The online grocery delivery service Peapod is leaving Illinois, and facilities in Lake Zurich and Palatine will be closed, its parent company said Tuesday.
Ahold Delhaize USA in a news release announced plans to close its Midwest division of Peapod, enabling it to focus on the East Coast.
"Effective Feb. 18, 2020, service for Midwest customers placing online grocery delivery orders in Illinois, Wisconsin and Indiana will be discontinued," the release said.
Distribution centers in Lake Zurich, Chicago, Milwaukee and Indianapolis will be closed, as well as a pickup point in Palatine, the company said.
The company said about 500 workers in the Chicago area, Indianapolis and Milwaukee are expected to be affected.
"Associates affected by this announcement will be eligible to apply for other roles within Ahold Delhaize USA companies," the statement said. "Eligible associates will be offered severance and transition support services."
"This was a difficult decision given Peapod's rich history in the Midwest," CEO Kevin Holt said in a statement. "We know changes such as these are never easy for consumers and communities. We appreciate the loyalty of associates and customers in the Midwest sales business over the past three decades."
The company said the Peapod online grocery sales business comprises $97 million in revenue of the $1.1 billion in total online revenue in the U.S.
"This move will enable us to fully focus on markets where we have strong store density, leading market share, and a long-standing heritage of customer loyalty," Holt said, referring to the East Coast.
The company said it plans to remain based in Chicago.
"Chicago will remain the headquarters for our Peapod Digital Labs team, and we will continue to draw from the valuable pool of digital and e-commerce talent in the market," said JJ Fleeman, president of Peapod Digital Labs and chief e-commerce officer. "Through Peapod Digital Labs, we will continue to build upon Peapod's technology legacy. Peapod began here, and we will remain here, in the heart of Chicago."
Peapod had moved its headquarters from Skokie to Chicago in 2017. The company was started in Evanston in 1989. It's been facing competition from other online delivery services like those of Amazon, Walmart and Instacart.