Food and grocery delivery service Aussie Farmers Direct has shut down, saying it cannot compete in a market dominated by the major supermarkets.
Aussie Farmers, which began 13 years ago delivering milk to homes before expanding to a full grocery range, says it will close immediately after going into voluntary administration on Monday.
“It is with great sadness that the directors of Aussie Farmers Direct advise of their decision to place the business into voluntary administration having made the assessment that the business is unable to continue operating,” the company said.
“Directors are of the opinion that it is no longer viable to keep operating the business under its current structure.”
Restructuring firm KordaMentha said about 100 franchisees and 260 employees will be hit by the closure – most of them from Victoria.
Administrator Craig Shepard said there is little cash in the company, which has struggled to compete with the supermarket giants in a tough retail environment exacerbated by low wage growth.
He said the company had tried to find a strategic partner or to sell the business, but had failed to find a solution to safeguard its future.
“Unfortunately, it is not possible to continue trading and the business will stop operating immediately,” Mr Shepard said.
He said the businesses’ logistics services will continue to trade and is not affected by the administration.
The grocery business had positioned itself away from the battle between Coles and Woolworths with a focus on exclusively local produce.
What started as a milk delivery franchise business expanded to include meat and fish, fruit and vegetables, bakery, coffee, deli and organic products.
The company had expanded to NSW, Queensland, WA, SA and the ACT, but Mr Shepard said Aussie Farmers Direct had struggled to compete with the major supermarkets and the promotion of low-cost imported products they sold.
He said most of the company’s debt is held by entities associated with local and overseas investors and there is no significant bank debt.
Aussie Farmers Direct said it had invested substantially into the business over the past four years in an effort to transform the company.
“Whilst every endeavour has been made to adapt the business into a sustainable and competitive offer, the headwinds faced by the business in the current retail environment along with increasing costs of operating meant that the directors were left with no choice but to appoint administrators,” a spokesperson for the company said.
“It is unfortunate that this outcome has not eventuated and that directors had no choice but the make this very difficult decision.”
A creditors’ meeting will be called next week.