EGYPT – The Food Lab, Egypt’s first cloud kitchen services operator, has raised US$4.5 million in a pre-seed funding round to support its expansion within the country and in the Middle East and Africa region.
The funding round was co-led by Nuwa Capital, Shorooq Partners, and 4DX Ventures. It also witnessed the participation of other investors, including Saudi-based Al Faisaliah Group and Abdul Majeed Al Hokair, as well as Japan’s Samurai Incubate.
The Food Lab provides a full suite of end-to-end services, including cloud kitchen (kitchen as a service), procurement, delivery, data-led insights, recommendations, and marketing for restaurants.
“If a restaurant is finding it difficult to expand, maybe due to money issues and low margins, they can come into one of our cloud kitchens all around Cairo. We will operate everything end-to-end from procurement to delivery for them,” said co-founder and CEO Osman to TechCrunch.
“Also, one of the biggest problems that we see in the F&B space, especially with the supply chain changes, is the prices of the ingredients are extremely volatile. So, another thing we do for them is procuring items in bulk from our supplier list and provide to them,” he said.
The company also has a virtual brand consultant — essentially a data-centric dashboard powered by machine learning — democratizes data and provides granular information to these brands regarding their operations and finances.
Other information it avails includes menu reengineering, marketing, supplier research, profitability margins, customer segmentation and buyer persona classification.
The Egyptian cloud kitchen provider claims that its platform allows “existing restaurant owners to grow exponentially and new brands to go from concept to launch within just 10 days.”
Founded in 2020, The Food Lab has so far established partnerships with more than 50 local and international brands that are leveraging the company’s platform to grow its presence in the country and have served 175,000 customers.
“Restaurants are capital intensive with shrinking margins, which pushes many of them out of business within a year, and our mission is to bridge the gap between restaurants and consumers, as we help restaurants to expand without any capital commitment,” said Kareem El Daly, founder, and president of The Food Lab.
The F&B market in Egypt is extremely fragmented, with an estimated size of US$17 billion annually. According to market data, Egyptians spend about 30% of their income on food, and the adoption of new technologies will allow restaurateurs to scale growth rapidly.
“Together with our new investors, we look forward to building on our leadership position to expand across Egypt.
“Job creation in the form of strategic hires remains a key priority alongside the further development of our technology,” Ahmed Osman, co-founder and CEO of The Food Lab, said.
There’s a growing need for cloud kitchens in emerging markets because of the apparent cost advantages of working out of a shared kitchen environment, particularly as food delivery services are in greater demand now than ever.
In sub-Saharan Africa, the providers involved, such as Kune and Ando, are relatively small-sized. But big players dominate the Middle East, like Kitopi and REEF.
The global cloud kitchen market is projected to touch US$2.6 billion by 2026 at a compounded annual growth rate (CAGR) of 17.2%, from as low as US$650 million in 2018.
This will be supported by the rise of online food delivery applications and the growing use of mobile and smartphones for food orders, according to Reports and Data.