Serving customers, restaurants and drivers, Asian Food Delivery Startup thrives during lockdown

By Yun Hao
Medill Reports

When COVID-19 hit in early March, Shuo Yang, a researcher from Northwestern Feinberg School of Medicine, took necessary measures to prepare her family with a two-week supply of food and stopped visiting grocery stores.

But vegetables and snacks ran out fast, so Yang needed to restock. Having no masks or other proper protection, she was caught in a predicament.

“I tried to order groceries from Costco through Instacart at first, but they had either told me that they were too busy to take any more orders, or they needed at least two weeks to deliver to door,” Yang said.

Chowbus Inc., an Asian food and grocery delivery startup headquartered in Chicago, was introduced to Yang by a friend. Launched as an application in 2016 by CEO Linxin Wen and chief technology officer Suyu Zhang, the company serves 20 major cities across North America including New York, Atlanta and Vancouver.

Yang, who lives in Naperville, said she’s pleased with the speed of Chowbus.

“If an order is placed by 2 p.m., it will be delivered same day. There was one time they forgot to pack bananas that I ordered, they gave me a refund right away,” Yang said.

Sales of Chowbus used to grow by four times each year, but since the pandemic started in mid-March, it has tripled within two months, Wen said.

Grocery orders used to account for only 10% of all Chowbus orders. They now account for 20%, Wen said. All grocery orders in the Chicago area are prepared by Chinatown Market located in Chicago’s Chinatown neighborhood.

Chowbus started preparing for the pandemic early. With two-thirds of the management team coming from China, it was aware of COVID-19 before the rest of the world was affected, Wen said. The company began purchasing masks and other protective gear for delivery couriers in late February and early March and since has doubled its driver pool across marketplaces to meet the surging demand of customers, Wen said.

In the latest report released by the Department of Labor on May 21, over 38 million Americans have filed for unemployment benefits since March 13, when President Donald Trump declared a national emergency.

“We’re lucky to be one of the very few companies to keep hiring people during this special time,” Wen said.

Chowbus has thousands of restaurant partners and over half a million users. Half of the active diners are Chowbus Plus members who pay $9.99 each month for waived delivery fees on orders above $15, Wen said. Delivery fees normally cap at $4.99 per order depending on the distance.

Although Chowbus acted early in response to COVID-19, it couldn’t fulfill all the grocery orders flooding in at first. It imposed a 15% service fee both to help subsidize workers, who were paid $15 per hour for packing up groceries, and to discourage customers from overly stocking up, Wen said. The service fee was removed in mid-April when the demand of for grocery deliveries flattened.

Eight in 10 restaurants partnered with Chowbus are Chinese restaurants, but the platform is not designed only for Chinese customers. All menus are translated into English and roughly 30% of users are non-Chinese, Wen said.

“Chowbus has really grown fast, especially in the recent two years,” said Edison Feng, general manager of Lao Sze Chuan in Chinatown, a popular 22-year-old restaurant with six franchises in the Chicago area.

“About half of our orders come from Uber Eats and Grubhub, and one-third are from Chowbus,” said Feng, who joined Lao Sze Chuan in September 2016 and has watched Chowbus grow. The app brings in around 30 orders per day, he said.

However, without dine-in orders, Lao Sze Chuan’s business has dropped by half. The restaurant now relies solely on online orders, which was only up by 20% to 30% since the pandemic started, Feng said.

Xintong Li, a part-time Chowbus driver from Chicago, delivers an average of 25 orders each day. He took the job last fall and now works five to six days each week.

“I’m definitely receiving more orders, but not too much,” Li said. “There were already a lot of orders to deliver before the pandemic, and considering that Chowbus has more drivers now, when it comes to each of us, the order number didn’t change too much for me.”

For each order delivered, Li earns $4 plus the tip from the customer. If the tip is less than $3, then Chowbus will subsidize the rest. In other words, for each order that Li delivers, he gets at least $7.

“I’m very grateful to still have a job, and for me, this is really a very decent amount of income. As far as I know, Chowbus pays drivers the most compared to many other delivery platforms,” Li said.

For Wen, Chowbus serves not only customers.

“Our margin is very thin, and we make very few money from each order,” Wen said. He wants Chowbus to be successful in the long-term, and in order to succeed, the company needs to provide value to restaurants and drivers as well.

“It’s not going to change no matter how big the company is,” Wen said.

Photo at top: Chowbus, Asian food and grocery delivery startup in Chicago, stands out for its delivery speed amid shelter-in-place orders. (Yun Hao/MEDILL)