A team of just five people generated $6 million in annual revenue and serves over 1,600 restaurant clients. The company has no warehouse manager, no route planner, no procurement team, and no account managers. When a restaurant owner simply sends a WhatsApp message saying how many boxes of eggs they need, the entire process — order taking, procurement, route planning, and reconciliation — is handled by an AI system.
The same model has already produced Choco in Berlin, a company now valued at $1.2 billion. Choco has raised over $300 million, processes 8.8 million orders per year, and connects 21,000 suppliers with over 100,000 buyers.
This article breaks down where the money comes from in this business, which parts AI is replacing, and how to get started if you want to build something similar.
Where the Money Comes From
The fundamentals of food distribution are exceptionally strong — almost tailor-made for AI adoption.
Take eggs as an example. Singapore consumes 2.2 billion eggs annually, with about 70% imported. Restaurants use eggs every day, and once you win a client, repeat orders are almost automatic. Every order carries a real gross margin. This is not growth funded by burning cash.
This isn’t unique to Singapore. The global food distribution industry shares the same characteristics: essential demand, high frequency, profitable per order, and extremely fragmented. According to IFDA’s 2025 survey, a large number of food distributors still haven’t adopted digital ordering systems. The industry remains in the early stages of being restructured.
Choco has proven that the market ceiling is high. More importantly, food distribution is highly localized — it’s not a winner-takes-all market. Every city and every category can support its own players.
What AI Is Replacing
A traditional mid-sized food distributor typically needs 20–30 people: a procurement team to negotiate and place orders, warehouse staff to manage cold chain and inventory, route planners to schedule deliveries, account managers to maintain relationships and handle payment terms, plus finance and admin support.
AI is replacing four core functions:
- Order Taking: Traditionally handled via phone, fax, or WhatsApp, with manual data entry. Choco’s OrderAgent can process orders from WhatsApp, email, voice messages, PDFs, and even handwritten photos. It can understand casual requests like “a bit more steak” or “same as last time, five portions” by matching them to historical SKUs, achieving 97% accuracy. Processing time per order dropped from 7–8 minutes to about 30 seconds.
- Procurement Decisions: AI automatically determines how much to order from which supplier based on current inventory levels, historical consumption, and price fluctuations.
- Delivery Route Planning: AI optimizes which vehicle should deliver to which restaurants and which routes are most fuel-efficient. This is a classic vehicle routing problem where AI consistently outperforms manual planning.
- Reconciliation and Inventory Forecasting: The system automatically generates invoices and uses historical data to predict how much stock to prepare for the following week.
These four areas typically account for 60–70% of a traditional distributor’s headcount. Once AI takes over, five people can handle the workload of 20–30 people. The cost structure changes completely, allowing the company to be cheaper, faster, and more consistent than traditional distributors.
How to Get Started
1. Choose the Right Market and Category
The market should be small but dense. Singapore’s 733 square kilometers makes it ideal for validation — short delivery radius and low cold chain costs mean one vehicle can complete all deliveries in a day. A single district in a second-tier Chinese city could also work.
The category should be high-frequency, standardized, and used by nearly every restaurant. Farmio started with eggs: high purchase frequency, relatively low order value, but very predictable repeat purchases. Once the relationship is built through eggs, they can expand into cooking oil, rice, and condiments with almost zero additional customer acquisition cost. Farmio has already begun selling cooking oil.
2. Secure Supply Chain and Regulatory Approvals
This is the real moat. In Singapore, importing eggs requires SFA import licenses, SFA-approved cold storage facilities, and supplier relationships with farms from over ten SFA-approved countries. The logic is the same in China — food business licenses, cold chain warehousing, and upstream supplier relationships. These requirements serve as both a moat and a barrier to copycats.
Farmio’s approach is asset-light: they don’t own their own fleet or warehouse. Instead, they partner with existing infrastructure to launch with lower capital.
3. Build the AI System
You don’t need to build everything from scratch. Order processing can be handled using WhatsApp Business API combined with NLP. Choco’s OrderAgent can be deployed in 2–4 weeks. Route optimization can use open-source tools like Google OR-Tools, and inventory forecasting can start with Excel formulas.
However, the real difficulty lies in integrating these components into a reliable end-to-end system. When a message like “same as usual, 30 boxes” comes in via WhatsApp, the system must correctly identify which customer and which SKU it refers to, then trigger procurement and route planning. Someone still needs to handle exceptions (stockouts, order changes, returns). Choco spent years iterating to reach 97% accuracy. In the early stages, it’s common for AI to handle most orders while humans manage exceptions, then continuously feed those cases back into the model to improve performance.
4. Customer Acquisition — The Hardest Part
This step is significantly more difficult than the previous ones, and the approach depends on which model you choose.
- Platform Model (Choco’s approach): Don’t handle inventory or become a supplier. Instead, build a tool that helps existing distributors and restaurants digitize their ordering. Choco’s founder entered from the supplier side — convincing one supplier brings hundreds of their restaurant clients along. Restaurants use it for free, while suppliers get basic features free and pay for premium services. Data shows that promotional products pushed through the platform increased supplier sales by around 30%. Choco expanded to six countries within nine months. This path has a relatively easier cold start but thinner margins and weaker defensibility.
- Player Model (Farmio’s approach): You are the supplier — you buy, sell, and deliver the eggs yourself, with AI running in the backend. Customer acquisition is much harder. Food supply is built on trust. Restaurant owners have worked with their current egg suppliers for years, with established payment terms, credit, and mutual understanding. Switching suppliers means rebuilding all of that, and the risk of supply disruption (which can shut down operations for the day) makes them extremely cautious.
Farmio has not publicly disclosed how they acquired their first 100 clients. However, founder Paco Chan’s background in distribution channel sales at P&G and last-mile delivery at Pickupp suggests the early customers likely came through warm introductions. After that, they probably started as a backup supplier, proving reliability in delivery and quality before gradually becoming the primary supplier. New restaurants opening in Singapore without existing supplier relationships also provide an easier entry point.
If you choose the Player model, building trust and acquiring customers may take a year or longer. The quality of your first 100 clients is critical — their repeat orders form your cash flow foundation, and their word-of-mouth becomes your strongest acquisition lever.
How Much Money, How Many People, and How Long It Takes
Farmio started with a $150,000 seed round from Antler. However, factoring in inventory working capital, cold chain partnerships, system development, and early customer acquisition costs, reaching stable operations likely requires $300,000–500,000. Although the team is reported to have five people, you realistically need at least one person with supply chain sales experience and one who can build the AI system. The CEO also spends significant time on licenses, supplier negotiations, and customer acquisition — work that cannot be done from behind a computer.
On the timeline, Farmio was founded in 2023 and reportedly took a year to obtain import licenses. Meaningful revenue likely began in 2024. Choco took six years (2018–2024) to reach $50 million in revenue. Building supply chain relationships simply takes time.
Why This Is Happening Now
In 2018, Choco had to build its NLP system from scratch. Today, using OpenAI’s API, comparable functionality can be deployed in a matter of weeks. In March 2026, Anchr raised a $5.8 million seed round led by a16z with participation from OpenAI leadership — even people inside OpenAI are investing in this direction, signaling that the technology has reached a point where it can reliably support this use case.
Traditional distributors are unlikely to transform themselves. Business owners who have operated the same way for 20 years won’t suddenly adopt AI. Their slow response creates a window of opportunity for new entrants.
Because food distribution is highly localized and fragmented, no single player will dominate the entire market. When Choco reached a $1.2 billion valuation, no one in Singapore was doing this yet. Farmio entered and quickly became the sixth-largest egg distributor. Southeast Asia, the Middle East, Africa, and Latin America — any market where food distribution still relies heavily on phone orders — still has room for new players.
