FoodCourt's system of 'clandestine kitchens' revealed

FoodCourt, a delivery-only kitchen startup based in Nigeria, has been making waves in the country's growing online food delivery market. Despite facing economic pressures, the market is expected to reach $2.4 billion within eight years, providing a strong foundation for FoodCourt's growth.

Originally rebranded from Co-Kitchen to FoodCourt for its Y Combinator application, the company's legal entity remains Co-Kitchen Workspace Limited in Nigeria. FoodCourt operates as an online delivery platform with a smartphone application, allowing customers to browse different restaurant brands and add items from several menus to a single basket.

The startup has been successful, generating $1 million in annual revenue per location. FoodCourt's average order value is ₦15,000, and it claims to be profitable, though it has not shared detailed figures. In May 2024, the company raised $1.7 million to further fuel its expansion.

FoodCourt focuses on expanding in Lagos and Abuja, with plans to add micro locations across Lagos. The process of opening a new kitchen begins with audience analysis, followed by careful site selection influenced by logistics such as road networks, proximity to filling stations and marketplaces, and the distance from existing kitchens.

In an effort to maintain control over sales channels and brand identity, FoodCourt partners with Chowdeck for some of its brands to be available on the platform. However, it does not rely solely on aggregators. FoodCourt owns its brands, kitchens, and app, and does not appear in the search results as having virtual restaurants under contract.

Despite high inflation and retail costs in Nigeria, consumers are sometimes willing to pay for convenience, strengthening the case for cloud kitchens like FoodCourt. The company is standardizing operations to avoid problems as it grows, with meals being closely controlled so that packaging, recipes, and prep times are the same in Abuja and Lagos.

FoodCourt initially ran a short grocery pilot using a dark-store model but ended it and shifted resources back to prepared meals. However, the company is now considering re-entering the grocery delivery space via aggregation rather than holding inventory.

Orders go straight to a digital display that routes items to the right stations for preparation. FoodCourt produces most of what it sells, including bread, juices, and sauces. Notably, the company does not employ riders but partners with last-mile delivery providers.

In a bid to optimize cooking processes and improve consistency, FoodCourt laid off nearly 100 employees in May 2024. The startup is also considering exploring new African markets within the next year.

As the online food delivery market in Nigeria continues to expand, valued at over $1 billion in 2024 and projected to more than double by 2033, FoodCourt is well-positioned to continue its growth and success.