Many small to medium-sized food distributors still run on pen and paper. This makes it difficult to determine things such as how certain products are performing and customer churn. It also makes it difficult for companies to comply with the FDAs new food traceability rules. ButterThe company’s solution is an all-in-one management system that helps distributors run their businesses, while serving as a registration system that helps them comply with food safety regulations.
Butter announced today that it has a $9 million Series A led by Google’s AI-focused Gradient Ventures. Other participants included Uncommon Capital, Notation Capital and angel investor Jack Altman. The new funding will go towards hiring Butter’s sales and engineering teams.
Butter was founded by Winston Chi and Shangyan Li in 2020, during the height of the pandemic. The impact of COVID on the food industry highlighted how outdated the supply side is, Chi told australiabusinessblog.com. Although companies like Toast, DoorDash and Square addressed different areas of sales and management, there was still little innovation on the supply side and many companies relied on paper systems and telephone calls.
Chi knows the challenges food companies face because his parents ran a battery-powered chicken farm in China for more than 20 years.
“They woke up every day between 3 and 4 am, waiting for deliveries and collecting payments. I witnessed the cumbersome process of logging orders and tracking progress. My father rarely had a night without calling customers or detecting misplaced orders or payments,” Chi told australiabusinessblog.com. “If my parents were still wholesalers, we would have had to close our business because of COVID. With my tech background, I feel the need to help this industry.”
Butter was created to digitize the process for food distributors selling to restaurants and supermarkets, as well as provide food companies with analytics to help them run their businesses more efficiently. Butter manages many areas of business, from sales and inventory to payment and e-commerce storefronts. In this way, the platform can tell users when to replenish products, in what quantity and on what date.
Analytics available through the platform for distributors includes how much money they make per day. Chi said many have just a rough idea.
“For example, the second day after we brought a seafood distributor on board, the distributor asked ‘is it true I only make 20% off salmon?’ We were able to quickly reference our data and show it to him,” Chi said. He shared that he spent more than half of his time on salmon every day and that he could then make the necessary adjustments to his scaling up the business.”
Butter tells distributors which customers are active, who are ordering less, and who are churning so they know before customers stop buying. It also analyzes which products sell the best in revenue and profit, including which products are returned most often, causing distributors to lose money.
The platform also makes it easier for them to comply with the new FDA traceability rule, as it acts as a registration system for distributors’ inventory. Chi explained that before the new regulations, only a few products, such as oysters, had strict traceability rules. But the new traceability rules cover more than 30 categories.
“Recently, a Butter customer told me it took him 8-10 hours to get a recall,” Chi said. “He would have to search through piles of paper to locate certain orders, buyers and transaction data,” Chi said. “Now with Butter, we can do that in a few clicks.”
Butter is currently used by 6,000 restaurants throughout California and manages a total of $300 million in cash flow and sales operations. Chi says clients who have worked with Butter in the past 12 months have seen an average 47% growth in sales.
Butter has won many customers by partnering with distributors, who send customers invitations to use Butter for free. Once they log in, their past transaction history, custom order guide, and updated pricing will be available in the Butter account.
In a statement about the investment, Gradient Ventures partner Wen-Wen Lam said: “Butter has a huge opportunity to revolutionize the entire food supply chain. We are impressed with the attention to detail shown by Winston and Shangyan in building their product. They are closely aligned with their customers’ pain points and are committed to solving less obvious problems for distributors, which is why they have gained wide acceptance from suppliers, including major wholesalers. We are delighted to support their team in build and scale.”