Nigeria’s Y Combinator-backed on-demand food delivery company Chowdeck has secured $2.5 Million in funding to fuel its growth across Nigeria.
The funding round includes investments from prominent Angel investors like Ato Arikawe (CTO of Thrive Agric), Simon Borrero and Juan Pablo Ortega (co-founders of Rappi), Shola Akinlade and Ezra Olubi (Co-founders Paystack), Y Combinator and Goodwater Capital.
Speaking on the investment round Shola Akinlade Co-Founder of Paystack said,
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“Chowdeck is not only addressing the crucial need for an efficient and reliable on-demand delivery service in Nigeria, the team embodies innovation and a commitment to excellence. Apart from investing financially into the company, our experience with building Paystack puts us in a great position to provide a lot of practical support and I am excited to see what it is to come from the Chowdeck team”.
With this newly secured fund, Chowdeck plans to solidify its dominance in markets where it currently operates before expanding to new cities across Nigeria. Also, the fresh funds will enable the food delivery company to improve its operations to deliver an enhanced customer experience.
Launched in October 2021, Chowdeck prides itself as Africa’s easiest and fastest on-demand food delivery service. The company says it makes a profit from each delivery with more than a 25% take rate per order.
Spurred by the effects of COVID-19, Africa’s food delivery industry has taken off as more vendors and consumers embrace the convenience of digital takeouts to serve customers in major cities. Despite the rising operating costs, Nigeria’s online food delivery market is highly contested, with several international companies, such as Glovo, Jumia, and Bolt, competing to own a larger chunk of the market against startups like EdenLife, FoodCourt, and Chowdeck.
When Chowdeck entered the food delivery scene, it faced stiff competition. However, the company discovered that the average delivery time for its competitors was longer than 30 minutes. It then set out to differentiate itself in the market with a shorter turnaround time for delivery.
According to Chowdeck CEO Aluko, he noted that even though the company is not the cheapest food delivery service in the country, they are the most efficient. One strategy that it has used is to hire agents who validate orders for riders at the busiest restaurants. For these busy restaurants, the agents manually verify if a customer’s order is in stock and ensure that an order is canceled if the restaurant does not have the order.
Similarly, Chowdeck employs automated processes to streamline customer-rider connections, utilizing in-house data for daily demand forecasting and required supply assessment. If, for instance, an average rider completes eight deliveries daily and the platform anticipates 10,000 deliveries, at least 1,250 riders need to be available for that day.
The company’s logistics setup not only benefits small food vendors and larger quick-service restaurants like Burger King and Chicken Republic but extends to supermarkets such as ShopRite and pharmacies.
Chowdeck, with a take rate of 24%, saw its revenues, which come from vendor commissions, service fees, surge charges and delivery fees, increase by 1,200% between 2022 and 2023, according to Aluko. Last year, Chowdeck annual gross merchandise value (GMV) stood at over N7 billion ($5.8 million). In October, it hit a milestone, crossing the N1 billion ($830,000) mark for the first time.
By March 2024, it had doubled that figure, reaching N2.4 billion ($2 million). Lagos generates 80% of Chowdeck’s volumes, while the remaining 20% comes from other cities: Abuja, Port Harcourt, Ibadan, Benin City, Ilorin, Abeokuta and Asaba.
Chowdeck is on a mission to empower restaurants not just in Nigeria, but Africa to deliver meals to customers anywhere and anytime. Part of the company’s unique offering to the restaurants listed on its marketplace is it helps them grow, and so far, most of the restaurants on its network can boast of this achievement.