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Navigating the Challenges: Chowdeck Makes Food Delivery in Nigeria Look Easy

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For the past six months, Allen Idoko, a 28-year-old food delivery worker in Lagos, has been earning up to 400,000 naira ($497) per month — nearly 12 times the minimum wage in Nigeria.

While he has been a food delivery worker for more than two years now, Idoko’s fortunes changed around May when he stopped working for Bolt Food and Glovo, and joined local startup Chowdeck, he told Rest of World.

“Look at that guy,” Idoko said, as he stood on the side of a busy road in Lagos’ Yaba neighborhood. He pointed to another worker in a Chowdeck T-shirt nearby. “Every week, he’s not making anything less than 170,000 naira ($208).” The other worker, 23-year-old Olaitan Musa, confirmed that he makes up to 600,000 naira ($735) a month. Along with the high pay, Musa told Rest of World, he enjoys working with Chowdeck because the company treats him well — he gets a monthly food allowance and a bonus for working on Sundays.

Launched in 2021, the Lagos-headquartered Chowdeck is emerging as a strong contender in Nigeria’s $834.7 million food delivery industry — so far dominated by global heavyweights like Bolt and Glovo, and local e-commerce major Jumia. Chowdeck delivery riders told Rest of World they preferred it to the other apps, while users said the company had improved their ordering experience. The app is also popular among food vendors, who told Rest of World it has helped them grow their businesses.

According to Uche Okafor, a logistics expert who helped launch and expand Bolt’s West Africa operations, Chowdeck has made a place for itself in a difficult industry due to its sophisticated product and worker incentives.

“They have cracked [geotagging] up to the product layers,” Okafor told Rest of World. “Not many companies are successful in building that, and that’s the layer you need to get to for you to optimize delivery.” On Chowdeck, “orders are geotagged and go to the closest courier depending on the radius,” he said, adding that the company’s focus on matching users to restaurants in their vicinity is one of its biggest advantages.

Food delivery is a tough business in Nigeria due to spiraling fuel prices, and the heavy traffic and bad roads that make it hard to predict delivery times. For years, established companies have struggled with customer complaints about late deliveries. Earlier this month, Bolt Food announced that it was exiting Nigeria to “streamline its resources.”

Chowdeck has managed to navigate these challenges so far, crossing a monthly order value of 1 billion naira ($1.2 million) in October. The same month, it had over 60,000 monthly active users, compared to just 7,000 in January. Chowdeck claims it makes a profit on each delivery. But despite the growth, the estimated delivery time on the app has lengthened from 15–25 minutes to 31.9 minutes, co-founder Femi Aluko told Rest of World.

“Every Chowdeck rider is aggressive about their order [and] you can’t delay them for [even] three minutes.”

Aluko first had the idea for Chowdeck during a trip to Dubai in 2021. Then an employee of Paystack, a fintech firm owned by financial service company Stripe, he was impressed by the “record-time food delivery” in Dubai, he said. Aluko roped in his Paystack colleague Olumide Ojo and friend Lanre Yusuf to launch Chowdeck the same year.

“We did a lot of research and talked to a lot of people and delivery riders, but the output was the same,” Aluko said. “The same excuses like traffic in Lagos, riders are unreliable, restaurants are not reliable, servers are not reliable. Just the same excuse — but traffic is a problem that happens everywhere. So we just decided to look more into the problem, and we started Chowdeck.”

The platform built its own geotagging function to predict the number of riders needed at any given time at a specific location. “We utilize flexible geotagging so our riders can serve restaurants within an allocated radius and also facilitate long-distance delivery,” Aluko said. According to him, short-distance orders comprise 86% of their operations. 

The technical strength of Chowdeck’s founding team earned it a spot in U.S. startup accelerator Y Combinator’s summer batch in 2022. The program’s alumni include Stripe, Airbnb, and Flutterwave. “They were a strong technical team who had previously worked at YC alumni Paystack,” Y Combinator’s managing director, Jared Friedman, told Rest of World over email. “It was clear they could move quickly — in a short amount of time, they’d built and launched a great product.” Y Combinator has invested in three other food delivery startups in Nigeria: FoodCourt, Heyfood, and Sendme.

In its initial months, Chowdeck worked on listing small-sized food businesses and helped to bring a few roadside vendors online. Now, however, it targets the bigger restaurant chains, which make up the bulk of its established competitors’ business. For instance, its partnership with Chicken Republic — with over 100 stores nationwide — forced out Bolt Food and Jumia Food from the company, Aluko said. 

Chowdeck’s success so far has been driven by the incentives it offers to its delivery workers, Damilola Fasawe-Aderinto, a logistics expert and venture capitalist at Greenhouse Capital, told Rest of World.

The company’s per-kilometer pay is way more than what competitors offer, Idoko and Musa said. In addition, Chowdeck pays a monthly food allowance of 10,000 naira ($12.41) to riders who complete 300 deliveries, and a 5,000-naira bonus for those who work Sundays. It also provides housing support and promotion opportunities to its delivery workers, Musa said.

A screenshot from the Chowdeck app.
Chowdeck boasts a more robust and transparent order tracker than that of its competitors.

Competitors Jumia Food and Glovo do not have any programs to support delivery workers beyond their basic pay. Jumia has a base pay of 600 naira (74 cents) for its bicycle riders, with an additional 50 naira for each kilometer after four kilometers. A Jumia spokesperson told Rest of World the pay maintains a balance that benefits riders and ensures the sustainability of their services. The company plans to soon start offering additional compensation on top of the base fee for all deliveries, the spokesperson said. Glovo did not respond to requests for comment.

Heavily incentivizing delivery workers is not sustainable in the long term, Fasawe-Aderinto said, but Chowdeck could pull it off if it keeps its marketing spend in check, regulates its operations costs, and maintains a balance between incentives and delivery fees. “For Chowdeck, if you notice, their delivery fees are not necessarily one of the lowest, and that’s because they see that as an opportunity cost for them to be able to meet up with the unit economics,” she said.

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Chowdeck has four sources of revenue: restaurant commissions, service fees, delivery fees, and contingency surge fees, Aluko said. The company also keeps a lean core team of around 30 people.

For now, the incentives have helped Chowdeck win delivery workers’ loyalty. “Every Chowdeck rider is aggressive about their order [and] you can’t delay them for [even] three minutes,” Korede Alimi, who runs a fast food restaurant chain, told Rest of World. “The moment you delay them for three minutes, they are already sending messages to their bosses so that they can communicate with the customers.” He said Chowdeck riders pick up about 200 orders from just one of his restaurants daily.

But the company’s operational speed and growth have started to wear out some of its food vendors. “We don’t have the amount of capital and facilities to scale at the same speed,” a restaurant owner, who asked to remain anonymous for fear of backlash from Chowdeck, told Rest of World. “They are just pushing you on all sides. It’s not been easy.”

Aluko acknowledged the issue and said the company is already hiring and allocating temporary workers to these businesses. Chowdeck is looking to partner with restaurant management firms to help improve their back-end operations, and approach lending companies for loans to sustain growth, he said. 

The company is also integrating analytic tools that can predict how many orders a restaurant is likely to get in a day so that its staff can prepare accordingly. 

Aluko said Chowdeck does not face issues like traffic delays and long delivery timelines, which continue to challenge many of its competitors. 

“We’ve gotten to a certain level of scale — doing above 10,000 deliveries every day now — and the things we are solving for are different from what our possible competitors are solving for,” he said. 

Source: Restofworld

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