Nigeria's YC-backed Chowdeck Aims to Scale Food Delivery with $2.5M Funding

 

In a move that could shake up the competitive Nigerian food delivery market, Chowdeck, a Lagos-based startup backed by Y Combinator, has secured $2.5 million in seed funding to scale its operations and expand its reach across the country. The funding, which comes as the startup celebrates significant growth and a strong user base, is a testament to Chowdeck's innovative approach to food delivery and its commitment to providing a seamless experience for customers, vendors, and riders alike.

A Market with Huge Potential

Nigeria's food delivery market is a lucrative one, with households spending nearly 60% of their income on food, the highest globally. This strong affinity for food, coupled with the rise of online shopping, sets the stage for the market to potentially reach $2 billion to $3 billion by 2032. However, despite the promising market size, there isn't a clear leader yet, making Chowdeck's entry into the market a significant development.

Chowdeck's Unique Approach

Chowdeck's founders, Femi Aluko, Olumide Ojo, and Lanre Yusuf, have taken a different approach to the market. Instead of relying on high discounts to attract customers, Chowdeck has focused on optimizing its business model to ensure sustainability. This approach has allowed the startup to maintain positive unit economics, ensuring that it makes no loss on any transaction. 

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While this strategy may not be the cheapest, it has enabled Chowdeck to target customers who prioritize time and are willing to pay for fast deliveries.

Key Features and Milestones

Chowdeck's platform offers consumers the convenience of ordering food and having it delivered to their doorstep within an average of 30 minutes. The startup has also introduced a relay service for intra-city package movement in Lagos, which has helped to streamline its logistics. With a take rate of 24%, Chowdeck's revenues have increased by 1,200% between 2022 and 2023, with the startup processing over 14,000 deliveries daily and growing 1,000% year-on-year.

Rider Earnings and Support

Chowdeck's rider earnings are also noteworthy, with some riders earning as much as ₦400,000 ($343) monthly, 13 times the national minimum wage. The startup's focus on rider compensation is a key differentiator, with Aluko stating that the business is built on profitable unit economics. "Our business is not the cheapest delivery platform. We charge customers what we think a delivery is worth and pay riders almost the same amount," he added.

Challenges and Future Plans

Despite the challenges posed by the market, including fuel scarcity, bad roads, and heavy traffic, Chowdeck is committed to delivering timely services. The startup plans to use the newly raised capital to improve its operational efficiency and extend its reach to more cities across Nigeria. 

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It also intends to leverage the investment to better the experience for its customers, vendors, and riders.

Conclusion

Chowdeck's success is a testament to the power of innovation and a commitment to providing a seamless experience for customers, vendors, and riders alike. As the startup continues to scale and expand its operations, it will be interesting to see how it navigates the challenges of the Nigerian market and whether its approach to food delivery can be replicated in other markets.

What do you think about Chowdeck's approach to food delivery? Do you think it has the potential to disrupt the market? Share your thoughts in the comments below.

Citations:

Chowdeck: On-demand food delivery for Africa | Y Combinator

Chowdeck gets $2.5 million in seed funding - Techpoint Africa 

In Nigeria's food delivery market, Chowdeck is thriving - Rest of World