FoodCourt, a food delivery service supported by Y Combinator, has recently undergone a significant restructuring of its cooking operations, resulting in the redundancy of nearly 100 employees in May 2024. The three-year-old company, which operates dark kitchens and follows a delivery-only business model, attributed the operational overhaul to customer feedback.
Chef Tilewa Odedina, who oversees the kitchens at FoodCourt, explained the rationale behind the changes: “We invested in larger kitchen equipment and shifted to prepping many of the base ingredients in advance, rather than starting from scratch with each customer order.”
Henry Nneji, the CEO of FoodCourt, conveyed the company’s ambition to cut down meal preparation times to 20 minutes for its base of 10,000 active monthly customers. Despite these efforts, the optimization process is ongoing, as evidenced by customer complaints about delayed orders surfacing on social media platforms.
Earlier in the year, FoodCourt secured $1.7 million in funding—a detail that had not been publicly disclosed until now. The company boasts an average order value of ₦15,000 and claims to have achieved profitability, although CEO Nneji has refrained from disclosing specific financial figures.
Cost efficiency has been cited as a pivotal factor in FoodCourt’s profitability. Chef Odedina highlighted the importance of balancing sales with cash flow: “You can make a lot of sales and be bleeding just as much cash.” To address issues such as theft, wastage, and underpricing, the company has revamped its kitchen management processes.
FoodCourt generates revenue through food sales, akin to a traditional restaurant, as well as through delivery fees. It faces stiff competition in a fierce market, contending with established restaurant chains and other delivery services like Glovo and Chowdeck.
In a strategic move, FoodCourt has also made its offerings available on Chowdeck as of July 2024, following a partnership similar to the one Chowdeck has with Chicken Republic. This deal includes advertising spend for FoodCourt, as per an individual familiar with the agreement.
Other competitors, such as Eden Life and YC-backed ChowCentral, which also operate quick-service restaurants with a delivery-only model, are listed on Chowdeck as well.
The food delivery landscape is becoming increasingly competitive, and it is uncertain whether the dominant player will emerge by simply outspending rivals. Success may hinge on achieving a delicate balance between operational efficiency and cultivating a dedicated customer base.
FoodCourt’s strategic acumen is noteworthy, particularly in a funding climate where aggressive spending to achieve rapid scaling has not always produced favorable outcomes for well-funded but now-defunct companies like Jumia Food and Bolt Food.
However, FoodCourt’s situation is unique; as a venture capital-backed cloud kitchen, it is under pressure to realize exponential growth to justify the valuations set by its investors. This may necessitate taking bolder risks than those typically associated with a conventional restaurant.
