Nigerian food delivery startup Chowdeck has acquired more than half a million users, taken part in Y Combinator, and raised US$2.5 million in seed funding, but it might never had come to be had co-founder and CEO Femi Aluko not been struck down with COVID-19 on New Year’s Eve in 2020.
Finding himself stuck at home, he struggled to order food online due to limited options and unresponsive vendors. This frustrating experience, he said, “felt very off,” and planted the initial seed for what would become Chowdeck.
Shortly after, Akuko was on a work trip in Dubai, a country with a more developed food delivery scene. He was so impressed with the on-demand delivery services available, that he knew he had to replicate it in Nigeria. Teaming up with former schoolmate Lanre Yusuf and former colleague Olumide Ojo, they developed Chowdeck, which allows customers to order meals from a variety of restaurants and have them delivered to their doorstep within 30 minutes, and launched in October 2021.
Since then, growth has been meteoric. Chowdeck has acquired more than 500,000 users and more than 6,000 riders, serving eight Nigerian cities – Lagos, Abuja, Ibadan, Port-Harcourt, Ilorin, Benin City, Abeokuta and Asaba. processes more than 14,000 deliveries daily, and has onboarded Chicken Republic, West Africa’s largest fast-food chain. It serves thousands of customers monthly, delivering meals, groceries, and medicine with ease, alleviating the burden of long queues and waiting times.
“Our remarkable growth is evident, especially in a competitive market where, at the time of our launch, major players like Jumia Food and Bolt Food already had a strong foothold with thousands of customers,” Aluko told Disrupt Africa.
Indeed, by the end of 2023, Jumia Food and Bolt Food had exited the Nigerian market, leaving Glovo as Chowdeck’s main competition. Such growth has won the startup significant backing. It was a participant in the Y Combinator accelerator in 2022, and Disrupt Africa reported in May it had banked US$2.5 million in seed funding from a host of investors.
Aluko said this capital will be used to expand into more Nigerian cities, but also to expand the startup’s product suite. It recently launched Relay, an on-demand logistics product, and further product expansion is coming.
“Chowdeck as a startup is poised to maximise the market, addressing the crucial need for an efficient and reliable on-demand delivery service in Nigeria. Beyond food delivery, we have expanded our services to include groceries, pharmaceutical products and more. This diversification ensures we meet a wide range of customer needs, enhancing convenience and reliability for our users,” said Aluko.
Revenues are growing fast. In November 2023, it crossed NGN1 billion (US$1.2 million) in monthly gross merchandise value (GMV), with over 25 per cent take rate on each order.
“This signified a significant growth surge, marking a tenfold increase as we only surpassed NGN100 million in monthly GMV just ten months prior,” said Aluko.
Chowdeck’s revenue isn’t solely based on passing delivery fees to riders. Additional revenue streams include restaurant commissions, service fees and occasional contingency surge fees.
“This multi-pronged financial model allows us to offer competitive rider pay while ensuring business sustainability,” Aluko said.
“We recognised the importance of maintaining positive unit economics from the outset. While other food delivery platforms often relied on high discounts, Chowdeck opted for a different approach: optimising our business model to ensure sustainability by minimising discounts and only offering them on behalf of partner restaurants when necessary. 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.”
