Shortly after its launch, local restaurant takeout service FoodUp is accelerating its growth by bringing a more established Richmond company into the fold.
FoodUp, which launched in September, has a deal in the works to acquire ChopChop, a Richmond restaurant delivery service founded in 2018.
FoodUp founder and COO Phu Nguyen said the acquisition is expected to fast-track the company’s already-planned introduction of delivery service and help it grow as it seeks to compete as an alternative to national delivery apps such as Doordash and Grubhub.
“We’re able to pool all our resources together and have economy of scale. That allows us to provide better services to existing customers,” Nguyen said. “It speeds up our timeline tremendously and we’ll be able to roll out delivery in more areas in addition to what ChopChop had in its wheelhouse.”
The deal is expected to close before the end of the year.
Nguyen said that FoodUp will have a total of 75 to 80 restaurants in its lineup with the acquisition of ChopChop. The plan is to eventually wind down ChopChop’s independent brand and bring that company’s delivery service under FoodUp’s banner and onto its app.
“We’re really excited and motivated to move things forward as quickly as possible,” Nguyen said. “All the local food delivery services coming together as one, I think it’s better for the local community rather than fighting each other.”
Chris Chandler, founder and owner of ChopChop, is expected to join FoodUp’s team temporarily to help with the transition.
“I want to stay on with FoodUp as long as I can to make that transition happen in the best possible way,” Chandler said.
Nguyen said the scope and timeline for regional expansion of delivery services hasn’t been finalized yet but is expected to generally radiate outward from ChopChop’s existing presence in the city of Richmond.
“As a starting point for delivery, it acts as the center of the universe for us to expand from,” he said.
Chandler reached out to FoodUp after he learned about the company and felt both sides had a shared goal in the creation of a locally based counterweight to national competitors.
“When I learned about this opportunity, I reached out to them and said ChopChop has been thriving for a while but we’re hitting our head against the wall against these big companies,” Chandler said.
It helped that FoodUp is a co-op owned by local restaurant operators and uses an in-house app designed by Nguyen.
“We came to the decision since they have their own tech and traction doing the co-op. It made sense for them to absorb ChopChop. They share my vision and share the love for Richmond restaurants,” Chandler said. “(The technology) was the piece I was always missing. I always had to outsource technology, so I was limited to what that outsourcing company was providing.”
The acquisition comes as Chandler said ChopChop has seemingly been ghosted by Kbox, which provides the software that ChopChop’s app operates on. Kbox has recently gone dark on Chandler and the ChopChop app isn’t functioning properly, he said.
“I’ve been waiting for a call for a month and I don’t think that call is coming,” Chandler said of Kbox.
ChopChop hopped onto the U.K.-based delivery tech company’s system as part of its planned merger last spring with delivery company LoCo. Chandler said LoCo won’t be part of FoodUp’s deal to acquire ChopChop.
Kbox’s status is unclear. BizSense sent emails last week seeking comment to two Kbox accounts, one associated with the company proper and the other its U.S. operations. The email to the former bounced back and the latter didn’t respond.
Chandler said his company’s contracted drivers continue to make deliveries on behalf of local restaurants due to a successor program to a Kbox-initiated arrangement in which orders made on national delivery apps at some local restaurants are delivered by ChopChop drivers.
“We still have a bridge through some (point-of-sale) systems to do those deliveries,” Chandler said. “It’s something separate we’ve set up outside of Kbox. It wasn’t a total failure. We learned a lot with Kbox. The endeavor appeared to be one that would be successful and beneficial for the restaurants, but it ended not being one.”
Chandler founded ChopChop four years ago as a lower-cost alternative to national delivery companies, which charge restaurants upward of 30 percent in delivery fees. ChopChop charges a 16 percent fee.
“I think now with this absorption of ChopChop we can get the process where it needs to be so everybody buys in and says as a group, ‘We can fight the big guys and push them out,’” Chandler said.