How unpaid salaries and vendor debts forced FoodCourt to pause operations
On March 4, 2026, some customers of FoodCourt, a Y Combinator-backed Nigerian cloud kitchen, noticed they could no longer place orders on the app. When they opened it looking to get a meal, they found the same line where the menu used to be: orders cannot be processed at this time.
Unknown to customers, the cloud kitchen had stopped delivering orders because the people who cooked the food, supplied it, delivered it, and ran its branch in Lekki, an affluent commercial and residential area of Lagos, had not been paid in months and went on strike, according to documents and internal messages seen by TechCabal.
The app was switched off by the startup’s leadership so that customers’ orders would stop coming in, according to internal messages seen by TechCabal. Beyond staff salaries, the company also owed money to vendors.
By April 19, the last FoodCourt branch had temporarily shut down after the second Lagos location paused operations, while the startup’s finance department raced to settle outstanding payments in anticipation of new funding by the end of April.
“The recent suspension of operations has been a difficult period for everyone connected to the business, including our employees, vendors, riders, customers, investors, and management team,” Henry Nneji, FoodCourt’s chief executive officer, noted in an emailed response to TechCabal.
“It’s important to clarify that the decision to pause operations wasn’t driven by one single issue. We reached a point where it became clear that continuing to patch those issues while operating wasn’t the right long-term decision,” Nneji added.
“The objective is to build a stronger business than the one that existed before the suspension. We fully intend to bring FoodCourt back,” he said.
Founded in 2021 by Nneji and Paul Adokiye Iruene, its chief technology officer, FoodCourt is the consumer app of CoKitchen, a Y-Combinator-backed foodtech company. The startup runs a full-stack cloud kitchen. Instead of listing other restaurants, CoKitchen cooks the food itself under several virtual brands from its kitchens, and customers order through FoodCourt in a business model that is optimised for speed and lower costs.
By the end of 2024, Nneji shared on LinkedIn that the startup had raised $1.7 million, delivered over 1 million meals, and achieved $4.3 million in annual recurring revenue (ARR). The closure came as a surprise to customers, as FoodCourt had shared that it was profitable in 2024 and opened new branches in Abuja, Nigeria’s capital, and another Lagos branch within 18 months.
Nneji said the startup was prudent with cash and that being accepted into Y Combinator had taught it discipline in 2024. “It got us to be very strategic about how we use our money, and it got us to also have a very, very deep look at our unit economics and our contribution margins just to make sure that we’re actually operating a sustainable business,” he told journalists at the time.
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FoodCourt’s long road to pausing operations
On February 21, 2026, FoodCourt’s human resources manager removed several employees from the company’s WhatsApp group chat, where it ran most of its operations, internal messages seen by TechCabal show.
It was the same day Nneji addressed staff directly about “the current salary delay,” saying leadership takes responsibility and ties the delay to “a funding facility that is now in its final stage of completion,” which “took longer than anticipated,” those WhatsApp messages show.
Employees were owed salaries across the company’s three branches at the time: two in Lagos, Nigeria’s commercial capital, and one in Abuja, the federal capital. It is not clear how many went unpaid or how much they are owed.
“We acknowledge that there are outstanding employee compensation obligations arising from this period,” Nneji said in its emailed response to TechCabal. “We remain committed to addressing those obligations as part of the restructuring process. Out of respect for employees and ongoing internal matters, we won’t be commenting on specific figures or employee counts.”
By March 2, 2026, kitchen staff decided to stop working over “the current situation”, according to messages sent by the head chef, who manages the kitchens, to the startup’s management team. She advised turning off the app to avoid customer complaints about delays “while we mitigate next steps,” according to internal messages seen by TechCabal.
Two days later, the app began displaying the “Oops, orders cannot be processed at this time” line to customers. Internal messages show management was trying to resolve a standoff at the Lekki kitchen, where staff had gone on strike over unpaid salaries.
From there, things deteriorated quickly, with Nneji sending a message to department heads and managers saying that “effective immediately, operations across all branches (Obanikoro, Lekki, and Abuja) have been temporarily suspended.” He cited the startup’s ongoing financial difficulties and its mounting debts to staff and vendors and said the suspension was meant to prevent further financial exposure.
However, messages seen by TechCabal show the unpaid wages were not spread evenly. A management message said heads of department, managers, and selected team members would continue to be paid. For other employees, the wait for their salaries ran into months.
“In the third week of March, I finally got my January salary,” said one former employee who asked not to be identified to avoid retaliation. “I consider myself one of the lucky ones to have received anything.” They added that two further months of pay, for February and March, remain outstanding.
“During the restructuring period, a small number of people continued supporting critical business functions, stakeholder engagement, compliance matters, asset preservation, ongoing obligations, and restructuring efforts,” Nneji said.
“Where possible, we also sought to prioritise team members in the most financially vulnerable positions. Senior leadership and management absorbed a significant portion of the impact during this period as we worked through the company’s challenges,” he added.
Separately, one internal email shared with TechCabal by a former employee describes ₦3 million ($2,171) owed to a distributor, framed as an excess payment the distributor was demanding back, with the threat of legal action.
Nneji declined to discuss the specific relationship, saying the company has commercial disputes from time to time and intends to settle legitimate obligations directly with the parties involved.
He also attributed the salary delay to a funding facility said to be in its final stage of completion. Nneji declined to comment on whether that facility ever closed.
“We have made meaningful progress across several areas of the business,” Nneji said. “We’re grateful that our existing investors have continued to support us through this period. In particular, we’ve been working closely with Future Africa, one of our largest investors, as we navigate this restructuring process and the next phase of the business.”
Why did FoodCourt end up here?
In September 2024, FoodCourt laid off 100 employees in what it called an efficiency drive while funding its second branch inside Lagos and its Abuja branch. The move did little for the business, as that growth did not keep pace with the new costs, two former employees told TechCabal.
“The Abuja launch was part of our long-term growth strategy and reflected our view of the opportunity at the time,” Nneji told TechCabal. “Based on the information available to us then, we believed it was the right decision for the business and would strengthen our long-term position. As with many growth initiatives, circumstances ultimately evolved differently than anticipated.”
Cloud kitchens live and die by their unit economics, the thin margin left on each order once food, packaging, labour, delivery and marketing are paid for. This business model fails when those costs outrun what an order brings in, and the operators that have collapsed mostly did so when rising costs met flat or falling demand.
FoodCourt operated in an environment where its profit margin shrank. In contrast, operating costs (food, packaging, labour, refunds, and marketing) kept rising until they outgrew what each order brought in.
That rising cost exposed how much the model was really asking of one startup. Cooking and packing food, running logistics, marketing, and customer support are each distinct, capital-intensive operations, and holding them all together proved difficult for FoodCourt.
“The restructuring is about far more than finances. It’s about improving systems, strengthening operational processes, improving execution, building a healthier organisation, and creating a business that is more resilient for the long term,” Nneji said.
The cloud kitchen model has struggled globally. Kitchen United, the ghost-kitchen pioneer, raised $175 million and ended up selling or closing all its locations in 2023. CloudKitchens, founded by former Uber CEO Travis Kalanick, laid off staff and closed 41 of its 71 restaurants within a year.
The business model runs on high fixed costs and heavy working-capital needs, requiring a constant rise in demand and outside funding to keep arriving.
For FoodCourt, both stalled.
That combination proved too much, and now its former employees, dispatch riders, and vendors are owed as investors, and its founders race to solve the problem.
FoodCourt’s suspension stemmed from a mix of operational, organisational, and working-capital pressures rather than any single failure, Nneji said. “We felt it was more responsible to pause, take a hard look at the business, and fix the underlying issues properly rather than continue applying short-term solutions.”
He acknowledged that FoodCourt owed money to vendors, riders, and service providers as well as staff and said the company was working toward an orderly resolution. He added that the startup intends to relaunch, calling a stronger business the goal of the restructuring, though he gave no reopening date.
“We understand that some people may question whether FoodCourt can successfully return. That’s a fair question,” he said.
“What gives us confidence is that the underlying demand [for] our product (good food) is real. Over the years, FoodCourt served tens of thousands of customers, built significant operational infrastructure, developed proprietary technology, and created a business that customers relied on. The challenge was building the operational and organisational foundation required to support that demand sustainably.”
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