Embattled startup Honestbee is weighing the permanent closure of its supermarket, Habitat, according to a court document seen by Tech in Asia. The company previously said it would shut down the venue temporarily.
In the document, the company’s CEO Lay Ann Ong explained that running Habitat would incur “significant overheads and working capital.”
In addition, Habitat’s landlord, LHN Space Resources, had been unwilling to extend the lease.
Ong added that Honestbee has been unable to secure an investor outside of Brian Koo (the firm’s ex-chairman), his firm Formation Group, and A Honestbee, a vehicle to hold Honestbee’s funds.
Talks with a large overseas retail conglomerate for a US$50 million cash injection have stalled. The conglomerate is reluctant to “fund the debt restructuring” of Honestbee and is deterred by the “uncertainty” caused by the Covid-19 outbreak, Ong wrote.
He intends to pursue the deal again after Honestbee’s creditor repayment scheme has been implemented.
In the meantime, he expects Honestbee to rely on Koo and Formation Group for funding in the near future.
While the US$7 million funding commitment from Koo is predicated on Habitat’s continued operations, Ong believes Koo will waive the clause.
The multimillion-dollar supermarket was launched by Honestbee towards the end of 2018 even as the company was deep in the red. It was intended as a showcase to raise money from investors. However, doubters questioned its remote location, which may have hurt its viability.
Later, it became clear that the funding wouldn’t come due to Honestbee’s poor fundamentals.
Following former CEO Joel Sng’s departure from the company, Ong doubled down on Habitat while shutting down the food delivery service.
This latest departure from Habitat may be a sign that the supermarket itself was operating unsustainably. Ong had considered changing Habitat to a low-cost consignment model, raising questions about why it didn’t adopt this approach in the first place.
Looking ahead, the company is in talks to license the technology behind its grocery concierge service as part of a joint venture.
It’s also exploring the creation of “quick-service restaurants” that would be spun out of the 16 food and beverage concepts that were developed at Habitat.