Billionaire venture capitalist Tim Draper has invested millions in seed funding in Cape Town-based digital kitchen company SmartKitchenCo.
SmartKitchenCo, which bills itself as the largest dark kitchen food business in SA, runs 15 online-only restaurants, including Jazzy’s Pizza, Jiro Poké, Quick Convenience and King Chicken.
Its business model is premised on a fairly new concept in SA, called “cloud or digital kitchen” – a food establishment that offers delivery-only takeaway foods via on-demand delivery apps, eliminating face-to-face contact between the restaurant and customer.
Draper, a Silicon Valley-based entrepreneur, who founded venture capital firm Draper Fisher Jurvetson, and Draper Associates, among others, scored big as an early backer of Skype and Baidu. He later became the first prominent venture capitalist to openly embrace initial coin offerings in 2017.
Jasper Meyer, founder and CEO of SmartKitchenCo, told ITWeb the funding will be used to introduce new food offerings, and grow the company’s delivery footprint to a national level.
“Our cloud kitchens sell multiple food types through various brands online, via delivery apps such as UberEats and Mr Delivery.
“SmartKitchenCo currently has 15 online restaurants which are run from three locations. Our company will soon be operating more online restaurants in the Cape Town and surrounding areas from five locations. Our kitchens have been designed to meet the requirements of food and beverage businesses. But not every business is the same, so layouts can be adapted to suit the needs of each brand,” he notes.
According to trends research firm Flux Trends, while not a new concept globally, local digital kitchens are disrupting the traditional restaurant business model, boosted by the success of food delivery apps like UberEats, Mr D and OrderIn.
“This disruptive trend enables food establishments to save on a lot of costs, such as service, rental and overhead expenses, allowing the business to solely focus on producing and delivering good quality foods, sometimes superior to that offered by restaurants,” Bronwyn Williams, trend translator and future finance specialist for Flux Trends, told ITWeb last month.
The value of food bought online in SA, along with delivery fees, will reach $726 million by 2023, according to research group Statista.
Former Uber CEO Travis Kalanick has invested millions of dollars in this fast-growing food delivery market, building a network of kitchens dedicated to serving online takeaway orders in the UK, US, India and China.
Discussing the challenges and opportunities of running a digital kitchen in the South African market, Meyer explains: “Our model is working great and it is a lot easier to scale our business to a national footprint compared to normal fast food chains.
“While the barrier to entry is low, there are a lot of new competitors on the block. Also, the delivery apps take a considerable commission rate per order. However, we always welcome challenges and competition, as it constantly pushes us to create better products and new ideas.”
According to Meyer, SmartKitchenCo is in the process of signing another multimillion-rand funding agreement, which is expected to solidify its national footprint, once concluded.
“Within the next 12 months, we will do the Series A funding and receive the R40 million+ needed to embark on extensive nation-wide expansion. Our national expansion plan will include the busiest delivery areas of Johannesburg. We are also looking at Durban, Port Elizabeth and Pretoria. This means SmartKitchenCo will be hiring some the most talented food, tech and entrepreneur minds in South Africa.”
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