According to reports, Egyptians spend 30% of their income on food in a $17 billion restaurant industry, one of the largest in Africa and the Middle East. Restaurants in this North African nation have a number of factors that affect their margins, including high cost of rent, large initial investments, and commission charged by Aggregators.
When he and his wife decided to open a restaurant, they stumbled upon some issues. Being an enthusiast of the food tech space, El Daly began to explore market gaps and saw an opportunity in using technology to help restaurants and food brands make a return on investment while maintaining their quality of service.
The space has changed over the past 10 years, according to El Daly.
The Food Lab was launched in 2020 by El Daly and his co-conspirators. After bootstrapping for two years, the company has raised $4.5 million in pre-seed financing.
One of the largest rounds in Egypt after Rabbit, Telda and Milezmore was led by Africa-focused fund 4DX Ventures. Other investors include the Al Faisaliah Group.
The Food Lab is a cloud kitchen platform, but it is also an infrastructure company for restaurants in Egypt. The cloud kitchen is one of the end-to-end services the company provides.
If a restaurant is finding it hard to expand due to money issues and low margins, they can come into one of our cloud kitchens all around Cairo. Osman said that they will operate everything from procurement to delivery for them.
One of the biggest problems that we see in the F&B space is the volatile prices of ingredients. We provide them with items in bulk from our supplier list.
The Food Lab's virtual brand consultant is powered by machine learning and is a data-centered dashboard that provides information to brands regarding their operations and finances. Menu reengineering, marketing, profitability margins, customer segment and buyer persona classification are some of the information included.
The Egyptian cloud kitchen provider claims that its platform allows existing restaurant owners to grow and new brands to launch in just 10 days.
We want to connect that closest cuisine or closest kitchen to the farthest appetites. Osman said that cloud kitchens may be the one thing we're starting with and doing some procurement, but we're an infrastructure play.
We try to help the restaurants grow. If they have issues, we use our technology platform and our knowledge to help them get rid of those barriers. That's what we're trying to do.
L-R: Wesam Massoud, Kareem El Daly, and Ahmed Osman.
The Food Lab had a single kitchen. The Food Lab's revenues have increased by 60x since it was founded, despite only opening another location last year.
The Food Lab has more than 50 restaurants and food brands that use it, and 175,00 end customers who have made orders from its kitchens. Aggregation, marketing and procurement fees are charged to these clients. The Food Lab's revenues have been increasing month-on-month.
There is a growing need for cloud kitchens in emerging markets because of the cost advantages of working out of a shared kitchen environment, particularly as food delivery services are in greater demand now than ever.
Kune and Ando are small-sized providers in sub-Saharan Africa. Kitopi and REEF are big players in the Middle East. The Food Lab claims to be the first such provider in Egypt. The pre-seed investment will allow the company to further expand in the country and lay the groundwork for entry into the Middle East and sub-Saharan Africa.
First thing is to take over the Egyptian market, especially in Cairo and some of the other key areas that we want to have a strong footprint in. The founder and president of the company said that this is the geographical expansion part.
We have hiring plans for some community roles and operational positions. We need to develop more technology solutions for our customers, partners and customers.
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