Posted: Oct 17, 2019
How 4 companies are doing virtual restaurant brands
Increasing interest in off-premise consumption has fueled the growth of the “virtual restaurant” concept, through which operators offer menus for delivery or pick-up only.
Recent research from the National Restaurant Association found that 60% of all foodservice occasions are now off premise. In addition, 34% of consumers said they are using delivery more than they did a year ago, and 79% said they use delivery at least once per month.
Despite the failure of some high-profile delivery-only kitchens, operators are drawn by the relatively low start-up costs and the freedom these virtual restaurants provide to quickly and easily explore new concepts, menu items and markets.
“You could decide to open a virtual restaurant, and be up and running in 60 days, and you can do it for less than $50,000,” said Alan Moore, a partner in Bytetobite Industries, which operates a network of delivery-only restaurant brands in Southern California. “If you decide to open restaurant down the street, it might take six months and cost you half a million dollars.”
Virtual restaurants pose their own unique challenges, however. Those in the game say menus need to be carefully refined to include only those items that stand up to the rigors of delivery, and processes need to be engineered and tested to optimize throughput and consistency. It is also important for operators to satisfy the demands of third-party delivery companies because scoring well with them on their reviews and other measurements earns restaurants better positioning in the delivery marketplace apps, Moore explained.
“You have to be respectful of their systems and processes,” Moore said.
Here are how some folks are doing it:
Bytetobite Industries, Los Angeles
Moore, who is also a partner in the Los Angeles brick-and-mortar restaurant Cheebo, said Bytetobite was formed with the goal of operating 100 virtual kitchens. The company already operates dozens of delivery-only brands from two Cloud Kitchens locations in the Los Angeles area.
Bytetobite’s virtual brands, available through several third-party delivery services, include Angel Wings, Chuck’s Chicken & Waffles, Oscar’s Pancakes, Hollywood Wraps, Pizzaroo, Sunset Fish & Chips, and others. All are produced in the same kitchens on the same production lines. Each brand is named to give consumers an instant understanding of the menu, and each has its own social media accounts to share photos of the dishes.
Not all of Bytetobite’s delivery-only brands have been successful, but the advantage of operating a virtual concept is that the menu can be tweaked or the entire concept shelved with just a few keystrokes.
“Don’t get hung up believing that you cook the world’s greatest barbecue chicken sandwich,” Moore said. “If it doesn’t sell, move on.”
Lettuce Entertain You Enterprises Inc., Chicago
Chicago-based Lettuce Entertain You Enterprises, or LEYE, which operates, manages or licenses more than 60 casual and upscale concepts, has approached ghost kitchens as a partnership with other brands, which gives it built-in marketing leverage — an important element of the virtual restaurant model.
The company partnered with the Whole30 diet brand for its Whole30 Delivered virtual restaurant, and with Bon Appetit magazine for Bon Appetit, Delivered. Both are also working exclusively with Grubhub as a third-party delivery partner. The virtual concepts operate from two existing LEYE kitchens.
Scott Barton, executive partner at LEYE, said one of the biggest challenges of operating virtual restaurants is conveying the spirit of hospitality that the company seeks to offer in its brick-and-mortar concepts.
“We are working on various ways we can still have a connection with the guest, and elevate their experience a little bit, even though they are not sitting in the dining room,” he said.
Barton said the company is “quite pleased” with the performance of the Whole30 menu, and is excited about the opportunities of the recently launched Bon Appetit concept.
LEYE conducted extensive recipe development and testing for both concepts — including testing dishes in their delivery vessels and allowing them to sit for 20 minutes first to better simulate delivery. The company also worked hard to ensure that the presentation of the dishes in the containers would be pleasing to customers.
“Through our recipe testing, we steered away from some dishes,” said Barton.
The new concepts have yet to offer dessert — often a logistical challenge for delivery — but Barton said the company hopes to do so eventually.
By Mark Hamstra
October 09, 2019
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