CHICAGO — The grocery delivery service Peapod will cease operations in Midwest, starting Feb. 18.
It will close its food facilities in Lake Zurich, Palatine, Chicago, Milwaukee and Indianapolis.
The closures will affect 500 employees.
The company said it plans to remain based in Chicago, but it will focus on its East Coast grocery brands, saying it has a stronger market share there.
Peapod's Midwest operations struggled because it was online only, president Selma Postma told the Chicago Tribune. This made it challenging to get new customers who want to know the brand their fresh food is coming from, as well as a lack of a network of stores to connect to the supply chain.
The value of the online grocery market went from $12 billion in 2016 to $26 billion in 2018. Some projections estimate it reaching $100 billion by 2025, according to the Chicago Tribune.
Peapod was founded in Evanston in 1989. It was based in Skokie for most of its history, but moved its headquarters to Chicago in 2018.