Chowdeck Rakes in $1.7 Million Monthly Revenue, Secures $2.5 Million Seed Funding

  According to Picodi, a global research institute, approximately 60% of Nigerians’ earnings are allocated to food, particularly in urban areas. While street vendors offering prepared meals are ubiquitous, the popularity of online food delivery services is on the rise. According to projections the Nigerian market will reach $2.383 billion by the year’s end. In 2021, following the surge in online shopping propelled by the COVID-19 pandemic, former Paystack engineers Femi Aluko, Olumide Ojo, and Lanre Yusuf, alongside design engineer Lanre Yusuf, Aluko’s university acquaintance, launched Chowdeck, a Nigerian on-demand food delivery startup.

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Aluko conceived the idea for Chowdeck during the pandemic when, on New Year’s Eve in 2020, he found himself confined at home, attempting to order food online. Encountering limited options and unresponsive vendors, he described the experience as “off,” catalyzing Chowdeck. His journey took an unexpected turn when originally planning a trip to Dubai to recruit engineers for Paystack, he was compelled to cancel due to a positive COVID-19 test. Upon finally reaching Dubai post-travel restrictions, he was awe-struck by the city’s sophisticated food delivery ecosystem, sparking a determination to replicate it in Nigeria. As of March 2024, CEO Aluko disclosed to Bendada.com that Chowdeck has surpassed ₦2.4 billion (~$1.7 million) in monthly gross merchandise value (GMV), marking a 140% surge from the previous year. Operating in eight Nigerian cities—Lagos, Abuja, Ibadan, Port-Harcourt, Ilorin, Benin City, Abeokuta, and Asaba—Chowdeck caters to over 500,000 users with a fleet of 6,000 riders. CEO Aluko highlighted the company’s rapid growth, processing an average of 14,000 daily orders, each yielding a profit. Securing a significant boost with the onboarding of Chicken Republic, West Africa’s largest fast-food chain, Chowdeck witnessed a 250% surge in order volume last year. Aluko stressed that Chowdeck’s revenue streams extend beyond delivery fees to encompass restaurant commissions, service fees, and occasional surge fees, ensuring both competitive rider pay and business sustainability.

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Approaching its third year of operation, Chowdeck has secured $2.5 million in seed funding, backed by prominent investors such as Y Combinator and Goodwater Capital, as well as angel investors like Simon Borrero and Juan Pablo Ortega of Rappi, Sudeep Ramani of Sportybet, Ayo Arikawe of Thrive Agric, and Karthik Ramakrishnan. Notably, Chowdeck’s seed round received backing from Shola Akinlade and Ezra Olubi, Aluko and Ojo’s former employers at Paystack. Akinlade hailed Chowdeck as not only addressing the imperative need for efficient and dependable on-demand delivery services in Nigeria but also embodying innovation and a commitment to excellence. With this fresh capital infusion, Chowdeck aims to fortify its foothold in existing markets before venturing into new cities, prioritizing data-driven expansion strategies. Additionally, the funding will facilitate operational enhancements to elevate the delivery experience, as Chowdeck diversifies its offerings beyond food to include groceries and medications. Aluko emphasized Chowdeck’s pledge to ensure timely deliveries for the majority of orders, boasting a delivery window of 22 to 30 minutes. Acknowledging challenges in the Nigerian delivery market, Aluko cited the imperative to onboard riders at the pace of growing orders, underscoring Chowdeck’s emphasis on incentives to attract more riders. Challenges notwithstanding, Chowdeck remains committed to bolstering customer support and supporting vendors amid rapid expansion, aiming for a win-win scenario for all stakeholders. Nigeria’s soaring food inflation has impacted food costs nationwide, prompting adjustments in prices on the Chowdeck platform. Nonetheless, Aluko noted that this hasn’t deterred users, citing the convenience and cost-effectiveness of online ordering.

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While some competitors have exited the market, Chowdeck emphasizes its profitability and operational efficiency, aiming to maintain its competitive edge. With Africa facing brain drain challenges, Chowdeck is proactively investing in talent through initiatives like a graduate trainee program, aiming to build a robust talent pipeline for sustained growth and innovation. Featured Image Source: Disrupt Africa

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This article was first published on 2nd May 2024

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