Kitopi's Mohamad Ballout Is Aiming To Have His Cloud Kitchen Platform Dominate MENA (And The World) With A US$415 Million Funding Round Led By SoftBank According to Allied Market Research, the size of the global cloud kitchen market is expected to grow at US$71 billion by 2027- a market that Dubai-headquartered state-of-the-art managed cloud kitchen platform Kitopi is striving to take a bite out of.
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Shaking up the traditional brick and mortar model of restaurants, the premise of a cloud kitchen's ability to provide cost-efficient infrastructure and offer delivery-only services presents a viable revenue stream for F&B brands. According to Allied Market Research, the size of the global cloud kitchen market is expected to grow at US$71 billion by 2027- a market that Dubai-headquartered state-of-the-art managed cloud kitchen platform Kitopi is striving to take a bite out of.
With a mission of "satisfying the world's appetite," the enterprise founded by Mohamad Ballout, Saman Darkan, Bader Ataya, and Andres Arenas enables restaurants and F&B brands to scale their reach and open delivery-only locations by providing infrastructure and its own proprietary software with minimal overheads and time. Since its launch in 2018, Kitopi has seen its entity grow at a fast-paced rate- currently, it operates over 60 kitchens in UAE, Saudi Arabia, Kuwait, and Bahrain, and works with more than 200 brands, including Shake Shack, KLC Virtual Restaurants, Luca, Papa Johns and iHOP.
It has even diversified its offerings by utilizing its supply chain to include subscription-based meal plans and on-demand groceries delivery. And it's interesting to see how the enterprise's plans are further unfolding- in July this year, Kitopi announced that it has successfully raised $415 million in a Series C led by SoftBank Vision Fund 2, with the round also joined by Chimera, Abu Dhabi's DisruptAD, Riley, Dogus Group, Next Play Capital, and Nordstar. Though valuation details remain undisclosed, a Bloomberg report noted that Kitopi had crossed the $1 billion valuation mark, which makes it the latest Middle East unicorn and the fastest one yet.
Having SoftBank Vision Fund 2 backing the enterprise is an achievement in itself, with it being the first investment made by the firm in a company homegrown in the UAE. "I think that with SoftBank coming in here, we're the first of probably many more investments that they're going to do, and other great investors coming in as well," says Ballout. "It's also great to see sovereign wealth funds jumping in to back homegrown concepts. You don't see a lot of that happening, so that's also something we're proud of." Kitopi is also lucky to have found investors that align with its vision, he adds. "It's not a one-way street, and we're fortunate to have the support of leading international and regional investors," he says.
Two of Kitopi's co-founders: Saman Darkan and Mohamad Ballout
"We were looking for long-term capital investors, and what was unique in SoftBank is their portfolio of phenomenal companies that we can build synergies with globally." And the raise has also reinforced the Kitopi team's thoughts on the venture's immense potential and value. "I do think we ended up raising more than what we initially expected to raise," Ballout says. "It definitely validates a lot of things- it validates Kitopi, and the team that Kitopi has. It validates the tech ecosystem in the MENA region, that there's a lot of great companies over here. And it is the first, if I guess, of many more companies that are going to cross the billion-dollar-mark in the next two years."
Looking at Kitopi's track record, it's easy to see the factors that can be used to justify its current valuation. Having launched only three years ago in the UAE, the enterprise needed less than a year to expand to Saudi Arabia, and in 2019, the venture started the year by closing a Series B funding round with $60 million. It wasn't deterred by the onset of the COVID-19 crisis too- in fact, it thrived. Indeed, a statement from the company noted that it had seen a 300% growth in 2020. The team was able to introduce its groceries vertical Shop Kitopi during the pandemic, when more than 60% of its team were working remotely. The latest cash infusion thus comes at an opportune time, with Ballout revealing that it will be used to channel Kitopi's expansion within the MENA region, particularly across Saudi Arabia, while also supporting its entry into new markets such as Southeast Asia.
So, what makes this enterprise tick and succeed at such a fast-paced rate? "What we always say at Kitopi is, we're not a family... we're a team of super entrepreneurs," Ballout declares. Compared to the so-called family-like culture that we often hear touted by entrepreneurs about their teams, this was refreshing to hear. "The way we see ourselves is that this is a sports team winning a massive tournament," Ballout adds. "We are a winning NBA-going, LA Lakers-like team, and the goal here is [for] everyone in it to win it, but at the same time, we want to enjoy doing it."
According to Ballout, Kitopi strives to foster an environment that's centered on "managing a high-performance culture and a value-add culture." In fact, a few minutes into our chat, Ballout is insistent on moving the focus of the interview away from him, but instead on highlighting the "25 strong entrepreneurs" he claims to have been leading the company. "Kitopi is not a founder-led business," Ballout explains. "We're proud founders, but this is not a founder-led business- we have a top leadership team of 25 people, and they're all heavily involved with our success story. All 2,500 of us are heavily involved, but it's a leadership-led team, versus a founder-led business, which [has] really allowed us to move [across our markets] much, much faster."
Kitopi leadership team
Ballout believes that by cultivating the spirit of a high-performance sports team in the enterprise, feelings of loyalty and trust are encouraged within everyone who works at the company. "They're really coming into Kitopi, not just to get a paycheck, not just because they want to hustle, but because we would all enjoy working together, and from the values perspective, we all have the same values, and that's what works for us," Ballout explains.
There seems to be little doubt that this focus on building its culture and empowering its employees to behave like a high-performance sports team has played a pivotal role in the venture's growth. But to really understand the enterprise's aptitude for fostering entrepreneurship-like qualities, you'll need to understand how it started. Ballout's own entrepreneurial journey started prior to Kitopi, when he co-founded BMB, which is today seen as one of the largest confectionary businesses in the Middle East, and that is also what sparked his interest in the F&B industry in the first place.
After exiting BMB, he joined a private equity firm to become an investor, wherein he found himself surrounded by the entrepreneurial community, with ventures in the food space constantly grabbing his attention. As an investor who was working closely with restaurant owners, Ballout realized scaling seemed to be the biggest issue for a majority of them. "There had to be an easier way to allow restaurants to increase their delivery reach, and therefore, their sales, without them having to break the bank by opening up new locations in traditional brick and mortar outlets," he notes.
This kicked off the ideation phase for Kitopi- starting with Ballout calling up one of his childhood friends, Saman Darkan, who had experience in digital transformation and starting a few startups as well. Darkan would later join as co-founder and Chief Product and Technology Officer, and lead Kitopi's launch of its engineering hub (and first tech hub outside the Middle East) in Krakow, Poland. The two put their heads together and started to visualize what Kitopi would end up becoming. "The concept of cloud kitchens existed in that they were a real estate space that were rented out as shared kitchens, but solving the end-to-end for restaurants, in a completely managed cloud kitchen concept was something we pioneered," Ballout remembers.
Next, two more co-founders came on board: Bader Ataya, former co-founder and Managing Partner of e-commerce platform Mumzworld.com, joined as Chief Growth Officer; as well as Andres Arenas, who brought to Kitopi his years of operations experience of running big scale seafood export facilities in his role as Chief Property Officer. "This is very much four friends coming together and building something that we were very passionate about, but more importantly, we were working on a very complex problem," Ballout explains. "But if you know someone so well, you also know how to solve problems with them very well."
This seems to be the ethos with which Kitopi has chosen the people to work for it in executive roles- these "Kitopians" certainly have their own entrepreneurial flair, with that either being shaped by their time in the corporate world, or their work in some of the MENA's leading startups. Some of the key names in Kitopi's leadership team include Chief Financial Officer Sami Bejjani, Chief of Staff Paul Zoghbi, and Director of Strategy Sabine El Najjar, who were all former McKinsey executives. Jihad Bou Nasr, who was formerly of Boston Consulting Group, is the company's Regional Managing Director. Pooja Vithlani, Vice President – Product Development, Stacey Pinto, Director – Brand and Reputation, and Aqida Kaleem, Director of Customer Experience, formerly used to work with fellow MENA unicorn, Careem. Ballout says that having close-knit trust amongst the co-founders and its leadership team was essential, especially in Kitopi's crucial stages of learning to navigate a volatile, uncertain, complex and ambiguous market. Early hurdles varied from getting F&B brands to sign up, as well as embodying different cooking techniques ("how do you reengineer that for scale?"), plus navigating aggregator players in the multiple cities they operate, and, of course, managing landlords.
"There were so many mistakes, but I believe the biggest one is not building an operating playbook prior to expanding," Ballout replies, when asked to recall some of the missteps Kitopi might have made along its journey. "We were able to correct that in our second year, but it would have definitely helped to have it from the start." Having said that, mistakes are supported at Kitopi, adds Ballout. "The logic behind this is that as long as it's a two-way door decision, mistakes are completely excused- this allows us to learn from them and move super-fast. The goal then is to identify those one-way door decisions that need to be closely analyzed before executing."
Arenas agrees with this sentiment- learning from mistakes fast, as was remaining humble, was key. "As first-movers in the space, we had to try new things, which didn't always work as we planned, but it is so important to quickly correct the direction and learn what can be done better." Meanwhile, Darkan states the importance of being attuned to various lifecycles and its issues: "The needs of an organizations differ from stage to stage- it's thus important to understand what skillsets matter most, and when."
As the company continues to grow, the Kitopi team have since honed in on their strategies to ensure growth and stability, especially in the midst of uncertainty. Given the enterprise's focus on building high-performance teams, creating and prioritizing a positive culture comes before everything else. As Darkan says: "Don't compromise on culture- that holds throughout every stage of growth." Along with that, fostering a culture of innovation is critical too, Ballout says. "Our values are built on encouraging our Kitopians to always innovate. If a solution doesn't exist, then build it."
This is the mindset that brought Shop Kitopi to the public in the midst of the COVID-19 pandemic, when the team realized that customers had to wait for days to receive essentials, resulting in a solution that offers to deliver across Dubai in 90 minutes or less. Building and maintaining strong partnerships is key as well to the enterprise's scalability, Ballout adds. "We believe our success so far lies in the fact that our teams invest a lot of time working closely with these brands, to understand better how we can help them grow," he says. "We recognize every brand is different- it's not a one-sizefits- all approach, and we customize as we go."
When asked about the steady rise of competition in the cloud kitchen sector, the Kitopi team say they are choosing to focus on their competitive advantage. Besides taking care of the entire operations -from supply chain and staff training, to food preparation and delivery and customer experiencea large part of Kitopi's advantage is on its proprietary Smart Kitchen Operating System (SKOS). "SKOS is a suite of applications that optimizes the performance of its cloud kitchen operations in real-time," Ballout explains.
"The solution focuses on delivering a great customer experience across multiple brands in a single kitchen by maximizing operational efficiency." Since the launch of SKOS, Ballout says Kitopi's kitchens have been able to double the order volume, while reducing preparation time by 40%. Indeed, the system makes use of data science to predict when drivers will arrive, and how long an item would take to cook, then auto sequence which items to cook first, thereby enhancing speed.
When the coronavirus pandemic struck in 2020, the company, like many of its peers in the food industry, initially saw a dip in online orders. However, the team worked closely with brands and delivery partners to educate consumers on health and safety practices. As a tech venture, the team aimed to optimize the kitchens not only for efficiency, but for health and safety standards too. In fact, the team made use of artificial intelligence to help monitor anomalies in the kitchens. "This tech could help ensure our colleagues were washing their hands for 20 seconds, wearing their masks correctly, etc." Ballout reveals. "If an anomaly was identified, we'd be able to rectify it immediately."
This period also saw Kitopi striving to support the ecosystem in which it operated in- the enterprise invited small businesses and F&B brands alike who struggling with keeping physical outlets open to join the platform. Kitopi also teamed up with its delivery and brand partners, along with the government, to distribute free meals to communities impacted by the pandemic. "While it continues to be a tough time in many parts of the world, what the pandemic has done is help the F&B industry leapfrog to the digital age, in what otherwise would have taken them years to do," Ballout notes. "Cloud kitchens are the future, as they not only help restaurants scale beyond borders quickly, but provide customers access to their favorite brands, from anywhere in the world."
The Kitopi team is thus making sure it bolsters its current momentum, with Ballout saying, "Our focus is to continue growing what we've already built." Ballout says the plan is to continue to innovate and expand Kitopi's infrastructure, as well as grow strategic restaurant partnerships. With Saudi Arabia set to be Kitopi's Middle East headquarters, and Dubai remaining as its global head office, the team is steadily charting for its regional (and global) domination. It's only a matter of time.
THE FACES OF KITOPI
BADER ATAYA / CO-FOUNDER AND CHIEF GROWTH OFFICER
"Our work is infinitely motivating and appealing because as a team, with a common vision, common values, and each other's sincere best intentions at heart always, we are far more than the sum of our parts."
SAMAN DARKAN / CO-FOUNDER & CHIEF TECHNOLOGY OFFICER
"We are pioneering change in the food ecosystem. It is a space we can all relate to on a personal level and one that is evolving rapidly. My hope for Kitopi is to create an organization that inspires. A brand people identify with that speaks louder than just the services we offer."
ANDRES ARENAS / CO-FOUNDER & CHIEF PROPERTY OFFICER
"First, having amazing colleagues to work with and having the opportunity to learn from each other every day. Second, being able to create an amazing concept which is revolutionizing the F&B ecosystem, our mission is to satisfy the world's appetite, and we're on track to achieving this!"
SAMI BEJJANI / CHIEF FINANCIAL OFFICER
"What motivates me at Kitopi is the ability to drive innovation for the industry on a global scale starting from our region. Also, the inspiring Kitopians and the entrepreneurial, collaborative, and caring culture that is embedded in everyone. My dream for Kitopi is to keep building a globally recognized leading company in the industry and exporting our innovations to other parts of the world."
MAHMOUD AWAD / CHIEF LEGAL OFFICER
"To know that I am part of a team dedicated to leaving a lasting footprint for startup in the region and the "cloud kitchen' space internationally. My part in that journey is to assist in developing an infrastructure that allows for a quick to market advantage and that acts as an enabler of innovation."
EKTA BHOJWANI / VICE PRESIDENT - PRODUCT
"The team is world-class- so there is always someone inspiring you to push harder. We're disrupting a traditional industry (F&B) and doing it at scale. Whenever I meet someone new, I'm always curious if they've ordered from our brands. My goal would be us to capture (at least) 50% of the stomach's market share of a customer."
On lessons learned
SABINE EL NAJJAR / DIRECTOR OF STRATEGY
"I've learned that we don't always need to have the five-year plan laid out before taking action. Sometimes, we have to follow educated hunches to leverage momentum and be market leaders."
POOJA VITHLANI / VICE PRESIDENT PRODUCT MANAGEMENT, CUSTOMER & BRAND
"When speed is valued and there's so much innovation opportunity ahead of you, there is a natural tendency to jump right into execution mode. However, it's critical to take a step back to ensure sound strategic alignment across key stakeholders on what needs to be done and why, and ironing out any assumptions, so that you can ensure smoother and more planful execution."
PAUL ZOGHBI / CHIEF OF STAFF
"The importance of fast execution, learning from our experience and being ready to re-pivot to refine the model, while keeping quality and customer experience always on top of mind."
JIHAD BOU NASR / REGIONAL MANAGING DIRECTOR
"It is very important for an entrepreneur to be able to work at two speeds simultaneously. The slow gear is needed in order to build the right systems, tools, processes and have a smooth-functioning organization. However, that takes time, and hence the fast gear is important to ensure you are pivoting and course-correcting quickly so that priorities are still being met, until the outcomes of the slow gear kick in."
STACEY PINTO / DIRECTOR OF BRAND & REPUTATION
"At Kitopi, no matter how fast we move, and how quickly we innovate, we work really hard on reminding ourselves that we're all unique individuals on the same team, working hard on bringing our best selves to work every day. We've all heard the saying: "Culture eats strategy for breakfast.' So, even though we've got our eyes on the prize, we've got each other's backs getting there."
Kitopi co-founder and CEO Mohamad Ballout's tips for entrepreneurs wanting to secure funds for their enterprises
1. Keep it real. "Be authentic and genuine- investors can see right through when you're not."
2. It's all about the numbers. "Be unit economic obsessive- the days of growth at any cost are over."
3. Trust the process. "Build relationships with potential partners early on. It's highly unlikely a new investor will invest a large sum of money when first meeting you- trust is built over time."
4. Keep it simple. "Simplify the problem you are solving in such a way that a 10-year-old can understand it.