- Reef Technology raised a $700 million syndicate investment led by Softbank and Mubadala, along with Oaktree, UBS Asset Management and Target Global, the company announced Tuesday. Reef and Oaktree also launched a $300 million infrastructure partnership called The Neighborhood Property Group to acquire strategic real estate assets.
- Reef will use the funding to grow from around 4,800 locations to 10,000 around the U.S., Tech Crunch reports. Co-founder and CEO Ari Ojalvo told the publication ghost kitchens "will be a significant part of non-parking revenue" for the company.
- Reef converts underutilized city space, like parking lots, into hubs for ghost restaurants turning shipping containers into kitchens with the support of its software and digital infrastructure. This investment reflects growing investor confidence in the ghost kitchen market, which has gained traction amid pandemic-fueled spikes in delivery demand.
Even before the pandemic put a spotlight on food delivery and ghost kitchens, the industry saw heavy interest from investors. Kitopi raised $60 million in funding in February while CloudKitchens garnered $400 million from Saudi Arabia's Public Investment Fund in November 2019, and Kitchen United received a $40 million investment in September 2019. As of October, $5.5 billion has been invested into ghost kitchens over the last 12 months, according to PitchBook. Given the sector is expected to create a $1 trillion global opportunity by 2030, it makes sense that more investors are entering the industry, especially as consumer habits shift more toward food delivery.
Reef has a bit of a leg up over its competitors because it doesn't require as much investment in real estate, since it only needs parking lots or garages to place its kitchens. Its latest investment will only expand its distribution and allow it to grow beyond the over 100 kitchens it has across more than 20 North American markets.
The company is also gaining interest from large and small chains, partnering with BurgerFi in May to expand its national footprint and Fuku in April. An Aloha Poke franchisee is also considering a pilot program with Reef in Dallas, Miami or Atlanta, according to a press release emailed to Restaurant Dive. Reef's business also isn't limited to food delivery and partnered with Carbon Health during the pandemic to create COVID-19 testing locations at its parking lots. The company also partnered with DHL Express in Miami in May to provide environmentally friendly cargo bikes to help with last-mile deliveries.
"Reef fits our thesis that core parking facilities should be augmented with technology to transform these core assets into mobility infrastructure hubs," Josh Connor, co-portfolio manager of Oaktree's infrastructure investing strategy and chairman of Neighborhood Property group said in a statement. "These alternative uses support communities with critical last block logistics solutions such as food delivery, micro-mobility, same-day parcel delivery, essential groceries and electric charging infrastructure."