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October 24, 2022

The FoodTech company helps restaurant owners maximise operations by transforming them into cloud kitchens

George Karam, seated in the middle, and his team at The Cloud, a new food technology company based in Hub Abu Dhabi71. Photo: The Cloud

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In the cut-throat world of the food service industry, where competition is fierce and profits can be thin, a less-is-more strategy can be a means of survival: companies bank on discounts and special offers to reduce orders as much as possible. possible to boost their bottom lines.

However, George Karam, co-founder and chief executive of The Cloud, a food technology startup in Abu Dhabi’s Hub71, doesn’t necessarily believe in that philosophy.

Instead, he believes in the power of the brand: if you think you’re good enough, then put your food out with confidence knowing it’s value for money for a hungry consumer.

“Unfortunately, some markets have more of a discount culture than others. This is driven by many factors,” Mr Karam told The National.

“We operate in many markets where discounts are very rare. We power a lot of high-quality brands, which don’t need steep discounts to sell.”

The Cloud’s strategy is simple: onboard food businesses to a robust ecosystem made up of fellow companies and users who connect with each other, opening up “instant” access to new pools of customers – with no upfront investment hand

The company is one of only four FoodTech-focused startups in Hub71, the UAE capital’s global tech ecosystem.

Traditionally, investors in Mena are only willing to take the operational risk, but in other regions they are also willing to take the innovation risk. This means that any new business that wants to be funded in Mena should be based on an existing business model that is already operating elsewhere.

George Karam, co-founder and chief executive of The Cloud

Like many entrepreneurs, Mr Karam’s experience led to the conception of The Cloud so that others do not go through similar hardships.

“I had a passion for food and opened a brick and mortar restaurant with two partners. We really struggled because of the high initial investment required and the high capital expenditure,” said Mr Karam, who co-founded The Cloud with Kamil Rogalinski.

“This led me to realize that there had to be a better way and, in 2018, I launched my first virtual brand.”

The Cloud helps restaurant owners maximize their operations by transforming them into cloud kitchens, hence the name.

The Cloud “empowers underutilized kitchens across the UAE… increasing order volumes through the latest technology, online marketing and a creative approach,” Mr Karam said.

More importantly, it helps save jobs — and, in the process, keeps wages stable — by making the most of resources.

Cloud or virtual kitchens – also known as ghost or dark kitchens – are commercial spaces built solely to prepare food for delivery, with a number of brands able to operate from that central building.

These “non-existent restaurants” benefited significantly from the shift to online services during the Covid-19 pandemic, which forced people to rely on apps and delivery services for food.

Brands can take advantage of offering flexible menus, more efficient operations and experimenting with new ideas that can be easily scrapped if they don’t work, according to US software company Oracle. More importantly, brand owners do not need materials traditionally found in physical stores such as signage, furniture and decorations.

The global cloud kitchen market was valued at $63 billion in 2021 and is expected to reach approximately $374bn by 2030 at a compound annual rate of approximately 22 percent, according to Acumen Research and Consulting.

Food companies receive orders through mobile applications which are then delivered by the likes of Zomato, Deliveroo, Talabat, Careem and Uber Eats – partners that have helped The Cloud’s kitchen partners, which are about to cross the 1,000 mark, Mr Karam said. .

“We are keen to add more and more partners in our existing markets and start operations in new markets,” he adds.

The cloud kitchen trend is expected to grow as consumers enjoy its convenience, variety and discounts.

“I don’t see this trend changing much going forward. If nothing else, the delivery business will continue to increase,” Mr Karam said.

However, discounting can send the wrong message: it could mean a brand isn’t good enough, so it needs discounted price offers to attract customers, or its marketing department might lack creativity, says Marvin Alballi, head of US operations – Franchise Brands Global based.

Restaurant staff can bear the brunt of the lost revenue because, in theory, companies can make less pay to make up for it. It’s a “vicious cycle”, says Aleix Garcia, managing partner at Dubai-based Infini Concepts.

Food delivery companies like Zomato, Deliveroo, Talabat, Careem and Uber Eats have helped The Cloud’s kitchen partners, which are about to cross the 1,000 mark. AP

The pandemic created two major new consumer groups “that have stayed with us” said Mr Karam. These are: business-to-consumer users downloading delivery apps and ordering more food online, and business-to-business users, such as restaurants, looking to increase online orders and deliveries.

The Cloud went through several iterations before finding the right “recipe” for its success today, says Mr Karam. He acknowledges that they were inspired by Airbnb, the innovative home rental platform.

Airbnb, similar to The Cloud, connects property hosts and travelers, simplifying the rental process. It was through this business model that the San Francisco company was able to cultivate and popularize the home sharing economy.

“While the traditional cloud kitchen model is struggling and the space is very crowded, our Airbnb-like model is successful,” he said.

“This is because we work with brick and mortar restaurants and enable them to expand their customer base or rapidly expand into new markets – all without any upfront investment.”

Last month The Cloud raised $10 million in Series A funding which will help it expand its footprint in the GCC and Europe. Currently, it has operations in eight countries – the UAE, Saudi Arabia, Belgium, Lithuania, the Netherlands, Romania, the UK and the US.

The Series A funding round was significant enough to attract the attention of other investors who saw potential in the new business, as it recently opened its regional headquarters in Riyadh, and considered expanding to Kuwait, France and Italy.

“After our last round, we received a lot of interest and we are currently raising a new round to accelerate the growth in our existing markets and expand into new markets,” he said.

The startup ecosystem, particularly in the UAE, has matured “significantly” in the past five years, Mr Karam said.

As well as more investors funding start-ups, “good government support, especially in Abu Dhabi” is helping to nurture potential businesses.

However, startups need to provide a viable business model and proof of concept to potential investors who might look elsewhere to get noticed.

“Traditionally, investors in Mena are only willing to take the operational risk, but in other regions, such as the United States, they are also willing to take the innovation risk,” he said.

“This means that any new business that wants to be funded in Mena should be based on an existing business model that is already operating elsewhere.”

Mr Karam sees the cloud kitchen industry growing further, fueled by the continued creativity of food brands and the integration of new age technologies. These factors are expected to boost customer interest, especially in the UAE where consumers are eager to try new experiences.

“I believe consumer demand will remain high and increase further pushed by new technology such as drone deliveries,” he said.

“The UAE is one of the most advanced markets in terms of cloud kitchens and the overall market is quite mature. Many interesting and innovative models have come out of the region and are now being copied in other parts of the world.”

The Cloud co-founders Kamil Rogalinski, and George Karam, who is also the chief executive of the new company in Abu Dhabi, left. Photo: The Cloud

Q&A with George Karam, co-founder of The Cloud

Do you think the metaverse can work with cloud kitchens?

I believe it does and we are about to put this to the test by launching an NFT powered brand in the UAE. We are also working on several other metaverse strategies.

Do you have any other ventures, or are you planning another one?

I have no other initiatives or plans to launch any at this time. If I wasn’t into The Cloud, I would have started a FinTech or cryptocurrency startup.

What is the most extraordinary experience you’ve had in your career as an entrepreneur?

After I started The Cloud, I discovered that a similar company exists in the United States and the founder’s name is also George.

What is your advice to those who aspire to make their mark in the competitive start-up industry?

Always keep going, don’t take ‘no’ personally and use every opportunity to network. Also, fail fast, fail forward.

What do you do during your downtime (if you have any)?

I have very little down time at the moment and if I get the chance, I like to go swimming, relax on the beach, or catch up with friends over (appropriately) a good meal.

Updated: October 24, 2022, 4:00 AM