Chowdeck raises $2.5 million to expand food delivery service in Nigeria

By Adedapo Adesanya

Lagos-based logistics provider Chowdeck has raised a seed investment of $2.5 million to scale up food delivery amid a tough foodservice market in Nigeria.

The seed round attracted investments 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 homes in an average of 30 minutes.

The platform officially launched in October 2021 and has seen significant growth over the past three years, with over 3,000 riders and over 500,000 users on board.

According to Mr. Aluko, CEO of Chowdeck, the logistics setup will benefit the three verticals: small food vendors and larger quick-service restaurants, supermarkets and pharmacies, according to Tech Crunch.

By 2023, Chowdeck had more than 1,500 active suppliers across the three vertical markets; In addition, it introduced an intra-city parcel delivery relay service in Lagos.

Chowdeck’s annual gross merchandise value (GMV) was over N7 billion ($5.8 million). As of October 2023, it reached a milestone as it crossed the N1 billion mark for the first time and by March 2024, that figure had doubled to N2.4 billion.

An analysis showed that Lagos generates 80 percent of Chowdeck’s volumes, while the remaining 20 percent comes from other cities: Abuja, Port Harcourt, Ibadan, Benin City, Ilorin, Abeokuta and Asaba.

Chowdeck, which has a 24 percent take rate, saw its revenues, which come from supplier commissions, service fees, peak charges and delivery fees, increase by 1,200 percent between 2022 and 2023.

“We’ve taken the time to figure out the right economics for our delivery business, which is why we’re not keen on offering unrealistic discounts.

“This approach kept us focused on selling and targeting the right customers, rather than trying to reach everyone, which could have compromised our economy and marketing strategies,” he said.

Mr Aluko also commended the efforts of his riders who earn well above the national minimum wage of N33,000.

“It was interesting for many people including us to see how our riders were regularly and profitably paid between N100,000 and 200,000 every month.”

However, although the market faces its challenges, the market has limited competition as Jumia Food and Bolt Food have exited the Nigerian market due to various business reasons, leaving Glovo as Chowdeck’s main competitor.

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