Alex Kolesnikov got into the food delivery business almost by accident.
In 2017, he was running RocketBank, a mobile banking company he founded in Moscow. He came up with the idea to create a simple app that would allow his employees to have sandwiches and coffee delivered to the office.
Kolesnikov called it a pet project, “something similar to a joke.” But the app was useful: It made it easier for workers to get food, and it meant RocketBank didn’t have to run its own cafeteria. After two months of operation, it was growing so fast that Kolesnikov realized it could be a business of its own.
The plan was to open a network of micro kitchens that would do all of their sales through online channels and delivery. Kolesnikov had never heard of a dark kitchen or ghost kitchen, but that’s exactly what it was. He called the company Local Kitchen.
Over the next several years, Local Kitchen would expand to 55 outlets across Moscow processing 25,000 orders daily and generating $46 million in annual revenue. In 2020, it was acquired by food tech company O2O Holdings.
The next year, Kolesnikov and Local Kitchen COO Anastasia Kalinkina began talking to investors about the possibility of expanding to other markets, including the U.S. or the U.K. Then, when Russia invaded Ukraine in 2022, they decided to make a move in earnest.
“When the war started, it just accelerated the process,” Kalinkina said. Today, many of their employees are young Ukrainian expats.
They zeroed in on the U.S., and in particular, Chicago. It was dense, with a lot of flexible real estate for kitchens, and it had a lot of foodies. They also thought it would be a better proving ground than the traditional startup hubs of Silicon Valley and New York City: If the business could work in Chicago, it could work elsewhere.
So that is where they launched Sizl in 2022. The company now has two locations in the city, inside ghost kitchen facilities operated by CloudKitchens. It also has a small commissary kitchen where it preps certain items, like soups, in advance. Last month, it raised $3.5 million to keep growing.
Sizl is a true ghost kitchen at a time when there are few of those left. It has no brick-and-mortar presence and all of its orders are for delivery.
That formula has proven difficult for other delivery-only restaurants to manage. It can be hard to reach customers purely online. Delivery still remains just a small slice of the overall restaurant economy, so there are fewer orders to go around. Delivery is also costly, especially when relying on third-party services for fulfillment.
But Sizl is not the average delivery-only restaurant. It uses all of its own technology as well as its own delivery people, who zip around on electric bikes rather than in cars. And more than half of its orders come through its proprietary app rather than through aggregators like DoorDash and Uber Eats, which provides better margins.
It also views grocery stores rather than other restaurants as its biggest competitor, because it wants customers to order Sizl just as often as they’d cook for themselves. For that reason, it changes its menu every two weeks because it doesn’t want customers to get bored.
“We are trying to be the go-to solution for everyday eating,” Kolesnikov said. “Having a consistent menu would lead to bored customers. We need to entertain them, and we entertain them by changing the menu every two weeks.”
The menu is eclectic. There are some Eastern European staples like borscht and chicken Kyiv alongside American favorites like burgers, steak and a tuna sandwich. There is also chicken pate, beef stroganoff and shakshuka. Entree prices range from $12 to $17. About 40% of the menu turns over with each change.
For most restaurants, switching the menu that often would be difficult to keep up with. But Kolesnikov says Sizl’s tech makes it possible. Its kitchens have digital displays that show recipes for each dish and how they should be cooked. Employees do get some light training on new items. But they are mainly following instructions on screens.
Sizl’s tech helps out in other ways. It built its own ERP, or enterprise resource planning system, that acts as the brains of the entire operation. The ERP allows Sizl to track detailed data on the business, such as revenue per hour per dish, which helps it make menu decisions. It can see the estimated lifetime value of customers and the distribution of orders over time. After observing an uptick in late-night orders, for instance, it decided to stay open an extra hour, until midnight.
Sizl also focuses on getting customers food quickly. Ideally, when an order comes in, the kitchen will spend 15 minutes cooking it and then another 15 minutes delivering for a turnaround time of half an hour. Couriers are trained to bring the food all the way to the customer’s door, even if they live in a high-rise. And because Sizl uses its own couriers, they know the delivery area well.
“The rider that is delivering your order, he has most likely been doing the same routes over and over again a lot of times,” Kalinkina said.
While customers wait, they can play games in Sizl’s app that unlock loyalty points and other perks. And, in yet another effort to entertain customers, each order comes with a collectible card. When customers collect a full set, they get more points.
“It was a wild experiment. We weren’t sure whether it would work or not,” Kalinkina said. Now, the company gets messages from customers requesting specific cards so they can complete their collection.
“People are getting emotionally attached,” she said, “like a Happy Meal thing.”
Oh, and the ability for customers to message the restaurant in real time? That’s pretty unusual too.
“These small things altogether make your experience different,” Kalesnikov said.
Sizl currently does about 100 orders daily, and is generating between $80,000 and $100,000 in revenue a month—not bad for two 180-square-foot kitchens. Its first location is profitable on a restaurant-level basis, Kalinkina said.
About 5,000 people have downloaded the Sizl app, and active users tend to order around four times a month. About 40% of its customer base uses Emotica, the gamified loyalty program.
Sizl’s goal is to eventually have 75 locations nationwide and be in every major city within three years. But its first milestone will be getting to eight or 10, which it believes will allow the company to break even. After that, it will shoot for 25 to 30, all company-operated, before launching franchising.
“Building the restaurants—kitchens, in our case—is relatively low capex,” Kolesnikov said. “But still, if we can avoid spending money on that and we can bring franchisees to the game, I think it’s worth exploring.”
Between Sizl’s proprietary tech, recipes, mobile app and menu, along with turnkey kitchens, he feels the company has a good package to offer prospective franchisees.
To get there, though, it will need to raise another round of venture capital, Kalinkina said. It already has some investors lined up.