Food procurement by hotels and small and mid-sized restaurants in Nigeria is not only a complex process to manage but also challenging. The process is structured in a way that a business can easily run out of money or have ample savings. Most restaurants don’t have access to deal directly with farmers to get better deals because they lack the staff or operational capacity to do so. As single entities, these restaurants and hotels are not collectively seeking to get a good value for their money directly from the farmers. This has led to a lot of losses, inefficient procurement systems, bad products, and late delivery of goods.
Nigerian-based procurement startup Vendease solves this problem by building a marketplace where restaurants and hotels can buy products directly from farms and food manufacturers. it is described on its website as “a procurement platform that provides a transparent process for hotels and restaurants to get the best quality products at the best possible price”.Its chief executive officer refers to it as “The Amazon Prime for restaurants in Africa”.
The startup was founded by Tunde Kara, Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju as a tech-enabled platform to help hospitality and restaurant businesses digitize, track and automate their procurement and inventory management processes. It also helps with logistics, warehousing, quality control, and financing where restaurants can buy goods and pay later. The idea for Vendease came when its founders discovered their favourite restaurants in cities like Lagos and Accra were shutting down due to challenges of the unreliable and expensive nature of procuring food in these African cities.
The traditional procedure used by these restaurants usually involves a staff or a contract employee going to the market or using third-party vendors. The founders saw that these systems were often unreliable and restaurants loses a lot of money from price inflation and bad produce. There and then, they decided to create a platform that caters to the procurement of products for Food businesses in Africa.
Through their platform, customers can order anything ranging from bread to grains and meat to vegetables on the website while the order notification goes to the farms or food manufacturers, gets processed, and delivery is done within 24 hours. Simply put, when a restaurant or food business places an order, the system generates all the possible suppliers that can fulfil it, looks at the best pricing versus quality, and assigns that order to the supplier then the delivery is made within 24 hours, either by the startup themselves or they hire third-party logistics providers.
The chief executive officer believes that their perception of being the Amazon Prime for restaurants in Africa is because they are deliberate about fulfilling orders to restaurants and hotels in less than 24 hours which is similar to how Amazon Prime prioritizes delivery. The speed and timely manner in which Vendease carries out its operations are such that it currently completes 80% of on-time and on-time deliveries across all orders.
TechCrunch announced that the company, founded in January 2020, took part in Y Combinator’s winter batch that included nine other African startups. It also raised a seed round of $3.2 million in October 2021 led by San Francisco-based venture capital firm Global Founders Capital with participation from Y Combinator, Hustle Fund, Liquid 2 Ventures, Hack VC, and Soma Capital, including individual local investors and early backers such as Paga CEO Tayo Oviosu, Remita CEO John Obaro, and Magic Fund.
The company will use the funding to expand into other cities and countries before the end of the first quarter of 2022. In addition, the funding will enable Vendease to continue to build out its technology stack, as well as secure partnerships with some payment platforms and banks to deepen its financial products, especially the buy now, pay later feature. In comparison with market prices of what users buy on the platform, vendease approximately saved about $480,000for their users in the last nine months, cutting a lot of unnecessary expenses from their general costs and savings that can go into other things in terms of expansion and growth. The CEO noted that the company hopes to 10x this number in the next 12 to 18 months. Proactively, in their small way, the company is helping to grow the gross domestic product for the food businesses both on the farmers’ and vendor side of the marketplace. In terms of human capital, CEO Kara stated that the businesses on Vendease have saved approximately about 5,000 person-hours and also has an option that allows food businesses to receive free supplies for any order that turns out unsatisfactory. Vendease has also moved 100,000 metric tonnes of food, which is a noteworthy feat for a startup that is a little over 18 months old, moving that amount of food. Moving this quantity, coupled with Vendease’s technology stack, has allowed the company to evaluate what its customers want before making their orders, which is why the company now has its warehouses and logistics service. In September 2021, the YC-backed company hit an annualized transaction volume of $12.9 million and $1.2 million in annual recurring revenue. Although the chief executive officer did not share revenue numbers in his interview with Tech Crunch, he said Vendease’s revenue has grown 17x since 2020. On the platform’s financing side, over 1,000 businesses have accessed more than $3 million in supply chain finance so far. Platforms digitizing the food supply chain for restaurants and food businesses across the continent have been scarce in Africa since Twiga launched in Kenya about seven years ago with a slightly different model. Now that Vendease is in the picture, it wants to establish itself as the leader amongst an upcoming pack with newer players such as Kenya’s Kibanda TopUp. A condition to that, according to CEO Kara, is Vendease’s execution and operational knowledge of the market and data on food businesses; he believes they will give the company an edge over other platforms. Vendease currently operates in three Nigerian cities: Lagos, Abuja, and Ibadan, with some of the biggest food brands in the country such as Hard Rock, Krispy Kreme, and Shiro. Its application is available on Google Play Store and the iOS application store.
By signing up with Vendease, food business owners make the right choice every time because they go the extra mile by providing analytics to back up and further assist business decision-making with Flexible payment options such as pay now, pay on delivery and buy now pay later. Their buy-now-pay-later system, allows food businesses to purchase and make use of products, and opt to pay in 14 days.
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