Pepper raises $50M to digitize food distribution with AI

New York-based startup Pepper, founded by Bowie Cheung, Chetan Narain, and Ivana Tesanovic, has raised $50 million in a Series C round to expand its AI-powered platform for foodservice distributors. The company aims to digitize one of the most manual sectors in the global economy, improving efficiency, visibility, and growth in a fragmented market, according to AgFunderNews.

Pepper is targeting a massive but underserved segment of the food distribution industry. While large players dominate part of the market, thousands of independent distributors still rely on manual workflows, including emails, phone calls, and spreadsheets, to manage orders and operations.

“Food distribution is one of the largest and most fundamental markets in the world, yet it has long operated on manual systems and fragmented technology,” said CEO Bowie Cheung, according to AgFunderNews.

The company initially focused on helping distributors launch e-commerce storefronts, allowing restaurants to place orders online. Over time, it expanded into a full-stack platform that integrates payments, marketing, analytics, and now artificial intelligence.

A key innovation is its AI-powered order automation system, which can process incoming orders from multiple formats, including emails, voicemails, text messages, PDFs, and spreadsheets. These orders are automatically integrated into ERP systems, eliminating hours of manual data entry.

The platform also includes tools to improve financial operations. Distributors can shift from paper checks to digital payments such as ACH and credit cards, while gaining real-time visibility into invoices. Automated reminders and payment links help reduce delays and improve cash flow.

Pepper is now focusing on agentic AI capabilities, designed to actively assist users rather than just process data. These tools can identify churn risks, suggest upselling opportunities, and even help sales teams prioritize accounts.

One example is a prospecting tool developed in partnership with Yelp. It uses AI to analyze restaurant menus and generate tailored order guides with pricing, something that previously required hours of manual work. “Now you’ve got something to leave with them that’s tailored to their business,” Cheung explained, according to AgFunderNews.

The opportunity lies in the scale and fragmentation of the market. There are approximately 25,000 food distributors across the US and Canada, representing about $1.4 trillion in wholesale spending. However, the top 50 companies account for only a third of that total, leaving a vast “long tail” of independent operators.

“The independent segment of this industry has been kind of a black box from a sales and marketing analytics perspective,” said Cheung, according to AgFunderNews. Pepper’s platform aims to bring transparency and data visibility to this segment, enabling better decision-making.

The company generates revenue through annual contracts, with pricing based on the size and complexity of each distributor’s business. Implementation typically takes between one and three months, depending on the integration requirements.

One of the main barriers in the sector is the complexity of connecting with legacy ERP systems. Pepper claims to have completed more than 500 integrations, a key differentiator in a space where technical challenges have limited competition.

Beyond efficiency, the company highlights growth as a core value proposition. Digital storefronts tend to increase order volumes, while AI tools make sales teams more productive and help identify new revenue opportunities.

“In the AI era, there’s an opportunity to rethink a lot of things, so we see a bright future for independents if they’re armed with the right technology,” Cheung said, according to AgFunderNews.

Pepper’s expansion reflects a broader trend: industries with manual processes are becoming prime targets for AI-driven transformation. In food distribution, where operations have lagged behind consumer-facing technology, the potential impact is both immediate and measurable.