Meals is critical to Nigerians, with households spending practically 60% of their revenue on it, the very best globally, based on official experiences. This robust affinity for meals, coupled with the rise of on-line buying, units the stage for Nigeria’s meals supply market to doubtlessly attain $2 billion to $3 billion by 2032.
Regardless of the promising market dimension, there isn’t a transparent chief but. Nonetheless, 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 customers the comfort of ordering meals and having it delivered to their doorstep inside a mean 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 meals in Nigeria would often take one or two hours. However every time I ordered meals throughout my three-month keep in Dubai, I persistently acquired it on time. If there have been any delays, the restaurant would name me to apologize. It was spectacular to see, and I questioned if we may replicate the identical stage 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 high company 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 important progress, with greater than 3,000 riders becoming a member of and over 500,000 customers (Aluko says over 100,000 are energetic on the platform).
Much less competitors, extra progress
Chowdeck’s exceptional progress is obvious, particularly in a aggressive market the place, at its launch, main gamers like Jumia Meals and Bolt Meals already had a powerful 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. Not like its predecessors, Chowdeck acknowledged the significance of sustaining constructive unit economics from the outset. Whereas different meals supply platforms usually relied on excessive reductions, Chowdeck opted for a unique method: optimizing its enterprise mannequin to make sure sustainability by minimizing reductions and solely providing them on behalf of its accomplice eating places when crucial.
“We took the time to determine the best economics for our supply enterprise, which is why we’re not huge on providing unrealistic reductions,” defined Aluko, a former principal engineer at Stripe subsidiary Paystack. “This method saved us centered on promoting and focusing on the best prospects reasonably than making an attempt to seize everybody, which may’ve compromised our economics and advertising methods.”
By the tip of 2023, Jumia Meals and Bolt Meals had exited the Nigerian market citing varied enterprise causes, leaving Glovo as Chowdeck’s major competitors. Each exits partly contributed to Chowdeck’s virtually twofold consumer progress throughout the final six months.
Prioritizing comfort
Aluko stresses that Chowdeck’s enchantment lies in its comfort. Whereas not essentially essentially the most cost-effective possibility, he added that Chowdeck targets prospects who prioritize time and are prepared to pay for quick deliveries.
The startup’s supply system depends on components equivalent to geotagging, providing numerous automobile choices from bicycles to motorbikes, and imposing strict rules 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 each day demand forecasting and required provide evaluation. If, as an illustration, a mean rider completes eight deliveries each day and the platform anticipates 10,000 deliveries, a minimum of 1,250 riders should 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 Rooster Republic but additionally extends to supermarkets equivalent to ShopRite and pharmacies. The startup, working throughout eight cities, has utilized classes from its flagship enterprise to launch supply companies in grocery store/grocery and pharmacy verticals. In 2023, Chowdeck had greater than 1,500 energetic 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 charge of 24%, noticed its revenues, which come from vendor commissions, service charges, surge costs and supply charges, enhance 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 also be dedicated to leveraging the funding to higher the expertise for its prospects, distributors, and notably supply riders, whose earnings presently exceed three to 5 instances Nigeria’s month-to-month minimal wage, Aluko famous.
“After a number of months of constructing Chowdeck, it was clear the extent of affect we have been going to have and teething issues we may remedy at scale within the nation, particularly round earnings,” remarked Aluko. “For many individuals, together with us, it was fascinating to see our riders getting paid between ₦100,000-200,000 month-to-month ($83-$170) frequently 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 equivalent to Simon Borrero and Juan Pablo Ortega (of Rappi), Shola Akinlade and Ezra Olubi (of Paystack) additionally joined the investor checklist.
