By Adedapo Adesanya
Lagos-based logistics service firm, Chowdeck, has raised a $2.5 million seed investment to scale food delivery amid a tough food service market in Nigeria.
The seed round attracted investment from notable backers, including YC, Goodwater Capital, FounderX Ventures, HoaQ Fund, Levare Ventures, True Culture Funds and Haleakala Ventures. Founders such as Mr Simon Borrero and Mr Juan Pablo Ortega (of Rappi), Mr Shola Akinlade and Mr Ezra Olubi (of Paystack) also joined the investor list.
Chowdeck, founded by Mr Femi Aluko, Mr Olumide Ojo, and Mr Lanre Yusuf, offers consumers the convenience of ordering food and having it delivered to their doorstep within an average of 30 minutes.
Officially launched in October 2021, the last three years have seen the platform experience significant growth, with more than 3,000 riders joining and over 500,000 users onboarded.
According to Mr Aluko, Chowdeck’s chief executive officer CEO), per Tech Crunch, its logistics setup benefits its three verticals – small food vendors and larger quick-service restaurants, supermarkets, and pharmacies.
In 2023, Chowdeck had more than 1,500 active vendors across the three verticals; additionally, it introduced a relay service for intra-city package movement in Lagos.
Chowdeck’s annual gross merchandise value (GMV) stood at over N7 billion ($5.8 million). As of October 2023, it hit a milestone, crossing the N1 billion mark for the first time and by March 2024, it had doubled that figure, reaching N2.4 billion.
A breakdown showed that Lagos generates 80 per cent of Chowdeck’s volumes, while the remaining 20 per cent comes from other cities: Abuja, Port Harcourt, Ibadan, Benin City, Ilorin, Abeokuta and Asaba.
Chowdeck, with a take rate of 24 per cent, saw its revenues, which come from vendor commissions, service fees, surge charges and delivery fees, increase by 1,200 per cent between 2022 and 2023.
“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.
“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,” he said.
Mr Aluko also lauded efforts from its riders, who earn well above the national minimum wage of N33,000.
“For many people, including us, it was interesting to see our riders getting paid between N100,000-200,000 monthly regularly and profitably.”
However, the market while facing its challenges has limited competition asJumia Food and Bolt Food have exited the Nigerian market citing various business reasons, leaving Glovo as Chowdeck’s main competition.