Food is important to Nigerians, with their families spending about 60% of their income on it, the highest globally, according to official report, This strong attraction to food, combined with the rise of online shopping, sets the stage for Nigeria’s food delivery market potentially reach $2 billion to $3 billion by 2032.
Despite the promising market size, there is no clear leader yet. However, Lagos-based ChaudekBacked by Y Combinator and armed with a seed investment of $2.5 million, it aims to make its mark in a field that like burnt heavy weights jumia And screw,
established by femi aluko, Olumide Ojo, and Lanre Yusuf, Choudek allows consumers to order food and have it delivered to their doorstep within an average of 30 minutes. CEO Aluko shared that the inspiration to launch the startup came from the prompt delivery and exceptional customer service he experienced during a work trip to Dubai.
“Ordering food in Nigeria usually takes an hour or two,” Aluko said. But whenever I ordered food during my three-month stay in Dubai, I consistently received it on time. If there was any delay, the restaurant would call me to apologize. It was impressive to see, and I wondered if we could replicate the same level of service in Nigeria. In the first half of 2023 alone, Nigerians spent more than 60 trillion on food and household items, per of the country Top agency for official statistics.
Aluko and his co-founders initially experimented with the concept by using a few bikes and partnering with two restaurants. After refining their approach, they officially launched the first version of the product in October 2021. Since then, the platform has experienced significant growth, with more than 3,000 riders joining and more than 500,000 users (Aluko says more than 100,000 are active on the platform).
Less competition, more growth
Choudek’s remarkable growth is evident, especially in the competitive market, where at the time of its launch, major players like Jumia Food and Bolt Food already had a strong foothold with thousands of customers.
Additionally, given the industry’s reputation for low profit margins and infrastructure challenges such as traffic and poor roads that delay delivery times, the main question was how Chaudek intended to overcome these hurdles and carve out a niche for itself. Is.
Later entrants to the market have the advantage of learning from the experiences of earlier players. Unlike his predecessors, Choudek recognized the importance of maintaining positive unit economics from the beginning. While other food delivery platforms often relied on high discounts, Choudek chose a different approach: adapting its business model to ensure sustainability by minimizing discounts and only offering them on behalf of its partner restaurants when necessary.
“We took the time to figure out the right economics for our delivery business, which is why we’re not big on offering unrealistic discounts,” explains Aluko, a former principal engineer at Stripe subsidiary Paystack. “This approach allowed us to focus on selling to and targeting the right customers rather than trying to catch everyone, which could have compromised our economics and marketing strategies.”
By the end of 2023, Jumia Food and Bolt Food were out of the Nigerian market Citing various business reasons, leaving Glovo as Chaudec’s main competition. Both exits partially contributed to Chowdeck’s doubling of user growth within the last six months.
prioritize convenience
Aluko emphasized that Chaudek’s appeal lies in its convenience. While not necessarily the most cost-effective option, he said Choudek targets customers who prioritize time and are willing to pay for faster delivery.
The startup’s delivery system relies on factors like geotagging, offering diverse vehicle options from bicycles to motorbikes, and imposing strict rules on sellers and riders. (For example, sellers must accept orders within a five-minute period; failure to do so results in order cancellation and reduced priority for the seller.)
Similarly, Chowdeck employs automated processes to streamline customer-rider connections, using in-house data for daily demand forecasting and essential supply assessment. For example, if an average rider completes eight deliveries per day and the platform estimates 10,000 deliveries, there should be at least 1,250 riders available for that day.
Choudek’s logistics setup benefits not only small food vendors and larger quick-service restaurants like Burger King and Chicken Republic, but also extends to supermarkets like ShopRite and pharmacies. Operating across eight cities, the startup has taken lessons from its core business to launch delivery services in the supermarket/grocery and pharmacy sectors. In 2023, Chaudec had over 1,500 active sellers across all three regions; Additionally, it introduced a relay service for intra-city package movement in Lagos.
rider’s earnings
Last year, the platform’s annual gross merchandise value (GMV) across these verticals was more than ₦7 billion ($5.8 million). That October, it hit a milestone, surpassing the ₦1 billion ($830,000) mark for the first time. By March 2024, this figure is expected to double to ₦2.4 billion ($2 million). Lagos produces 80% of Chaudec’s volume, while the remaining 20% comes from other cities: Abuja, Port Harcourt, Ibadan, Benin City, Ilorin, Abeokuta and Asaba.
According to Aluko, Chowdek sees its revenue increasing by 1,200% between 2022 and 2023 with a take rate of 24%.
As a fast-growing business, Chaudec intends to use the newly raised capital to improve its operational efficiency and expand its reach to more cities across Nigeria. still, On-demand delivery service is also committed to leveraging investments to improve the experience of its customers, vendors and especially delivery riders Earnings currently are three to five times Nigeria’s monthly minimum wageAluko said.
Aluko commented, “After a few months of building Chaudec, it became clear how much of an impact we were going to have and the initial problems we could solve at scale in the country, especially around earnings.” “For many people, including us, it was interesting to see our riders getting paid between 100,000-200,000 monthly ($83-$170) regularly and profitably.”
The seed round attracted investment from notable backers including YC, Goodwater Capital, FounderX Ventures, HoaQ Fund, Leveray Ventures, True Culture Funds, and Haleakala Ventures. Founders like Simon Borrero and Juan Pablo Ortega (of Rappi), Shola Akinlade and Ezra Olubi (of Paystack) also joined the investor list.
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