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The Food Lab, an Egyptian cloud kitchen provider, raises $4.5M pre-seed for expansion – TechCrunch

According to reports, Egyptians spend around 30% of your income on food in a $17 billion restaurant industry, one of the largest in Africa and the Middle East. However, restaurants in this North African nation operate on thin margins due to various factors, ranging from large initial investments and high rental costs to rising operating expenses and commissions charged by aggregators.

kareem the Daly He ran into these problems when he ventured out to open a restaurant with his wife. Being an enthusiast of the food technology space, El Daly began exploring market gaps and saw an opportunity in using technology to help restaurants and food brands get a return on investment while maintaining service quality.

“Many things have changed within the ecosystem during the last decade in space”, El Daly he told TechCrunch. “We wanted to bridge the gap between restaurants and customers, help them expand, grow and operate perfectly through technology and a shared economy model”.

The Food Lab was the resulting solution that El Daly and co-founders Ahmed Osman and Wesam Masoud launched in 2020. After two years of startup, the company raised $4.5 million in pre-seed funding, its first venture round.

Africa-focused fund 4DX Ventures and UAE-based venture capital firms Nuwa Capital and Shorooq Partners led the round, one of the largest in Egypt after Rabbit, Telda and Milezmore. Other participating investors include Al Faisaliah Group and Samurai Incubate.

The Food Lab is a cloud kitchen platform, but describes itself as an infrastructure company for restaurants in Egypt (around 400,000) in the food and beverage (F&B) space. The company offers a full suite of end-to-end services, including cloud cooking (kitchen as a service) and shopping..

“If a restaurant has difficulty expanding, maybe due to money problems and low margins, they can enter one of our cloud kitchens in Cairo. We will operate everything from start to finish, from procurement to delivery, co-founder and CEO Osman told TechCrunch.

“Also, one of the biggest issues we see in the F&B space, especially with changes in the supply chain, is low ingredient prices. extremely volatile. So another thing we do for them is to provide them with bulk items from our supplier list and provide them to you.”

Virtual Brand Consultant for The Food Lab – essentially a data-centric dashboard powered by machine learning – democratizes data and provides granular insights to these brands with respect to its operations and finances. Other information includes menu reengineering, marketing, profit margins, customer segmentation, and buyer persona ranking.

The Egyptian cloud kitchen provider claims its platform enables “existing restaurant owners to grow exponentially and new brands to go from concept to launch within single 10 days.”

“What we want to do is be that connector; we want to connect that closest kitchen or closest kitchen to the most distant appetites. Cloud kitchens may be the only thing we’re starting with and making some acquisitions, but we are a work of infrastructure”, said Osman.

“We try to integrate ourselves in a way that helps them [restaurants] grow up. If they have problems, we are using our technology platform and our knowledge to help them do it and remove all those barriers.. That is Really what we’re trying to do.”

L-R: Wesam Massoud, Kareem El Daly and Ahmed Osman

In October 2020, The Food Lab launched with a kitchen. Although the food tech startup only opened another location last year, the founders said The Food Lab’s orders and revenue have grown 10-fold since then. start have increased by 60x.

More than 50 restaurants and food brands use The Food Lab, and 175,000 end customers have ordered from their kitchens, the company said.. these clients they are loaded a percentage of your revenue, including aggregation, marketing, and acquisition fees. As a result, Food Lab’s revenue has grown between 25% and 35% per month.

There is a growing need for cloud kitchens in emerging markets due to the apparent cost advantages of working in 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 in size. But the big players dominate the Middle East, like Kitopi and REEF. The Food Lab claims to be the first provider of its kind in Egypt, an intersection of both markets. According to its founders, this initial investment will allow the company to expand further in the country and lay the groundwork for entry into the Middle East and sub-Saharan Africa.

“The first thing is to completely take over the Egyptian market, especially in Cairo or in some key governorates where we want to have a strong presence. So this is the geographic expansion part,” said El Dalywho is the founder and president of the company.

“Other than that, we have hiring plans for some community roles and operational positions.. And the third thing is that we continue to develop our technology solutions for our customers, partners and consumers..”