Pepper Secures $16M to Revolutionize Food Distributor Ordering

Revolutionizing Food Distribution with Digital Solutions

Currently, a significant portion of restaurants and grocery stores rely on traditional methods – voicemail orders and paper check payments – when procuring food from distributors. This process lacks transparency, creating difficulties in tracking orders and accessing historical data. Pepper is actively working to modernize this system.

Based in New York, Pepper has created a specialized ordering platform tailored for food distributors. The system supports extensive product catalogs, exceeding 100,000 items, and empowers distributors to establish mobile applications and websites for streamlined online order and payment acceptance. According to CEO Bowie Cheung, this approach has, on average, resulted in a 15% revenue increase for their clientele.

The Genesis of Pepper

Pepper was co-founded in 2019 by Bowie Cheung, Chetan Narain, and Ivana Tesanovic. Cheung and Narain initially connected while working at UberEats, observing the rapid adoption of technology within restaurants, but a noticeable lag in its implementation within the food distribution sector.

“While concerns regarding food waste and sustainability are prevalent, enacting operational improvements proves challenging due to the industry’s fragmented nature,” Cheung explained. “We witnessed the swift technological transformation within restaurants. Considering there are approximately 25,000 food distributors in the U.S. with limited technological support, we identified a significant opportunity.”

Responding to the challenges presented by the global pandemic in 2020, the company launched Pepper Pantry. This consumer-facing platform allowed customers to directly order from food distributors with home delivery options.

Recent Funding and Expansion Plans

Pepper recently announced a $16 million Series A funding round, intended to build upon the foundation established two years prior. The company’s goal is to collaborate with over 25,000 restaurants and grocery stores across the U.S. and Canada.

Index Ventures spearheaded the funding round, with participation from Greylock Partners, Imaginary Ventures, BoxGroup, Moving Capital, and Brett Schulman. This latest investment brings the total funding raised to $20 million.

“Pepper is addressing a substantial opportunity within the restaurant industry by facilitating the digital procurement of $200 billion in annual food inventory, moving away from traditional phone and email methods,” stated Damir Becirovic, principal at Index Ventures and a Pepper investor. “They have developed a robust platform for food distributors, effectively providing a Shopify-like e-commerce solution.”

Strategic Investment and Growth

The U.S. wholesale food distribution industry generates approximately $991 billion in annual revenue. Cheung intends to allocate the new funding to three key areas: expanding the network of food distributors in the U.S. and Canada, enhancing product development, and bolstering sales and marketing efforts. The company also plans to double its current workforce of 24 employees within the next year.

Pepper prioritizes ease of implementation for its customers, often requiring no upfront costs – a feature that differentiates it from some competitors.

The company’s pricing is based on a monthly subscription determined by the number of active users. This allows for a relatively quick setup, typically within two months, contrasting with the substantial upfront costs and longer implementation timelines (six to twelve months) associated with alternative solutions.

This streamlined approach has enabled Pepper to rapidly build a network representing 20,000 unique buyers, collectively generating over $1 billion in sales within a single year.

“For certain suppliers, the existing barriers to entry have prevented them from adopting digital operations,” Cheung noted. “Our technology’s rapid deployment capabilities allow us to avoid imposing those fees. Furthermore, we refrain from charging ongoing consulting fees and are continually expanding our feature library, empowering customers to select the functionalities they require.”