Trends, Tradition, and Innovation in MENA's Foodtech Scene

Something's cooking in the Middle East and North Africa's (MENA) food technology scene, especially during Ramadan.

In a region with an emphasis on integrating timeless traditions observed on occasions like Ramadan with technology and strategic foresight to cater to consumers' contemporary needs, all while making MENA's food ecosystem more efficient.

The current investment climate

At the height of the COVID pandemic, the MENA foodtech sector emerged as one of the most resilient. Now, the industry is experiencing a cooldown in what some industry experts are calling the VC winter.

This downturn appears to persist into 2024. However, this adjustment was to be expected, as the foodtech industry--not just regionally, but also globally--was a primary recipient of historically high levels of funding in 2020 and 2021 during the pandemic, Erika Welch, Lucidity Insight's chief content officer, tells Inc Arabia.

Despite funding levels coming down, we can see many indicators of maturation in the food delivery and foodtech space; multiple foodtech players across the region have seen successful exits, she adds, citing Kitopi and Jahez as notable examples.

Kitopi, a UAE-based cloud kitchen-turned-universal foodtech company, garnered $450 million in Series C funding, raising its total funds to a staggering $806 million and officially hitting unicorn status in 2021. Meanwhile, Riyadh-based food delivery platform Jahez was successfully listed on Nomu, Saudi Arabia's parallel equity market, and is preparing for listing on the Saudi exchange, Tadawul.

An appetite for success

Despite a downturn in venture capital (VC) investments--with Lucidity Insights reporting a total of $1.3 billion in 2023, marking a 46% year-on-year decrease—MENA's foodtech sector is maturing.

Welch notes that the largest segment of investment in foodtech is going into food delivery.

Aiming to quintuple its size by 2024, Kaykroo is a UAE-based foodtech player committed to delivering affordable, fresh meals directly to consumers through a macroscale cloud kitchen platform that supports virtual restaurants.

Founder and CEO of Kaykroo, Jihad El-Eit, tells Inc. Arabia that technology has been integral to driving the business.

"If technology is used as a core component in all aspects of business operations and strategy, you can make technology choices from a broader perspective. You can look for solutions that meet multiple needs all at once. Having 50 brands in our portfolio, serving more than 100,000 customers, and enabling all kinds of tools to enhance service and quality becomes crucial," he shares.

With a forward-thinking mindset, El-Eit also emphasizes that people, cash, and innovation are the key components for growth in the business.

"Having a business model that is mainly F&B, your priority becomes serving customers the best food and experience. If you don't have an excellent team, you won't be able to navigate it. If you are a growth company, you need a lot of cash to sustain this growth," he enthuses.

El-Eit adds that serving up different cuisines requires F&B business owners to remain innovative.

Kareem Abughazaleh, founder of Foodie Holdings, tells us that one key to thriving in the foodtech space is to leverage emerging opportunities in an increasingly digital climate. The Dubai-based group empowers food brands across various specialties, including catering, subscription meal plans, co-packing, and private label production, among others.

Speaking to Inc Arabia, he reveals that the company is launching a new digital product for their corporate catering arm, Blast Catering.

"This will be live in early Q2, and we believe it is going to be a game-changer. We are putting all the power into our clients' hands by taking away the pain points associated with ordering and delighting them with something frictionless and lightning-fast. Early beta testing and feedback indicate that we've unleashed something quite disruptive," he states.

A time for reflection, innovation, and collaboration 

During Ramadan, there's an ironic increase in food consumption. Research by HLB, a global network of independent advisory and accounting firms, shows that food bills increase anywhere from 50% to 100%. Moreover, it estimates that food consumption during the holy month makes up about 15% of annual expenditure on food in the region.

According to TGM Research, the region also sees a notable spike in food delivery, with 18% of the population relying on food delivery during Ramadan.

With all these trends, Ramadan creates several opportunities for startups to adjust their operations and offerings. For example, in Kaykroo Kitchens, which operates 24/7, staffing and stocking are prioritized.

"Since Ramadan often involves altered schedules with fasting during daylight hours and more activities during the evenings, Kaykroo ensures we are staffed and stocked well in advance during the revised peak hours of this month,"El-Eit reveals.

In this significant time, Kaykroo also intensifies its marketing campaigns to highlight special offerings, promotions, and the support it offers to the community. For Ramadan, the startup has also introduced a special Ramadan-themed brand, Ramadaniyat, which caters to customers' preferences during this period.

"These include traditional sweets, desserts, or beverages that are popular during Iftar and Suhoor,"El-Eit adds.

During Ramadan last year, Kaykroo teamed up with Jahez to bring Ramadaniyat to Saudi Arabia. This year, the company collaborated with Mayar Foods to unveil Ramadaniyat with AlWalimah, which delivers Saudi dishes that use the latter's AlWalimah Sauce. These products were made available on Jahez, Hungerstation, The Chefz, and other food delivery partners.

Like Kaykroo, Foodie Holdings also feels the impact of changing preferences during the holy month. Similarly, forging a partnership with another prominent name in the industry has proven beneficial for them.

"We are fortunate to have a joint venture with Deeritna, which is a 25-year-old authentic Arabic cuisine brand from Jordan that has an extremely loyal following among members across the Levantine community. So what would have seen a slight dip in office catering activity, for example, has been more than compensated by strong demand for this specific category during Ramadan," Abughazaleh states.

Looking ahead

While the Islamic world celebrates Ramadan, the spotlight is also on the foodtech players' commitment to adapt.

Looking ahead, Welch points out more movements that will redefine the sector.

"We have started to see more investments moving away from B2C foodtech players and going into B2B foodtech players, and this trend is likely to continue. This includes B2B SaaS that helps streamline traditional restaurant procurement processes or front-end restaurant SaaS and payments players, which provide innovative fintech solutions such as small business loans to restaurants using data collected across their other products to help assess creditworthiness and underwrite these loans," she reveals.

She also identifies a trifecta of trends shaping the foodtech ecosystem in the next years: an escalating demand for digital services, a growing emphasis on health and wellness, and a craving for personalized food experiences.

El-Eit notes that sustainability remains essential. "Technologies are being developed to produce biodegradable, recyclable, and edible packaging, reducing the industry's environmental impact," he tells us.