Many small to mid-sized food distributors still work with pen and paper. This makes things like the performance of certain products and customer churn difficult to identify. It also makes it harder for businesses to comply with the FDA’s new food tracking regulations. Butter Solution is an all-in-one management system that helps distributors run their businesses as a system of record to help them comply with food safety regulations.
Butter announced today that it has a $9 million Series A round led by Google’s AI-focused Gradient Ventures. Other participants include 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 pandemic. The impact of Covid on the food industry highlights how outdated the supply side is, Chee told TechCrunch. While companies like Toast, DoorDash and Square handled separate sales and administration departments, there was still little innovation on the supply side, and many businesses relied on paper systems and phone calls.
Chi is well aware of the challenges food businesses face because his parents ran a battery-operated poultry farm in China for over twenty years.
They were waiting for delivery and collecting payments between 3-4AM every day. I witnessed firsthand the difficult process of tracking logs and invoices. My dad never goes a night without calling customers or following up on wrong orders or payments,” Chee told TechCrunch. “If my parents were still wholesalers, we would have had to close our business due to covid. With my technology background I feel the need to help this industry.
Butter was created to digitize the processes of food distributors selling to restaurants and supermarkets, and also provides analytics to help them manage their food business more efficiently. Butter manages multiple departments, from sales and inventory to payments and e-commerce storefronts. In this way, the platform can tell users when they need to renew products, in what amount and on what day.
Analytics available through the distributors platform include how much money they make per day. Chi many have only a cruel idea.
“For example, on the second day we boarded a seafood distributor, the distributor said, ‘I’m only doing 20% salmon?’ We were able to demonstrate this to him by quickly indexing our data,” Chi said. He told him that he spends more than half of his time on salmon every day, and after that he was able to make the necessary adjustments to grow his business.
Butter tells distributors which customers are active, who orders less, and who skims, so customers know before they stop making purchases. It also analyzes which products sell better in terms of revenue and profit, which products are returned the most, which leads to losses for distributors.
The platform makes it easier for them to comply with the new FDA traceability rule, as it acts as a system of record for distributors’ inventory. Chi noted that before the new regulations, only a few products, such as oysters, had strict traceability rules. But the new tracking rules cover more than 30 categories.
“Recently, a butter customer told me it takes 8-10 hours to recall,” Chi said. “He had to sift through a lot of paperwork to pinpoint certain orders, buyers and transaction dates,” Chi said. “Now with Butter, we can do that with just a few clicks.”
Butter is currently used by 6,000 restaurants in California and manages a total of $300 million in cash flow and sales operations. Chi says that customers who have worked with Butter over the past 12 months have seen an average increase in sales revenue of 47 percent.
He brought in many customers by working with distributors who sent invitations to customers to use the butter for free. Once logged in, their previous transaction history, customized order instructions and updated pricing will be available in the butter account.
In a statement about the investment, Wen Wen Lam, partner at Gradient Ventures, said, “Butter has the potential to transform the entire food supply chain. We pay attention to detail at Winston and Shangyan in building their products. They are highly attuned to their customers’ pain points and committed to solving problems that are not obvious to distributors, which is why they have been widely adopted by suppliers, including major wholesalers. We’re excited to support their team as they build and scale.
