2 Upper East Side 'Dark Stores' Close Amid Startup?s Implosion

UPPER EAST SIDE, NY ? The rapid grocery delivery boom that was supposed to reshape the city's commercial landscape may be over before it started: one of the industry's most prominent businesses has shuttered its dozens of New York City warehouses and closed down entirely.

Two Upper East Side locations of Fridge No More are among the company's 31 storefront fulfillment centers that closed abruptly last week ? along with the company itself.

Promising no-fee deliveries within 15 minutes, Fridge No More expanded at a breakneck pace around the city in recent months, along with similar companies riding a wave of venture capital funding. But the company's CEO told employees last week that it was closing down after a sale to a potential buyer fell through, according to CNN.

The same day, Fridge No More filed a notice with the state, indicating that it would lay off 671 workers across the 31 New York City delivery centers.

That includes its Upper East Side locations at 1198 and 1638 Third Ave., where Fridge No More took over vacant storefronts formerly home to more traditional retailers ? in the latter case, the old Effy's Cafe space near East 92nd Street.

For months, local officials have subjected the rapid delivery companies to harsh scrutiny, labeling them "dark stores" since the storefront 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 charged that the warehouses were not even legal, since they operated 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 New York 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, the Post reported.

Fridge No More did not immediately respond to a request for comment.

Buyk, a similar Russian-backed delivery startup with locations around the city, likewise shut down earlier this month, directly attributing the closure to sanctions on Russia.

On the Upper East Side, other delivery centers have attracted unwanted attention for their effect on the streetscape. Last month, City Councilmember Julie Menin accused the company Gopuff of endangering neighbors near its Lexington Avenue warehouse by allowing employees to ride electric bikes on sidewalks and against traffic.

Related coverage:

• Upper East Side Delivery Center Endangers Neighbors, Menin Says
• 2 UES 'Dark Stores' Are Operating Illegally, Boro Prez Says