Kenyan cloud kitchen operator Kune Food shuts down barely a year after launch

KENYA – Kune Food, a Kenyan based cloud kitchen concept operator offering ready-to-eat affordable meals, has called it quits, shutting down its operations barely a year since it launched.

The founder and Chief Executive Officer Robin Reecht, blamed the sudden cessation of operations on the economic downturn, investment markets tightening up, coupled with rising food costs which deteriorated its margins.

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The startup which was founded in 2020 will lay off 90 employees and lose more than 6,000 individual customers and 100 corporate customers it had acquired over time.

Prior to its official launch in the market, Kune conducted a trial in Kenya in the early months of 2021 and raised a pre-seed funding round worth US$1 million which enable it to scale.

The funding round was led by Launch Africa Ventures, with anchor investments from Century Oak Capital GmbH and Consonance.

The investment enabled the startup to build a factory, a kitchen studio, 7 distribution hubs and build its own distribution capacity.

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Other than enticing the Kenyan consumers with a variety of meals, Kune was seeking to inculcate a foodies culture in the country with the launch of a food program, curated at its newly built Kitchen Studio.

“Since the beginning of the year, we sold more than 55,000 meals, acquired more than 6,000 individual customers and 100 corporate customers. But at US$3 per meal, it just wasn’t enough to sustain our growth,” said Reecht.

The company was seeking to raise US$3.5 million from local and international investors in its second phase of fundraising to provide it with working capital and ramp up their production capacity.

Until the indefinite closure, Kune was hoping to expand its operations countrywide by 2024.

“We were unable to raise our next round. Coupled with rising food costs deteriorating our margins, we just couldn’t keep going.

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“Many things could have been done differently, better certainly. The coming months will allow us to reflect on Kune’s failure, and I hope to share about it when the time will be right,” he said.

Despite Kune’s untimely collapse, Cloud kitchen has been trending up in food delivery service in the last one decade, with Research and Markets highlighting that the global cloud kitchen market size was valued at US$43.1billion in 2019, and is estimated to reach US$71.4billion by 2027 with a CAGR of 12.0% from 2021 to 2027.

Major factors driving the growth of the concept are an increase in demand for online food delivery, heightened appetite for international cuisine, and the adoption of tech-savvy ordering systems.

Moreover, hectic work schedule of millennial and Gen Z is set to boost the growth of the market.

The Food Lab, Ando, Kitopi and REEF are some of the players dominating the market in MENA region.

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