Kbox Global, the U.K. startup that turns underused commercial kitchen space into takeout delivery hubs -- therefore helping existing kitchens generate much-needed revenue -- has raised £12 million in new funding. The round is led by Balderton Capital and follows a £5 million investment from early Deliveroo backer Hoxton Ventures disclosed in July.
Aiming to build and expand on the so-called "dark kitchen" model, whereby new delivery-first restaurants and brands are created to run on top of the likes of Deliveroo and Uber Eats, Kbox's "host kitchen" tech and unique business model utilises capacity in existing commercial kitchens, such as those found in pubs, hotels, restaurants and even supermarkets.
Partnering kitchens are tech and data-enabled by Kbox, and given the recipe -- figuratively speaking and quite literally -- along with the needed training to ensure that entering the takeout market is a success and where margins are notoriously thin with little room for error. Most importantly, incentives appear to be aligned: Kbox makes money only if Kbox host kitchens do.
Image Credits: Kbox
"The reality is that most restaurant and commercial kitchens, be it in hotels, pubs, gyms, catering kitchens or supermarkets, are underutilised," explains Kbox founder Salima Vellani. "The model is outdated. One very expensive location with one brand that cannot evolve as food trends change. The result is ambitious and successful food providers not being able to capitalise on the soaring delivery market. So, we’ve fixed this."
On the demand side, Kbox has created a multicuisine range of delivery focused food brands, "so kitchens can serve more local people, more easily, with the ability to adapt swiftly to demand flux and taste changes," she says. "And on the supply side, our tech platform digitises kitchen operations to make them efficient."
However, Vellani claims that what makes Kbox special is its AI and machine learning tech, which enables advanced analytics. This sees the startup help kitchens find the right set of food brands for their local market, and then "future proof" them by keeping menus current through data analysis without the need for a data scientist. "Using our AI, we can also forecast demand for each kitchen, which in turn minimises waste, improves staff utilisation and morale, and thus improves the profitability of each host kitchen," she explains.
To that end, Vellani says there is no upfront cost to franchise Kbox brands and technology and "zero investment" in kitchen upgrades or equipment. Furthermore, Kbox generates revenue on a per order basis so it only benefits when the kitchen makes money. In other words, one of the biggest draws is there's little risk for a host kitchen when working with Kbox.
"I recall having a conversation last week with the senior EVP of one of the most well-known hotel asset owners in the world and he said to me, and I paraphrase: 'so basically this is a risk-free model with absolutely no downside to us -- the only thing I can see happening if this doesn't work is you have simply upskilled my staff. I am going to make sure all of my hotel owners talk to you'," says the Kbox founder.
Meanwhile, there appears to be no exact equivalent offering in the dark kitchen space currently, although there are several heavily funded players tackling the real estate angle –- a kitchen rental model if you will. Others are building dark kitchen operations and licensing brands from third parties, or creating their own brands.
Adds Vellani: "We are at the very early stages of a massive shift in not only the restaurant industry but in the food service and hospitality industry as a whole. COVID has simply accelerated a shift we were already seeing but it has also highlighted a very pertinent issue – these industries are running on razor-thin margins that are not sustainable and only Kbox is really focused on enabling existing food operators to move into the delivery-first era without incurring large costs by utilising what they already have".
So far, the model appears to be working -- hence today's injection of capital. To date, Kbox has partnered with kitchens in London, Manchester, Liverpool, Glasgow, Edinburgh and Brighton, and says it is on course for 2,000 operational kitchens in the U.K. before the end of 2021. In addition, an international rollout of the model is underway with franchise agreements in Australia and India launching this month with a further eight countries to be launched next year.