Even before the age of COVID-19, online ordering and delivery for restaurants had been booming for years. Today, many restaurants are relying almost entirely on online ordering and delivery to keep their businesses running. This trend has presented many different challenges and opportunities over the past several years and led to innovative new ideas like the virtual restaurant.
What Is a Virtual Restaurant?
A virtual restaurant is a restaurant that has a full menu but that exists exclusively online and is listed on food delivery apps, with no traditional “restaurant” space. Eliminating the brick-and-mortar components of the restaurant gives virtual restaurant owners more flexibility, but typically these restaurants are attached in some way to a traditional restaurant.
An existing restaurant owner may create a virtual restaurant that runs out of the kitchen they already have, but offer a completely different menu, allowing them to make the best use of their inventory and potentially inviting more orders and more business overall.
A virtual restaurant can be located in any of the following types of physical spaces:
- An existing brick-and-mortar restaurant that is launch additional virtual restaurant concepts.
- A commissary-type space typically in a converted warehouse called a ghost kitchen (or cloud kitchen, virtual kitchen) that provides businesses with the production kitchen and equipment needed to operate a virtual restaurant.
- A food truck.
For instance, a spot that sees most of its traffic during the dinner rush might create a virtual restaurant focused on breakfast food. This way they’re likely to have orders coming in throughout the day, but don’t need to fret about overlapping rush periods.
These virtual brands might have different names and use different design styles to attract more customers while offering the same or nearly identical menus as they would normally. A restaurant may even create several virtual brands for its business to appeal to different, specific demographics.
Today, more and more restaurateurs are trying their hands at virtual restaurants to widen their diner bases and stay afloat during these especially tough times.
An example of a virtual brand for an existing restaurant is Pasqually’s Pizza & Wings, a new virtual restaurant concept from Chuck E. Cheese.
The pizza-chain was already struggling pre-COVID, filled for bankruptcy, and its traditional model was looking grim. To reach a broader audience, Chuck E. Cheese created the Pasqually’s brand with a more adult-orientated menu to diversify from its kid-centric base and brand.
The virtual restaurant model has been a success, with over 10% Chuck E Cheese’s revenue coming from the Pasqually’s brand. As of early 2021, all 470 Chuck E Cheese locations are also delivering under the Pasqually’s brand on UberEats, DoorDash, and GrubHub,
Virtual Restaurant vs. Ghost Kitchen
Ghost kitchens are another trend currently disrupting the food service and restaurant industry. While both refer to new ideas in off-premise dining, these terms are not interchangeable.
A ghost kitchen is a facility that restaurant owners can rent space and time in; these are typically fully-furnished with cutting-edge tools and tech. These spaces allow its tenants to prepare and distribute their food orders, providing opportunities for revenue expansion and an increased capacity for online orders. A virtual restaurant is a restaurant that uses a ghost kitchen to produce its food and fulfill orders.
5 Benefits of Virtual Brands for Restaurants
1. Reduced Startup and Operational Costs
Opening a new, traditional restaurant can cost hundreds of thousands of dollars, not including any regular operational costs. On average, it takes about 18 months for a casual dining restaurant to break even. Opening a virtual restaurant, on the other hand, eliminates the majority of startup costs and operational costs related to maintaining a storefront or physical dining room. This can free up capital for kitchen improvements or simply make opening a restaurant more feasible, depending on the owner.
2. Reach New Customer Demographics
Launching a new virtual restaurant brand allows your restaurant to target a brand new demographic. In the Chuck E. Cheese example, the brand launched a new virtual brand called Pasqually’s that offered a menu adult-centric menu. This allowed Chuck E Cheese to improve online orders by listing Pasqually’s on major delivery apps and converting those users into ordering its pizza. The ability to target a new demographic is a core benefit of what makes virtual restaurant brands so appealing to any restaurant that has a defined core-audience demographic and wants to diversify to a larger base.
3. Grow Online Orders
Running a virtual restaurant, or several, allows for listing on multiple delivery service apps plus in-house delivery systems. Enlisting a tech-savvy team member to manage the optimization of your listings can be particularly helpful here. Being able to appeal to enough customers on enough services increases a restaurant’s overall order opportunities. Each virtual restaurant you launch creates a new revenue channel for your company.
4. Maximize Your Kitchen Space
Many restaurants have a menu that is focused on breakfast, lunch, or dinner – but not all three. This creates downtime for your restaurant’s kitchen where its space is not being fully utilized. With virtual restaurant brands, you can create brands and menus that focus on the times of the day your traditional restaurant experiences downtime. For example, a pizza brand may create a virtual brand that focuses on breakfast items to drive orders in the morning – creating a brand new ordering channel for the restaurant.
5. Freedom to Test New Concepts
Being virtual in nature not only eliminates big-picture costs, it also means that testing new concepts, making changes to copy, menu options, and even fully relaunching can be quick and easy. Once you’ve figured out the in-house logistics, all you’ll need to do is update your online listings.
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6 Examples of Virtual Restaurants in 2021
1. Pasqually’s Pizza & Wings
Pasqually’s Pizza and Wings is the online-only, virtual brand for Chuck E. Cheese, named for the chef in the Chuck E. Cheese universe. This is a fantastic example of a well-established, existing restaurant using a virtual brand to offer slightly different menu items and a more premium dining experience to customers placing online orders.
2. The Burger Experience
This virtual restaurant, opened and operated by Smokey Bones in 2019, offers a variety of unique burgers, plus hearty sides like seasoned fries, mac & cheese. The Burger Experience and Smokey Bones’ other virtual restaurant, The Wing Experience, were opened in partnership with Uber Eats and can be ordered through the UberEats app.
Above: This is the branding customers see when ordering The Burger Experience on UberEats.
3. Gabriella’s New York City Pizza
This restaurant is part of the Family Style Inc. restaurant group and mainly exists in its traditional, brick-and-mortar form in California and Nevada. In other locations, Gabriella’s NYC Pizza exists only virtually; the restaurant group’s Chicago kitchen houses six different pizza brands offering very similar menu items on delivery apps.
Seaside’s is a carry-out and delivery only restaurant run by the Lettuce Entertain You restaurant in Chicago. Opened in 2017 in the kitchen of Lettuce Entertain You Quality Crab & Oyster Bah in Lincoln Park, Seaside’s was able to offer additional menu items and increase the owner’s overall sales.
5. Bokuchan’s Japanese Curry House
Opened by chef Shin Thompson and Liga Sigal of Furious Spoon, Bokuchan’s is Chicago’s first dedicated japanese curry shop. Their pick-up and delivery-only kitchen in Avondale serves up Katsu and curries made daily from scratch, plus enticing add-ons like curry waffle fries and matcha white choco-chip cookies.
6. Dog Haus
Dog Haus is a West Coast restaurant franchise that has made its name for gourmet hot dogs and burgers. During COVID-19, it has launched a major virtual restaurant initiative, rolling out 8 new virtual brands under the umbrella company name of Absolute Brands. Dog Haus creates a brand-new menu for each of its virtual restaurants, mixing in traditional items found on the Dog Haus menu with new concepts and food items. This gives each of Dog Haus’s new virtual brands a unique identity.
How to Launch Your Restaurant's First Virtual Brand
1. Decide on a concept for your virtual restaurant
Once you’ve decided to bring your restaurant into the virtual realm, it’s time to make a few decisions. What kinds of adjustments are you looking to make to your brick-and-mortar brand when it comes online? Are all of your menu items well-suited for at-home consumption? Are you going to start just one virtual restaurant or will you be testing out a few ideas to make the most of the time and space in your kitchen?
2. Optimize your operations for delivery
Next, assess your current operations and determine what’s needed to shift gears to focus on increased delivery service. Consider your kitchen’s inventory, staff scheduling, and delivery supplies. If you have launched a new breakfast concept, you’ll need to ensure you have kitchen staff at your restaurant to handle new inbound orders. Think about how to most efficiently set up your space for order packing and pickup. Basically, reframe your operations to prioritize delivery orders and set your virtual restaurant up for success.
3. Find your virtual restaurant's market fit
Now that you know what you want to do and what kind of a setup you need, dig a little deeper into the market research for your new virtual restaurant brand. Determine out what types of cuisine are popular in your area, think about what your team does better than anyone else and how your restaurant could fill gaps in cuisine offerings or cater to untapped demographics. From there, you can apply this information to your desired concept and operational capabilities to develop a solid plan for the virtual restaurant, or restaurants you’re looking to bring to life.
4. Build a brand for your virtual restaurant
While being strictly virtual eliminates the need for printed marketing materials, digital assets like a fully optimized website, an eye-catching logo, and an easy-to-navigate logo will be crucial. Make sure your visual brand and all of your website copy speak to your desired customer base and make it easy for them to understand what makes your virtual restaurant unique and how they can place an order.
5. Join third-party delivery platforms
No matter your location, there are plenty of third-party delivery services to choose from. Do some careful research on the platforms available to you and how their pricing structures will affect your overall profits and success.
Many of these bigger delivery partners charge hefty commission fees, but end up being worth listing with because of the increased visibility. Other delivery services are more focused on helping local restaurants by offering commission-free listings that have lower up-front costs but might not reach as many of your desired customers. Choosing the right third-party delivery platforms will depend entirely on your business’ needs and goals.
6. Launch your virtual restaurant
Now you’re ready for launch! Complete your listings on third-party apps, make sure your website is live and functions without a hitch, and spread the word on social media.
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