Egyptian cloud kitchen services operator The Food Lab has raised $4.5 million in early-stage funding for domestic and regional expansion as demand for food deliveries rebounds.
The pre-seed funding round was co-led by Nuwa Capital, Shorooq Partners and 4DX Ventures, the company said in a statement on Tuesday. Investors backing the company include Saudi Arabia’s Al Faisaliah Group and Abdul Majeed Al Hokair, and Japan’s Samurai Incubate.
Set up in 2020 by Egyptian entrepreneurs Kareem El Daly, Ahmed Osman and Wesam Masoud, The Food Lab has partnered with about 50 local and international restaurant brands in the country to help their business grow.
“Restaurants powered by The Food Lab can expand quickly, without any capital commitment, while strengthening their brand equity,” Mr El Daly, founder and president of The Food Lab, said. “Our tech infrastructure helps our clients make data-driven decisions, whilst delivering Egypt’s highest level of service … to the largest number of people.”
Cloud kitchens, or ghost kitchens, are commercial establishments built to prepare food specifically for delivery and they have benefitted from the shift to online services during the coronavirus crisis. They have no physical presence as a restaurant, and offer delivery-only services from centralised premises through a mobile app.
The global cloud kitchen market is expected to be valued at $71.4 billion by 2027 from about $43.1bn in 2019, according to Allied Market Research.
“Together with our new investors, we look forward to building on our leadership position to expand across Egypt,” Ahmed Osman, co-founder and chief executive of TFL, said. “We are also excited to lay the groundwork for expansion to new markets in the Middle East and Africa, which will unlock growth opportunities for restaurants.”
Egypt’s restaurants have experienced robust growth, with an estimated size of $17bn annually, the company said, citing market data.
“The Food Lab is offering restaurant owners a solution to the problems posed by the country’s recent trend of de-urbanisation, which makes it very difficult for a restaurant to reach any meaningful percentage of a given population,” Ghassan Noursi, venture lead at Nuwa Capital, said.
TFL’s cloud kitchen is underpinned by a home-grown technology platform, which provides end-to-end services for restaurateurs, including procurement, cooking, delivery and marketing, the company said.
Venture capital funding to Mena start-ups surged to $2.6bn in 2021, according to data platform Magnitt. The region’s most active markets — the UAE, Saudi Arabia and Egypt — closed deals worth more than $100m last year.