Berlin-based Choco, a food tech creation software to digitize ordering, supply chain and communications for restaurants and suppliers, has raised $111 million. That brings his total valuation to $1.2 billion and makes him Germany’s latest unicorn, following Grover last week.
The increase is notable because it does not involve any new investors; it is an extension of its $100 million Series B and is led by the same US growth investors, G Squared and Insight Partners.
Choco is creating digital tools for foodservice businesses, many of which still rely on pen and paper and manual spreadsheets to order ingredients or record sales. Better communication reduces waste and errors, 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 producer or farmer and ending with the restaurant, and there are various transactions taking place. But almost everything happens offline via fax, pen and paper and voice messages,” says Choco co-founder and CEO Daniel Khachab.
Startups have taken on aspects of this problem. For example, the Belgian company Deliverect provides software to restaurants to organize their online orders. It grew during lockdowns in 2020 and 2021 as online ordering surged and restaurants, accustomed 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 men the last twelve months, the company has increased its users by 350%.
smooth out mistakes
Chefs typically cook until 11 pm, sit in the kitchen after closing and place their orders over the phone, but this leads to errors, Khachab says. Chefs often forget to order certain items, order too much or too little, or worse, the wrong item shows up. And vendors who take orders over the phone or voicemail are also easily mistaken.
“Imagine that you are a chef in an Italian restaurant. You call your supplier, leave a voicemail and ask for five plums, twenty tomatoes, half a pound of flour and a little basil and hang up the phone. Then, later you say: ‘Did I ask for lemons?’”.
According to data from Choco, approximately 25% of food orders that arrive at a restaurant are incorrect and are simply thrown away because they are not on the menu.
These mistakes inevitably lead to food waste, which wastes 3.3 billion tons of CO2 per year, three times more than all flights.
It also throws money down the drain at a time when restaurants, many of which saw their margins squeezed during the shutdown, are struggling to get back on their feet.
Choco aims to fully digitize the global wholesale food market by 2026. And for that, it will need more hands on deck.
The company has 400 employees and is expected to increase that number to 700 by the end of the year.
Choco wants to use some of the funds to invest in learning and development opportunities for employees, says Khachab.
It also wants to focus on product development, in particular adding a “full suite of financial services” to the software, and customer service.
It is also looking for new markets. Choco operates in the US, Germany, France, Spain, Austria and Belgium. Soon, it will be launched in Portugal and in another market that the company cannot reveal yet.
Miriam Partington is Sifted’s correspondent in Germany. She also covers the future of work, co-authors Sifted Startup Life Newsletter and tweets from @mparts_