Pepper, the e-commerce platform for food distributors, continues to edge into Sysco and US Foods territory by giving smaller, independent distributors a technology leg up.
The company developed an ordering system specifically for independent food distributors that supports catalogs of over 100,000 items, and enables these companies to launch mobile apps and websites so they can accept orders and payments online.
Co-founder and CEO Bowie Cheung, who previously worked at Uber Eats, said the company now has 200 customers among a market of 25,000 food distributors. However, Cheung said Pepper wants to grow that by facilitating the relationship between independent distribution and technology.
“These businesses, generally speaking, have never been well-served by the big-box broad-line distributors like Sysco or US Foods,” Cheung told TechCrunch. “If you enjoy the diversity and the vibrancy that non-chain restaurants bring to your community, then you already understand the importance of that independent distributor, and that’s very much the customer that we have always served and continue to serve today.”
Pepper is doing this by developing dozens of new product features each year that leverage advanced technology, like generative AI, to improve the experience, efficiency and results. The company’s proof points include customers seeing a 23% increase in sales, 93% buyer retention and the ability to save more than 10 hours of work per week per sales representative, Cheung said.
There are some players in the e-commerce food distribution space with Pepper, including Choco, which developed a sustainable food system for restaurants and suppliers, Cut+Dry and Anchovi, which was Dot Foods’ white-label foodservice e-commerce platform. In April, Dot Foods migrated Anchovi users onto Choco as part of a new partnership.
Where Cheung believes Pepper is different is that all of those competitors took a marketplace-first strategy where you download an app. There is no “Pepper app,” but rather it takes a distributor-facing strategy, he said. This means that the distributor’s brand identity is front-and-center instead of Pepper’s.
Customers seem to like it. The more than 140 customers is double the number of customers it had when Pepper raised its $16 million Series A back in 2021.
Since then, the company became a full-stack payment processor. This makes it easier for operators to pay distributors. It also “reimagined” what the modern customer relationship management and copilot software should look like for a sales rep that works in food distribution so they can be more productive. In addition, the company built an ads platform that enables distributors to run marketing campaigns with their suppliers to promote existing products.
Cheung wasn’t specific on Pepper’s revenue, but did share that it has grown by more than 20 times. He also didn’t disclose the company’s valuation, but did say it was “a step up from our last round.”
Investors like Pepper, too. On Monday, the company announced a $30 million Series B round of funding led by new investor ICONIQ Growth, with participation from another new investor, Harmony Partners, and existing investors at Index Ventures, Greylock and Imaginary. This gives the company around $60 million in total funding.
“ICONIQ Growth is the perfect partner for us,” Cheung said. “Their track record in backing large, successful vertical software businesses and industries that the consumer world wouldn’t necessarily consider really resonated with us. Food distribution is one of those industries.”
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