalmi Duchman in March. He tried to turn the business around, but it was too late, said Daniel Gielchinsky, Duchman’s general counsel.
Previous owner Innovative Food Holdings had driven the company to financial ruin, Gielchinsky said, taking on too many employees and attempting to grow too quickly without a set expansion plan.
“Mr. Duchman attempted to implement an ambitious turn-around plan but was unable to do so because of certain obstacles and ultimately was forced to close the company because of the manner in which it was hemorrhaging cash,” Gielchinsky said.
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Mr. Duchman had hoped with all sincerity to have the opportunity to turn this company around in a positive way and is saddened that this was ultimately the outcome.
Daniel Gielchinsky, general counsel
The company is now filing for the Florida-equivalent of a bankruptcy, known as an assignment for benefit of creditors.
A temporary manager was in charge of informing employees and clients of the closure but “the manager may not have followed through on all of the notices that were intended to be given,” Gielchinsky said.
“We are looking into that,” he added.
Gielchinsky declined to say how many people The Fresh Diet employed, but said the number is below the threshold for a Worker Adjustment and Retraining Notification Act notice of a business closure. Under a WARN notice, businesses must give notice if an employment site is being shut down resulting in displacement for 50 or more employees — excluding those who have worked six months or less in the last year and those who work less than 20 hours a week — during a 30-day time period.
Kelisha Able, who worked helping clients with special food needs, said she and her husband, who is a driver for the company, were informed of the closure Thursday night through a manager. The parents of three elementary-school age children are both without jobs now, Able said.
“Right now, I am going crazy,” Able said. “We don’t know how we are going to pay our rent, we don’t know how we are going to start for our kids to go back to school, all the bills that we have. Our job is paycheck to paycheck, it’s not like we have a lot in savings.”
Able, who worked for the company for five years and seven months, said she only had one clue that the business was in trouble: when plans were being discounted from $34.99 to $19.99 a day. At The Fresh Diet, clients pay a daily fee to have breakfast, lunch, dinner and two snacks delivered to their doorstep every morning.
Right now, I am going crazy. We don’t know how we are going to pay out rent, we don’t know how we are going to start for our kids to go back to school, all the bills that we have.
Kelisha Able, The Fresh Diet employee
Able said she finally got her two-week paycheck, due to her Friday, on Monday morning — but it was only for one week.
“We are trying to figure it out,” Able said. “I’ve applied for unemployment but that’s it, we don’t know what we are going to do.”
Several clients only realized the business closed when they stopped receiving their morning meals.
Longtime New Jersey client Hayley Stein said she and her fiancé paid nearly $11,000 in two meal plans purchased on a Black Friday deal in 2015. Stein has been using The Fresh Diet since 2011 and has been “thrilled” with the program and its customer service.
But on Saturday morning, for the first time since she’s ordered her meals, the food did not arrive.
“I feel like I was ripped off,” Stein said.
She said she has paid the full cost of the plans and still has more than 200 days remaining. Most surprising, Stein said, is that on July 1 she received an email from the business with a subject line, “Introducing our new custom plan,” with information on a customizable diet plan. The email was signed by Duchman.
It didn’t seem like a company on the edge of ruin, Stein said.
Gielchinsky said the company is also “looking into” refunds for customers who already paid for meals.
Since the abrupt closure, clients have posted on Twitter and Yelp about money owed to them. Andrew Buck, director of infrastructure at the local Fresh Diet office, said Duchman texted him over the weekend asking him to delete The Fresh Diet’s Twitter, Facebook and some Yelp accounts. The website remains active but calls to a posted number go unanswered.
“Hey Zalmi, I hear that Fresh Diet has closed, and I paid a lot of food in advance. You owe me $2000! How are you going to fix this?” tweeted user @izrak2.