How Choco, the Food Ordering Platform, Is Navigating the Tailwinds of COVID-19
by Jorge Fontúrbel and Florian Unger
Impacts of COVID-19 can be seen in every part of the global economy, but its effects have been more prominent across industries such as air travel or hospitality. The outlook may seem bleak, but startups in these beleaguered sectors are responding to the challenge with extraordinary resilience and ingenuity.
One company providing a clear example of how to weather this storm is Choco, a Berlin-based food ordering platform which connects food suppliers to restaurants via its user-friendly app. Faced with massive disruption due to the crisis, Choco has responded by expanding into the current fast growing grocery delivery market in just a few weeks. With restaurants across the world shuttered or limited to providing take-out, Choco has found a way to link food suppliers directly to consumers, all while making sure restaurants can stay alive until the lockdowns are lifted. See Choco’s direct-to-consumer grocery delivery shops for the US, Germany and France here.
The Restaurant Industry Is Getting Forked
The restaurant industry is on the brink of collapse. Even in normal times, restaurants typically operate on razor-thin margins and require large working capital, making them vulnerable to the slightest setback. Now that the majority of European countries have closed restaurants or severely curtailed their ability to serve customers, prospects seem dire. Many restaurateurs have claimed they will be unable to reopen once restrictions are lifted. And that’s just in Europe — the outlook in the rest of the world, where there are typically fewer safety nets for businesses, is even more troubling.
This is a tragedy in the making, but the problem runs even deeper. With restaurants out of action, there are serious consequences for food suppliers further up the value chain. Orders have dried up, and stocks are in danger of going bad, leaving no option but destruction. Many suppliers of restaurant-grade ingredients are small, family-run businesses who are fighting to preserve businesses which represent their life’s work or even the work of many generations.
These suppliers need a way to connect to new customers, and quickly. Every passing day is a threat to their survival. But any solution needs to keep restaurants in the loop as well, to maximize the chances of returning to normal once restrictions are lifted.
From Berlin to Long Island to the World
Seeing this dire need, Choco has been proactively working with its suppliers to mitigate the consequences of restaurant closures. Choco’s solution allows consumer to order food directly from the suppliers of their favorite restaurants.
“While the current situation is a huge challenge, restaurants and suppliers will be stronger when the crisis is over” says Daniel Khachab, Choco’s CEO. “We are doing this to help our supplier partners to innovate and to keep operations running, while giving consumers next-day delivery and restaurant-quality ingredients”.
Choco was founded in 2018 with a mission to reduce food waste and streamline food supply chains around the world. Food is one of the world’s least digitized industries, a fact which contributes to staggering waste: around 30–40% of all food produced globally is wasted, with much of that waste happening in supply chains before reaching consumers. Seeing how much business was conducted using outdated pen-and-paper methods, Choco set out to drag the industry into the modern world.
Already established as the standard ordering tool across thousands of restaurants in dozens of cities around the world, Choco’s role has become central to the restaurant industry. After the pandemic hit hard the market, Choco didn’t wait and responded rapidly by launching Choco Market, its B2C grocery delivery marketplace. Customers choose from a variety of restaurant-grade groceries, which are then delivered direct to their door.
One of Choco’s first customers during the pandemic, a second-generation fruit and vegetable supplier based in New York, had $800k in unsold products at imminent risk of needing to be destroyed after restaurants needed to shut. Now, through Choco Market, the company has more than 500 orders per day and has hired additional staff to deal with demand.
As this is clearly a global problem, Choco hasn’t waited to ramp up their response. Within a week of the initial success in New York, Choco launched in several other US cities. Now Choco is launching more Choco Markets in Europe such as Germany or France, along with other local and global initiatives.
Supporting Restaurants and Charities
In addition to supporting suppliers, Choco is committed to supporting restaurants in these difficult times. Choco has launched their Support Gastro restaurant platform to give consumers information about delivery and pickup options at local restaurants. Consumers can also buy vouchers for meals at restaurants which can be redeemed once lockdowns are lifted. This is a worldwide initiative, with information currently available for restaurants in Berlin, Hamburg, Munich, Brussels, Vienna, Paris, Barcelona, Singapore and Chicago.
Choco is also donating the profits from these initiatives to charities which support businesses in the food sector. For example, they recently donated $20,000 to L’AFMR, a French charity dedicated to helping restaurants regain their licenses once the crisis has passed.
Building a Global Food Network
Time will tell if these initiatives are only temporary, but they perfectly complement Choco’s original vision of building a digitized global food network that can massively reduce waste. They also clearly demonstrate that Choco has the ingenuity and resourcefulness to succeed in that ambitious goal.
This excellence has not gone unnoticed: last week, Choco announced its latest financing round of $30.2m led by Coatue Management. In the two years since its founding, Choco has raised $71.5 million in known venture funding.
Target Global is proudly supporting Choco and its team in their mission to become the leading global food network.
About Target Global: Target Global is an international investment firm with 800EUR+ AUM focusing on fast-growing tech companies across their lifecycles. Through its dedicated Mobility 2.0 Fund, Target Global is actively investing in next-generation mobility solutions in Automotive, Transportation, Logistics, and Industry. Recent investments include Zego, REEF, Bird or Choco.
