In a world where virtual kitchens are mushrooming, the Middle East’s market leader in that sector is trying a different recipe. SoftBank Group Corp.-backed Kitopi in recent months has been investing in brick-and-mortar restaurants, the company’s chief executive said.
Mohamad ballout, an interviewer, stated that the company’s name is a portmanteau from Kitchen Utopia and is betting that, despite the global rise in food ordering online, approximately a fifth of fast food and casual diners will still eat food on-site.
As a result, the Dubai-based startup has deployed “a few hundred millions of dollars” on nearly a dozen fast-food brands in its core Gulf markets, the United Arab Emirates, Kuwait and Saudi Arabia, in recent months, said Ballout. “There’s a world we see where consumers still want to go experience something in person.”
Kitopi has received a significant boost in its finances, which led to the spending spree. Last year it raised $415 million from a group of investors led by SoftBank’s Vision Fund 2 – it’s first in a business headquartered in the United Arab Emirates and one of the largest funding rounds to date in the Middle East. Among the other investors participating were Abu Dhabi’s Chimera, Turkey’s Dogus Group, and California-based Next Play Capital.
Kitopi, which was one of the first tech companies to be deemed a “unicorn”, has raised even more capital since joining this group. Kitopi was valued at $1.55 billion when it received $300 million more through the extension of its Series C round.
Kitopi is now awash in this money and has begun to look at physical restaurants as an investment option. Kitopi changed strategy five months ago and began investing in brands like Right Bite and Under 500, Ichiban and Circle Cafe in the UAE. Shobak is in Saudi Arabia.
Kitopi was founded in 2018 and has been focusing on the creation of cloud kitchens (also known as ghost chefs), which are responsible for food preparation and delivery orders for multiple restaurant chains. This model has seen a surge in popularity since the pandemic, when more people prefer to have their meals delivered to their homes rather than dining out.
Ballout stated that by combining cloud kitchen technology with traditional restaurant management, the company will be able to gather more information about customers to better anticipate their needs.