Joint venture of Group and Sberbank to invest in Local Kitchen

O2O, a joint venture of Group and Sberbank, invests in Local Kitchen, a service offering express delivery from dark kitchens. O2O will receive an 84.7% share of the project with the rest held by the service’s founders. The deal is slated to be closed by the end of Q4 2020. O2O will invest part of the funds previously raised from its shareholders for business development.

Local Kitchen has started integrating with O2O services. For instance, you can order a meal from Local Kitchen via Delivery Club, and get it free of charge within 15–30 minutes. With the service built into Group and Sberbank ecosystems, its users will not need to waste time registering in the Local Kitchen app as they will soon be able to log in using Sberbank ID or VK Connect. The Local Kitchen mini app is already available to VK users.

Today, the service operates 34 kitchens in Moscow cooking food for local residents and handling over 20,000 orders per day. Thanks to the delivery by bike within a couple of kilometres, customers get their breakfasts, lunches, and dinners as quickly as in half an hour, or even faster. Ordering meals from Local Kitchen can save you up to 60 hours of cooking a month.

A smart system developed by Local Kitchen is employed for process management, for forecasting demand accurately and planning food supply. Currently, the menu offers more than 3,500 dishes, with about 100 of them rotating weekly. The system creates a menu for a day given the season, upcoming holidays, and food preferred by local residents. After Local Kitchen is fully integrated into the ecosystems built by Group and Sberbank, the companies will be able to share technologies to benefit all the O2O products.

Boris Dobrodeev, CEO (Russia) Group:

“We are confident that the kitchen factory format will take root as quickly and firmly as food delivery from restaurants. Local Kitchen has built a system capable of serving delicious dinners faster than they could be cooked at home. Here are several drivers of success: this is a service that can be used on a daily basis, and it takes into account habits and desires very accurately. We are happy to make the project a part of our platform, as it is fully consistent with our idea of offering people the most convenient services for daily chores.”

Lev Khasis, First Deputy Chairman of the Executive Board at Sberbank:

“The pandemic, which has dramatically transformed the global economy, primarily affected the efficiency of conventional business models. Recent months have shown that the best survivors were those companies that focused on the evolving customer habits and tastes and tried to quickly meet their needs shaped overnight by the new normal we all have faced. Even though customers were gradually returning to the lives they used to live, they stuck to their new habits. We believe that Local Kitchen is a perfect example of the synergy between the business model flexibility and the desire to anticipate customer preferences.”  

Local Kitchen was founded in 2017. February 2019 saw the launch of the Foodreactor, a kitchen factory, to scale up the service. In the second quarter of 2020, the number of orders prepared and delivered by Local Kitchen quadrupled compared to the same period in 2019.

In 2020, Local Kitchen is set to reach almost all Moscow neighborhoods, and its revenue is expected to exceed 3 billion rubles.