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Kitopi raises $300 million Series C round extension

Wamda

Source: Bloomberg

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 bricks-and-mortar restaurants, the company’s chief executive said. 

The firm, whose name is a portmanteau of Kitchen Utopia, is betting that despite a global surge in ordering food online, about a fifth of fast-food and casual diners will continue to consume food on site, Mohamad Ballout said in an interview. 

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.” 

The spending spree comes after Kitopi received a big boost to its coffers. Last year it raised $415 million from a group of investors led by SoftBank’s Vision Fund 2 - its 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. 

Having joined the group of so-called unicorns - tech companies with a valuation over $1 billion - with that investment, Kitopi has gone on to raise even more. A few months ago, it attracted an additional $300 million through an extension of the Series C round, giving Kitopi a valuation of $1.55 billion, Ballout said. 

Awash with this cash, Kitopi has turned to physical restaurants as a new area of investment. Kitopi shifted strategy about five months ago, investing in brands such as Right Bite, Under 500, Ichiban, 800 Pizza, Circle Cafe and Taqado in the UAE, and Shobak in Saudi Arabia. 

Since its inception in 2018, Kitopi focused on building out cloud kitchens, also known as ghost kitchens, which handle food preparation of delivery orders for multiple restaurant brands. That model has boomed during the pandemic as more consumers turned to having their meals delivered at home instead of dining out.  

Ballout said that combining the technology used for cloud kitchens with the know-how required to run traditional restaurants will enable the firm to gain more data about customers and so better anticipate their needs.  

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May 12th 2022, 6:56 pm
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