Berlin-based Choco, a foodtech making software to digitise ordering, supply chain and communications for restaurants and suppliers, has raised $111m. That brings its total valuation to $1.2bn and makes it Germany’s latest unicorn, following Grover last week.
The raise is notable because it doesn’t involve any new investors; it’s an extension of its $100m Series B and is led by the same US growth investors, G Squared and Insight Partners.
Choco is building digital tools for food service businesses, many of which still rely on pen and paper and manual spreadsheets to order ingredients or record sales. Better communication reduces waste and mistakes, the company says.
“The main problem with the food industry is that there are a variety of actors along the supply chain, starting with the grower or farmer and ending with the restaurant — and a number of transactions are taking place. But nearly everything is happening offline via fax, pen and paper and voicemails,” says Choco’s cofounder and CEO Daniel Khachab.
Startups have taken on aspects of this problem. For example, Belgium company Deliverect provides software to restaurants to organise their online orders. It boomed during lockdowns in 2020 and 2021 when online orders rapidly increased, and restaurants — used to manual ordering systems — struggled to keep track.
Choco, however, works with restaurants — and, to a lesser extent, dark kitchens — as well as their suppliers. And in the last twelve months, the company has grown its users by 350%.
Smoothing out errors
Typically, chefs will cook until 11pm, sit down in the kitchen after closing and do their ordering via phone, but this leads to errors, says Khachab. Often chefs forget to order certain items, order too much or too little — or worse, the wrong item turns up altogether. And suppliers taking orders over the phone or on voicemail easily get things wrong too.
“Imagine you’re a chef for an Italian restaurant. You call your supplier, leave a voicemail and order five plums, twenty tomatoes, half a pound of flour and some basil and hang up the phone. Then afterwards you’re like, 'did I order lemons?'"
According to Choco’s data, roughly 25% of food orders that arrive at a restaurant are incorrect, and are simply tossed in the trash since they're not on the menu.
These mistakes inevitably lead to food waste, which wastes 3.3bn tonnes of CO2 a year — three times as much as all flights.
It also tips money down the drain at a time when restaurants — many of which had their margins slashed during lockdown — are struggling to get back on their feet.
Choco aims to completely digitise the global food wholesale market by 2026. And for that, it’ll need more hands on deck.
The company has 400 employees, and is expected to grow that number to 700 by the end of the year.
Choco wants to use some of the funding to invest in learning and development opportunities for employees, says Khachab.
It also wants to focus on product development — in particular, adding a “whole suite of financial services” to the software — and customer service.
It’s looking to new markets too. Choco is active in the US, Germany, France, Spain, Austria and Belgium. Soon, it will be launching in Portugal and one other market which the company cannot yet disclose.