"We've been experiencing financial challenges, despite our strong efforts to reduce costs and drive sales. Our fixed costs were too high compared to the revenues we were generating; without achieving scale, it was difficult to cover expenses. We now have to wind down operations. This week and next, we will facilitate final orders to customers and stop production," Megan Burritt, Leader of Business Development at Planted Detroit, responded.
As the news came out yesterday that Planted Detroit is winding down operations and finally closing its doors on August 4, Megan sat down with VerticalFarmDaily to share the (financial) struggles they faced in the past year.
Definitely not the end
However, the team refuses to sit still. "Despite the challenges we've experienced, we are still looking for a major investor, strategic partner, or political stakeholders that are interested in discussing the role that Planted Detroit might be able to play in the food system," Megan adds.
High electricity costs
"We have significant fixed costs - to mention a few, insurance, energy costs which are so high in Detroit, and equipment complexities. Electricity costs are 14 cents per kW/h, which have been slightly reduced since last month, but it's still fairly unsustainable," Megan shares.
According to Megan, competitors have canceled plans to open facilities in the Detroit area due to these immense costs. Yet, as Planted Detroit likes to be transparent on that, they urge CEA players to share similar 'hurdles' to prevent any future failures. "If we could make it more of a public discourse around the costs of electricity supporting this kind of infrastructure, government stakeholders might be able to support our agricultural methods, making it more financially sustainable for multiple operators."
According to Megan, it's extremely challenging to build a business plan on existing costs while also offering fair market wages to employees.
Miscalculation of labor
Being vertically integrated has a lot of benefits, however, controlling everything from seed to harvest also comes with a lot of expenses, as Megan explains. "What we originally planned on the farm was way less complex, especially on the technical side. It turned out to be more complex, and the team learned a lot while developing it. The original plan of going into CEA was just a few people running the farm. However, it turned out to be way more than that."
Laying off more than 70 employees, Planted Detroit stays hopeful for a commercial takeover so the brand can be revived and production keeps blossoming.
"We would like to urge others to share more information on what challenges they have faced and the mistakes that are made so that others don't have to make them again and waste investors' money. Then, we could group and remedy these issues so that nobody has to start from scratch. We had to do it all by ourselves. Ultimately it was too big of a dream for our investor's tolerance."
For more information:
Tom Adamczyk, Founder and CEO
Planted Detroit
Tom@planteddetroit.com
https://planteddetroit.com