According to reports, Egyptians spend about 30% of their income from food in a $17 billion restaurant industry, one of the largest in Africa and the Middle East. Yet restaurants in this North African country operate on thin margins because of: multiple factors ranging from large initial investments and high rental costs to rising operating costs and commissions charged by aggregators.
Kareem El daly ran into these problems when he wanted to start a restaurant with his wife. As a lover of the food tech space, El daly began investigating market gaps and saw an opportunity in using technology to help restaurants and food brands recoup their investment while maintaining their quality of service.
“A lot of things have changed in the ecosystem in space in the last ten years,” says El daly told MovieUpdates† “We wanted to bridge the gap between the restaurants and the customers, helping them expand, grow and operate seamless through technology and a shared economy model.”
The Food Lab was the resulting solution that El Daly and his co-founders Ahmed Osman and Wesam Masoud launched in 2020. After two years of bootstrapping, the company has raised $4.5 million in pre-seed financing – its first round of venture.
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 – about 400,000 in number – in the food & beverage (F&B) space. The company offers a full suite of end-to-end services, including cloud kitchen (kitchen as a service) and procurement†
“If it is difficult for a restaurant to expand, could be due to money problems and low margins, they can go anywhere in Cairo in one of our cloud kitchens. We will run everything end-to-end, from procurement to delivery, for them, co-founder and CEO Osman told MovieUpdates.
“One of the biggest problems we see in the F&B space, especially with the changes in the supply chain, is that the prices of the ingredients extreme volatile. So another thing we do for them is shopping bulk items from our supplier list and deliver to them.”
The Food Lab’s virtual brand advisor – actually a data-centric dashboard powered by machine learning — democratize data and provide detailed information to these brands concerning their business and finances. Other information includes menu redesign, marketing, profitability margins, customer segmentation, and buyer persona classification.
The Egyptian cloud kitchen provider claims its platform “grows existing restaurant owners”. exponential and new brands to go from concept to launch only 10 days.”
“What we want to do is be that connector; we want to connect that closest kitchen or closest kitchen with the freshest appetite† Cloud kitchens may be the only thing we start with and do some sourcing, but we’re an infrastructure game,” Osman said.
“We try to embed ourselves in a way that we help them [restaurants] increase. When they have problems, we use our technology platform and knowledge to help them do that and remove all those barriers† that is real what we are trying to do.”
In October 2020, The Food Lab was launched with one kitchen. Although the foodtech startup only opened another location last year, its founders said The Food Lab’s orders grew 10x and revenues have since grown. start have increased by 60x.
More than 50 restaurants and food brands use The Food Lab and 175.00 end customers have placed orders in the kitchens, the company said.† these customers are charged a percentage of their revenues, including aggregation, marketing and purchasing fees. As a result, Food Lab revenue has grown 25-35% month-over-month.
There is a growing need for cloud kitchens in emerging markets due to the clear cost benefits of operating from a shared kitchen environment, especially as the demand for food delivery services increases now than ever.
In sub-Saharan Africa, the providers involved, such as Kune and Ando, are relatively small format† But major players dominate the Middle East, such as Kitopi and REEF. The Food Lab claims to be the first such provider in Egypt, crossing both markets. According to the founders, this pre-seed investment will enable the company to expand further in the country and lay the groundwork for access to the Middle East and Sub-Saharan Africa.
“The first is to take over the Egyptian market completely, especially in Cairo or some key governorates where we want to have a strong footprint. So this is the part of the geographic expansion,” 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 third, we need to further develop our technology solutions for our customers, partners and customers†