An online grocery service has warned it may see an increase in cancellations as the cost of living crisis impacts its customers.
Modern Milkman, which is headquartered in Colne, Lancashire, said the current macroeconomic conditions "pose a challenge for all businesses" and that production costs have "spiralled" because of inflation and the war in Ukraine.
The company delivers eco-friendly produce through a subscription model such as milk, juice, eggs, butter, bread, fruit and vegetables in plastic free packaging and returnable glass bottles.
The business warned that the cost of living increase "also has an impact on our customers and therefore we may experience an increase in our cancellations".
READ MORE: Click here to sign up to the BusinessLive North West newsletter
It was founded by chief executive Simon Mellin and completed a funding round in June 2022 which raised £21.9m. At the time, only a £2.25m investment from Manchester-based Praetura Ventures was revealed.
Earlier this year the company said it made 350,000 deliveries a week and employed 650 staff.
The cancellation warning was included in newly-filed documents with Companies House which show its turnover more than tripled from £7.9m to £24.7m in 2021.
However, its pre-tax losses widened from £1.7m to £15.4m.
The company also claimed it helped save more than 21.7 million plastic bottles during 2021, up from 6.5 million in 2020.
A statement signed off by the board said: "The company continued to grow rapidly in 2021, achieving a 209% increase in revenue and expanded delivery coverage across the United Kingdom.
"During the year, the business invested heavily in marketing, our operational infrastructure and technological development in order to support growth in both the current and future years.
"Towards the end of 2021, we formed our first foreign subsidiary in France which began trading in early 2022.
"Going forward, focus remains on continuing to grow our customer base, growing basket spend and increasing our network density in order [to] improve profitability."
On the main risks the company faces, it added: "The current macroeconomic conditions pose a challenge for all businesses. Production costs have been steadily increasing for many years now, but recently they have spiralled for several reasons, including long-term inflation as well as the ongoing war in Ukraine which has impacted costs of farming essentials such as fertiliser, fuel, feed as well as labour costs.
"This will have an impact on operating margins however we work closely with our suppliers to ensure we are paying a fair price for the products in line with our values.
"We also continually review retail prices for our products to ensure we remain competitive.
"The cost of living increase also has an impact on our customers and therefore we may experience an increase in our cancellations.
"However, we believe that our subscription model represents great value and our little and often top-up format helps consumers to minimise food waste, buying only what they need for the coming days."
READ NEXT:
