'Dark Stores' Shutter Across NYC After US Imposes Sanctions

NEW YORK CITY — The rapid grocery delivery boom that was supposed to reshape New York City's commercial landscape may be over before it started: two of the industry's most prominent businesses have shuttered their dozens of warehouses and closed down entirely.

Buyk and Fridge No More abruptly shut down in recent days, reportedly caused at least in part by financial issues stemming from U.S. sanctions on Russia. (Both startups were backed by Russian investors.)

Promising no-fee deliveries within 15 minutes, both companies expanded at a breakneck pace around the city in recent months, along with similar companies riding a wave of venture capital funding.

Last week, however, Fridge No More's CEO told employees that it was closing down after a sale to a potential buyer fell through, according to multiple reports. The same day, the company filed a notice with the state, indicating that it would lay off 671 workers across the 31 New York City delivery centers.

Using public records, Patch mapped Fridge No More's dozens of shuttered locations — along with another 38 warehouses run by Buyk, which announced its own shutdown in early March, as the New York Post first reported.

Spread across all five boroughs, the combined 69 storefront fulfillment centers were especially concentrated in Manhattan and Western Brooklyn.

Some locations had only existed for a few weeks: Buyk's location on 21st Street in Astoria, Queens opened in December, with a company spokesperson telling Patch that the neighborhood stood out as a "fast-moving residential area where people value their time a lot."

In Long Island City, Fridge No More's 38th Avenue storefront appeared empty when Patch stopped by Thursday afternoon, although indoor refrigerators were still illuminated and stamped delivery bags were lined up on a table.

Even before the financial woes, the companies had attracted unwanted attention. Elected officials have subjected the rapid delivery companies to harsh scrutiny, labeling them "dark stores" since the warehouses tend to be off-limits to the public — and alleging that they could pose a mortal threat to street-level shops like bodegas.

More concretely, some officials charge that the warehouses are not even legal, since they operate on blocks zoned for typical local retail. Earlier this month, City Councilmember Gale Brewer released a map showing 115 such warehouses around the city — nearly all of which appeared to violate the zoning code.

Amid the scrutiny, some of the companies began rushing to alter their storefronts to add small areas open to the public, helping to skirt the zoning restrictions.

While Fridge No More's leaders tied its shutdown to the failed sale, the Post reported that the closure could also stem from recent U.S. sanctions on Russia. Fridge No More was led by a Russian CEO and had drawn funding from Russian investors, prompting speculation that the war in Ukraine had harmed the company's finances, according to the Post.

While Buyk initially said its hundreds of furloughs were temporary, a message on its Instagram page appears more permanent: "As of March 10, 2022, BUYK has ceased its operations," it reads. "We thank you all for your support and patronage, and hope to see you again soon."