MENA region hot for cloud kitchens, other foodtech startups

Anna Vod · July 5, 2024 · Short URL:

Here are a few fast-growing startups attracting investor interest

In recent years, the Middle East and North Africa (MENA) region has emerged as a hotbed for foodtech innovation, driven by a unique blend of challenges and opportunities. From the arid deserts of Saudi Arabia to the bustling cities of the United Arab Emirates, foodtech startups are seizing the market opportunities and attracting VC interest. This shift is not only addressing the region’s food security issues but also paving the way for sustainable and efficient food systems.

In 2023, the global food technology market size was valued at $184.30 billion and is estimated by Precedence Research to reach $475.43 billion by 2033, growing at a CAGR of nearly 10%. Asia Pacific contributed 33% of the market, while the Middle East and Africa made up just 4%, the market analysis firm said in an April 2024 report.

The MENA region faces significant agricultural challenges, including limited arable land and water scarcity. These factors have historically made the region heavily reliant on food imports.

However, the rise of foodtech is changing this narrative.

Growth factors include rising disposable income, consumer demand for healthier and sustainable food options, and supportive government initiatives. For mobile-based services, the growing use of smartphones has been especially beneficial. And indeed, in the Middle East and North Africa (MENA) region, capital has been flowing to cloud kitchens – restaurants without a dining area that only accept pickup or delivery orders. The concept gained popularity during the pandemic and has stuck around since, with businesses choosing to cut back on serving and focus on cooking.

So, let’s meet some foodtech companies in the MENA region that are growing fast and getting investor attention.

A $15 million Series B fundraising was recently closed by GrubTech as it partnered with Saudi Arabia food delivery app Jahez. GrubTech, based in Dubai, provides an end-to-end SaaS platform for restaurants and cloud kitchens, streamlining operations, delivery, inventory management. Operating since 2019, the startup has added groceries and pharmacies to its network, and plans to use the new capital to expand across Saudi Arabia, Europe, and the U.K.

In Abu Dhabi, UAE, there’s Sauce Capital, a foodtech startup which runs a food delivery app Chew, connecting users to kitchens with unique and healthy food concepts. Some of its known brands include Chic Flic, Eggbun, BWL, Laffa, and Buwagyu, while the app surpassed 1 million orders earlier this year. The company operates 17 kitchens and hosts 40 virtual food brands in Abu Dhabi, Dubai, Sharjah, and Riyadh. 

Meet also Pure Harvest Smart Farms, a controlled-environment agriculture company which uses on-site water treatment, immediate cooling of fresh produce, and sustainable practices in its greenhouses built in the desert to improve food security. Pure Harvest’s U.S. investors include Franklin Templeton, based in San Mateo.

In Dubai, Kitopi is expanding its tech-powered multi-brand restaurant with an online and offline presence. Its smart kitchen operating system optimizes all aspects of kitchen operations in real time to maximize efficiency and increase utilization. This six-year-old Kitopi, backed by SoftBank, LA-based B Riley Financial, and Next Play Capital in Redwood City, has expanded to eight countries and 200 locations.

KRUSH Brands, launched in Dubai in 2015, operates a multi-kitchen food service with last-mile delivery services. Its business model focuses on healthy, sustainable, and locally-sourced food, leveraging a proprietary integrated ordering and operating platform. 

Matbakhi is a foodtech company that operates a hotel-based cloud kitchen model. The company helps hotels transform their underutilized kitchens into profit-generating spaces while revamping their culinary offerings with “soulful brands.” These brands are incubated with local chefs, creating innovative F&B concepts inspired by local stories and powered by global best practices in virtual brand operations.

Then there’s Supy, which provides cloud solutions to restaurants, analyzing data across operations and delivering real-time visibility into the performance, helping identify discrepancies and control spending. It includes inventory management, procurement, automated restocking, and cost reduction strategies for optimization.

In Riyadh, Saudi Arabia, Foodics is providing an all-in-one SaaS for restaurant operations and payments. Among its familiar big-name clients in the MENA region are Starbucks, Dunkin Donuts, and Cinnabon. It’s been backed by NYC-based Endeavor Catalyst.

Meet also Nana, a digital grocery shopping platform in Saudi Arabia that operates a dark store model and offers 15-minute delivery. The company’s website boasts having delivered more than 45 million orders. Last year, Nana became one of the top-funded startups in the MENA region, in spite of the 2023 slump in global economic growth.

A Banama, Bahrain, foodtech startup is Calo, a meal subscription service that offers personalized meal plans for health-conscious customers. The company operates in Saudi Arabia, UAE, Kuwait, Qatar, and Bahrain, and has served 10 million since its inception in 2019. The company is backed by 500 Global in San Francisco.

Other growing businesses in the space include Kaykroo, which runs 45 virtual restaurant brands, while Kitch provides its own smart cloud kitchen solutions, and Kitchen Park offers cloud kitchen spaces for rent. Barakah is fighting food waste by finding consumers for unsold fresh food. Riyadh-based NOMU Group streamlines inventory sourcing, procurement, financing, storage, and delivery for hospitality businesses. The Cloud provides a turnkey, virtual restaurant management solution. The iKcon cloud kitchen company was acquired by REEF Technology for the latter’s expansion in MENA.

MENA investors

Among active investors in MENA startups is Shorooq Partners, with offices across the region. In addition to foodtech, its investment portfolio includes companies in fintech, games, climate technology, and crypto.

In Kuwait, an early-stage accelerator called Savour Ventures seeks out startups across the food value chain to create a new sustainable food system. Its portfolio lists Foodics, GoodsMart – a household shopping app in Egypt that offers a variety of products and contactless delivery, and Sprouting Journey – a Bahrain provider of wholesome foods for children and babies, using no nuts, added sugars, or preservatives.

COTU Ventures, a Dubai early-stage VC firm, has been an active investor in GCC startups. It announced earlier this year that it raised a new $54 million fund to “empower MENA’s extraordinary with their first check.” While its portfolio consists largely of SaaS, fintech, and sales, COTU has also backed the aforementioned Supy, as well as Chatfood, which facilitates mobile ordering and other solutions for hospitality brands, RoundMenu, a restaurant listing and food ordering app, and Aydi, a developer of a field operating system for farmers.

In the U.S., a select few investors are looking into the MENA region. Partners for Growth (PFG), headquartered in Tiburon, CA, counts the Middle East as one of its focus areas. It has backed Tabby, a BNPL e-commerce app advancing “financial freedom in the way people shop, earn, and save.” 500 Global, with a San Francisco office, has invested in over 250 companies in the MENA region. Sequoia Capital is also known for its wide international presence.

Image: Sauce Capital

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