Nigeria’s YC-backed Chowdeck hopes to scale meals supply, a notoriously robust market, with $2.5M funding

Meals is critical to Nigerians, with households spending practically 60% of their revenue on it, the best globally, based on official reports. This sturdy affinity for meals, coupled with the rise of on-line buying, units the stage for Nigeria’s meals supply market to potentially reach $2 billion to $3 billion by 2032.

Regardless of the promising market dimension, there isn’t a transparent chief but. Nevertheless, Lagos-based Chowdeck, backed by Y Combinator and armed with a $2.5 million in seed funding, goals to make its mark in an area that has burned heavyweights like Jumia and Bolt.

Based by Femi Aluko, Olumide Ojo, and Lanre Yusuf, Chowdeck presents shoppers the comfort of ordering meals and having it delivered to their doorstep inside a median of half-hour. CEO Aluko shared that the inspiration for launching the startup got here from his expertise of fast deliveries and distinctive customer support throughout a piece journey to Dubai.

Aluko defined, “Ordering food in Nigeria would usually take one or two hours. But each time I ordered food during my three-month stay in Dubai, I consistently received it on time. If there were any delays, the restaurant would call me to apologize. It was impressive to see, and I wondered if we could replicate the same level of service in Nigeria.” Within the first half of 2023 alone, Nigerians spent over ₦60 trillion on meals and home goods, per the nation’s top agency for official statistics.

Aluko and his co-founders initially experimented with the idea by utilizing a number of bikes and partnering with two eating places. After refining their method, they formally launched the primary model of the product in October 2021. Since then, the platform has skilled vital development, with greater than 3,000 riders becoming a member of and over 500,000 customers (Aluko says over 100,000 are lively on the platform).

Much less competitors, extra development

Chowdeck’s exceptional development is obvious, particularly in a aggressive market the place, at its launch, main gamers like Jumia Meals and Bolt Meals already had a robust foothold with 1000’s of consumers.

Moreover, given the business’s fame for skinny revenue margins and infrastructural challenges like visitors and poor roads inflicting delays in supply instances, the important thing query was how Chowdeck meant to navigate these obstacles and carve out its area of interest.

Later entrants in a market have the benefit of studying from the experiences of earlier gamers. In contrast to its predecessors, Chowdeck acknowledged the significance of sustaining constructive unit economics from the outset. Whereas different meals supply platforms typically relied on excessive reductions, Chowdeck opted for a distinct method: optimizing its enterprise mannequin to make sure sustainability by minimizing reductions and solely providing them on behalf of its accomplice eating places when essential.

“We took the time to figure out the right economics for our delivery business, which is why we’re not big on offering unrealistic discounts,” defined Aluko, a former principal engineer at Stripe subsidiary Paystack. “This approach kept us focused on selling and targeting the right customers rather than trying to capture everyone, which could’ve compromised our economics and marketing strategies.”

By the tip of 2023, Jumia Meals and Bolt Meals had exited the Nigerian market citing various business reasons, leaving Glovo as Chowdeck’s fundamental competitors. Each exits partly contributed to Chowdeck’s virtually twofold consumer development throughout the final six months.

Prioritizing comfort

Aluko stresses that Chowdeck’s attraction lies in its comfort. Whereas not essentially probably the most cost-effective choice, he added that Chowdeck targets clients who prioritize time and are keen to pay for quick deliveries.

The startup’s supply system depends on elements akin to geotagging, providing numerous automobile choices from bicycles to motorbikes, and implementing strict laws on distributors and riders. (For instance, distributors should settle for orders inside a five-minute window; failure to take action results in order cancellation and decreased precedence for the seller.)

Equally, Chowdeck employs automated processes to streamline customer-rider connections, using in-house knowledge for day by day demand forecasting and required provide evaluation. If, for example, a median rider completes eight deliveries day by day and the platform anticipates 10,000 deliveries, no less than 1,250 riders have to be obtainable for that day.

Chowdeck’s logistics setup not solely advantages small meals distributors and bigger quick-service eating places like Burger King and Hen Republic but in addition extends to supermarkets akin to ShopRite and pharmacies. The startup, working throughout eight cities, has utilized classes from its flagship enterprise to launch supply providers in grocery store/grocery and pharmacy verticals. In 2023, Chowdeck had greater than 1,500 lively distributors throughout the three verticals; moreover, it launched a relay service for intra-city bundle motion in Lagos.

Rider earnings

Final 12 months, the platform’s annual gross merchandise worth (GMV) throughout these verticals stood at over ₦7 billion ($5.8 million). That October, it hit a milestone, crossing the ₦1 billion ($830,000) mark for the primary time. By March 2024, it had doubled that determine, reaching ₦2.4 billion ($2 million). Lagos generates 80% of Chowdeck’s volumes, whereas the remaining 20% comes from different cities: Abuja, Port Harcourt, Ibadan, Benin Metropolis, Ilorin, Abeokuta and Asaba.

Chowdeck, with a take fee of 24%, noticed its revenues, which come from vendor commissions, service charges, surge prices and supply charges, improve by 1,200% between 2022 and 2023, based on Aluko.

As a fast-growing enterprise, Chowdeck intends to make use of the newly raised capital to enhance its operational effectivity and prolong its attain to extra cities throughout Nigeria. But, the on-demand supply service can be dedicated to leveraging the funding to higher the expertise for its clients, distributors, and significantly supply riders, whose earnings currently exceed three to five times Nigeria’s monthly minimum wage, Aluko famous.

“After a few months of building Chowdeck, it was clear the level of impact we were going to have and teething problems we could solve at scale in the country, especially around earnings,” remarked Aluko. “For many people, including us, it was interesting to see our riders getting paid between ₦100,000-200,000 monthly ($83-$170) regularly and profitably.”

The seed spherical attracted funding from notable backers, together with YC, Goodwater Capital, FounderX Ventures, HoaQ Fund, Levare Ventures, True Tradition Funds and Haleakala Ventures. Founders akin to Simon Borrero and Juan Pablo Ortega (of Rappi), Shola Akinlade and Ezra Olubi (of Paystack) additionally joined the investor record.