Dubai's Sweetheart Kitchen stirs up 2020 MENA expansion plans

The virtual kitchen start-up operates three units in the UAE, two in Kuwait

  
Sweetheart kitchen operates three units in the UAE and two in Kuwait. Image used for illustrative purpose only.

Sweetheart kitchen operates three units in the UAE and two in Kuwait. Image used for illustrative purpose only.

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Dubai-headquartered virtual kitchen start-up Sweetheart Kitchen (SWHK) plans to open 22-27 new units in the UAE and Kuwait this year, the firm’s founder said.

“We plan to launch 12-15 units in the UAE and 10-12 in Kuwait in 2020. We plan to focus this year on the Middle East and North Africa (MENA) region and will expand to other geographies in 2021, or perhaps earlier,” SWHK founder and serial entrepreneur Peter Shatzberg told Zawya.

The delivery-only, multi-brand virtual kitchen start-up, which completed a €15 million Series B funding last month, operates three units in the UAE and two in Kuwait.

Shatzberg did not reveal its investors but said its total funding stood at €21 million.

The company has partnered with food delivery platforms like Talabat, Zomato and Carriage for more than 20 quick service and fast-food concepts.

“We will look to partner with other market leaders across the region, including Hunger Station in Saudi Arabia and Bahrain,” he said.

Business model

The company’s “private-label multi-brand virtual kitchen,” model, Shatzberg said, is differentiated by ‘unique and proprietary systems,’ which integrate cuisine, process and tech with a lean manufacturing mindset. 

Its business model differs from other virtual kitchen models such as coworking kitchen spaces and cloud kitchens that have evolved from the food delivery business.

“We have built everything (including our brands) from scratch and do not rely upon existing brands (or technology) to drive our platforms. This approach allows us to optimise our procurement, production and assembly processes,” he explained.

It ensures sustainability via advanced systems that monitor raw materials, expiry dates, and match supply with demand.

“We are able to source the freshest ingredients while minimising our food wastes, making us a more sustainable kitchen,” he said.

As it owns and operates its brands and systems, flexibility to innovate and expand in a different vertical comes easy.

“This is one of our competitive advantages but also something the market is starting to pivot towards…as they now understand that they cannot outsource their product development or leave raw material selection to third parties,” he said.

Shatzberg is very clear about the identity of the brand and the scope of the business.

“Our valuation will be less a reflection of being a virtual kitchen and more a function of our ability to execute, scale and pivot as a team,” he said.

“As the growth of the delivery market continues, and the trend of virtual kitchens will grow in parallel, customers will become more comfortable that their food is not coming from a traditional restaurant,” he concluded. 

The global cloud kitchen market was valued at $0.65 billion in 2018 and is expected to reach $2.63 billion by the 2026, at a CAGR of 17.2 percent, according to market research firm Reports and Data.

(Writing by Anoop Menon anoop.menon@refinitiv.com, editing by Seban Scaria)

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