- Shared kitchen company CloudKitchens has reportedly raised $400 million from Saudi Arabia’s Public Investment Fund (PIF)
Shared kitchen space company CloudKitchens has reportedly raised $400 million from the Saudi Arabia’s Public Investment Fund (PIF), according to sources with Rory Jones and Rolfe Winkler of The Wall Street Journal. With this round of funding, it could value CloudKitchens at $5 billion.
The agreement between CloudKitchens and the Saudi fund reportedly completed in January. This deal reunites the Saudi fund — which supported Uber at the earlier stages — with Travis Kalanick. And this is reportedly one of the Saudi kingdom’s first major investments since the Jamal Khashoggi incident.
How does CloudKitchens work? CloudKitchens buys cheap real estate — usually near city centers and then builds commissary kitchens (known as ghost kitchens) — and rents to restaurants that are preparing food exclusively for delivery services such as DoorDash and Grubhub.
CloudKitchens runs its own delivery-only restaurants from the commissaries like “Excuse My Friend Toast” and “Egg the F Out.” And some of CloudKitchens’ partners include The Halal Guys and Fat Sal’s Deli.
The advantages of a delivery-only set up include lower real estate costs, more efficient labor, and lower upfront costs.
Kalanick and PIF governor Yasir al-Rumayyan also still on the board position at Uber. Uber has also been growing its own rapidly growing food delivery service called Uber Eats.
Before PIF made the investment, Kalanick funded CloudKitchens with $200 million of his own money using some of the proceeds of Uber share sales. And he invested another $100 million in January. This means CloudKitchens has raised at least $700 million so far.
Rumayyan oversaw the PIF’s $3.5 billion investment in Uber back in 2016. And Rumayyan and Kalanick started discussions about the CloudKitchens investment back in the spring of 2018. About a year ago, Kalanick had attended the annual Future Investment Initiative conference in Riyadh — which is sponsored by Saudi Crown Prince Mohammed bin Salman. And Kalanick received an investment just a few months later.
One of CloudKitchens’ largest rivals is Reef Technology. Reef Technology sets up commissary kitchens — usually in parking lots — to help owners generate additional revenue from unused parking spots. Reef raised over $1 billion in debt and equity funding from several investors including the SoftBank Vision Fund.