Nigeria’s food delivery market is poised to reach a staggering $2 billion to $3 billion by 2032, thanks to the country’s strong affinity for food and the rise of online shopping. However, the market is still up for grabs, with no clear leader emerging yet. Lagos-based startup Chowdeck aims to change that, armed with a $2.5 million seed investment and the backing of Y Combinator.
Chowdeck was founded by Femi Aluko, Olumide Ojo, and Lanre Yusuf, who were inspired by Aluko’s experience of quick deliveries and exceptional customer service during a work trip to Dubai. In Nigeria, ordering food typically takes one to two hours, but Aluko was consistently receiving his food on time in Dubai. This led him to wonder if the same level of service could be replicated in Nigeria.
The startup initially experimented with a few bikes and partnered with two restaurants before officially launching its platform in October 2021. Since then, Chowdeck has experienced significant growth, with over 3,000 riders joining and more than 500,000 users. The platform has differentiated itself by focusing on convenience and fast deliveries, with an average delivery time of 30 minutes.
Chowdeck’s success is even more remarkable considering the competitive nature of the market. Major players like Jumia Food and Bolt Food already had established customer bases when Chowdeck launched. However, both Jumia Food and Bolt Food exited the Nigerian market by the end of 2023, leaving Chowdeck’s main competition as Glovo.
One key factor in Chowdeck’s success has been its focus on maintaining positive unit economics from the outset. Unlike other food delivery platforms that relied heavily on high discounts, Chowdeck opted for a different approach. The startup optimized its business model for sustainability by minimizing discounts and only offering them when necessary on behalf of its partner restaurants. This approach allowed Chowdeck to target the right customers and prioritize profitability.
Chowdeck’s delivery system relies on geotagging, diverse vehicle options, and strict regulations on vendors and riders to ensure efficient operations. The startup also uses automated processes and in-house data for daily demand forecasting and supply assessment. By streamlining customer-rider connections and logistics, Chowdeck has been able to extend its services beyond food delivery to supermarkets and pharmacies.
In terms of financial performance, Chowdeck’s annual gross merchandise value (GMV) reached over ₦7 billion ($5.8 million) in 2023, with revenues surging by 1,200% between 2022 and 2023. The startup’s take rate stands at 24%. Lagos generates 80% of Chowdeck’s volumes, while the remaining 20% comes from other cities across Nigeria.
Chowdeck plans to use its recent seed funding to improve operational efficiency and expand its reach to more cities in Nigeria. The startup is also committed to enhancing the experience for its customers, vendors, and delivery riders. In fact, Chowdeck’s riders currently earn three to five times Nigeria’s monthly minimum wage, which has had a significant impact on their lives.
The seed round attracted investment from notable backers, including Y Combinator, Goodwater Capital, and various founders from successful startups like Rappi and Paystack. With the support of these investors and its strong growth trajectory, Chowdeck is well-positioned to become a dominant player in Nigeria’s food delivery market.