Nigeria’s YC-backed Chowdeck hopes to scale food delivery, a notoriously tough market, with $2.5M funding

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Food is important to Nigerians, pinch households spending astir 60% of their income connected it, nan highest globally, according to official reports. This beardown affinity for food, coupled pinch nan emergence of online shopping, sets nan shape for Nigeria’s nutrient transportation marketplace to potentially reach $2 cardinal to $3 cardinal by 2032.

Despite nan promising marketplace size, location isn’t a clear leader yet. However, Lagos-based Chowdeck, backed by Y Combinator and equipped pinch a $2.5 cardinal successful seed investment, intends to make its people successful a abstraction that has burned heavyweights for illustration Jumia and Bolt.

Founded by Femi Aluko, Olumide Ojo, and Lanre Yusuf, Chowdeck offers consumers nan convenience of ordering nutrient and having it delivered to their doorstep wrong an mean of 30 minutes. CEO Aluko shared that nan inspiration for launching nan startup came from his acquisition of speedy deliveries and exceptional customer work during a activity travel to Dubai.

Aluko explained, “Ordering nutrient successful Nigeria would usually return 1 aliases 2 hours. But each clip I ordered nutrient during my three-month enactment successful Dubai, I consistently received it connected time. If location were immoderate delays, nan edifice would telephone maine to apologize. It was awesome to see, and I wondered if we could replicate nan aforesaid level of work successful Nigeria.” In nan first half of 2023 alone, Nigerians spent complete 60 trillion connected nutrient and family items, per nan country’s top agency for charismatic statistics.

Aluko and his co-founders initially experimented pinch nan conception by utilizing a fewer bikes and partnering pinch 2 restaurants. After refining their approach, they officially launched nan first type of nan merchandise successful October 2021. Since then, nan level has knowledgeable important growth, pinch much than 3,000 riders joining and complete 500,000 users (Aluko says complete 100,000 are progressive connected nan platform).

Less competition, much growth

Chowdeck’s singular maturation is evident, particularly successful a competitory marketplace where, astatine its launch, awesome players for illustration Jumia Food and Bolt Food already had a beardown foothold pinch thousands of customers.

Additionally, fixed nan industry’s estimation for bladed profit margins and infrastructural challenges for illustration postulation and mediocre roads causing delays successful transportation times, nan cardinal mobility was really Chowdeck intended to navigate these obstacles and carve retired its niche.

Later entrants successful a marketplace person nan advantage of learning from nan experiences of earlier players. Unlike its predecessors, Chowdeck recognized nan value of maintaining affirmative portion economics from nan outset. While different nutrient transportation platforms often relied connected precocious discounts, Chowdeck opted for a different approach: optimizing its business exemplary to guarantee sustainability by minimizing discounts and only offering them connected behalf of its partner restaurants erstwhile necessary.

“We took nan clip to fig retired nan correct economics for our transportation business, which is why we’re not large connected offering unrealistic discounts,” explained Aluko, a erstwhile main technologist astatine Stripe subsidiary Paystack. “This attack kept america focused connected trading and targeting nan correct customers alternatively than trying to seizure everyone, which could’ve compromised our economics and trading strategies.”

By nan extremity of 2023, Jumia Food and Bolt Food had exited nan Nigerian marketplace citing various business reasons, leaving Glovo arsenic Chowdeck’s main competition. Both exits partially contributed to Chowdeck’s twofold personification maturation wrong nan past six months.

Prioritizing convenience

Aluko stresses that Chowdeck’s entreaty lies successful its convenience. While not needfully nan astir cost-effective option, he added that Chowdeck targets customers who prioritize clip and are consenting to salary for accelerated deliveries.

The startup’s transportation strategy relies connected factors specified arsenic geotagging, offering divers conveyance options from bicycles to motorbikes, and enforcing strict regulations connected vendors and riders. (For example, vendors must judge orders wrong a five-minute window; nonaccomplishment to do truthful leads to bid cancellation and decreased privilege for nan vendor.)

Similarly, Chowdeck employs automated processes to streamline customer-rider connections, utilizing in-house information for regular request forecasting and required proviso assessment. If, for instance, an mean rider completes 8 deliveries regular and nan level anticipates 10,000 deliveries, astatine slightest 1,250 riders request to beryllium disposable for that day.

Chowdeck’s logistics setup not only benefits mini nutrient vendors and larger quick-service restaurants for illustration Burger King and Chicken Republic but besides extends to supermarkets specified arsenic ShopRite and pharmacies. The startup, operating crossed 8 cities, has applied lessons from its flagship business to motorboat transportation services successful supermarket/grocery and drugstore verticals. In 2023, Chowdeck had much than 1,500 progressive vendors crossed nan 3 verticals; additionally, it introduced a relay work for intra-city package activity successful Lagos.

Rider earnings

Last year, nan platform’s yearly gross merchandise worth (GMV) crossed these verticals stood astatine complete ₦7 cardinal ($5.8 million). That October, it deed a milestone, crossing nan ₦1 cardinal ($830,000) people for nan first time. By March 2024, it had doubled that figure, reaching ₦2.4 cardinal ($2 million). Lagos generates 80% of Chowdeck’s volumes, while nan remaining 20% comes from different cities: Abuja, Port Harcourt, Ibadan, Benin City, Ilorin, Abeokuta and Asaba.

Chowdeck, pinch a return complaint of 24%, saw its revenues surge by 1,200% betwixt 2022 and 2023, according to Aluko.

As a fast-growing business, Chowdeck intends to usage nan recently raised superior to amended its operational ratio and widen its scope to much cities crossed Nigeria. Yet, nan on-demand transportation service is besides committed to leveraging nan finance to amended nan acquisition for its customers, vendors, and peculiarly transportation riders, whose earnings presently transcend 3 to 5 times Nigeria’s monthly minimum wage, Aluko noted.

“After a fewer months of building Chowdeck, it was clear nan level of effect we were going to person and teething problems we could lick astatine standard successful nan country, particularly astir earnings,” remarked Aluko. “For galore people, including us, it was absorbing to spot our riders getting paid betwixt 100,000-200,000 monthly ($83-$170) regularly and profitably.”

The seed information attracted finance from notable backers, including YC, Goodwater Capital, FounderX Ventures, HoaQ Fund, Levare Ventures, True Culture Funds and Haleakala Ventures. Founders specified arsenic Simon Borrero and Juan Pablo Ortega (of Rappi), Shola Akinlade and Ezra Olubi (of Paystack) besides joined nan investor list.