Published: January 2021
The latest restaurant trend isn’t notable for what’s on the menu, but what isn’t: no ambiance, no tables, no front of house staff – in fact, no front of house at all. Virtual brands – which operate digital-only, delivery-only restaurants – are the next big thing in off-premise dining, and for many restaurant owners, a lifeline for post-pandemic recovery.
Virtual brands have all the marketing, none of the brick and mortar. Though some operate out of stand-alone “ghost kitchens,” many are an extension of established restaurants, leveraging kitchen space, equipment and staff to maximize ROI.
Customers can place orders online, through third-party delivery apps like DoorDash, GrubHub and UberEats. Log in to any one of these apps and you’ll see dozens of businesses you’ve never seen before delivering wings, pizza, burgers and more right to your door.
Though the virtual brand concept was introduced as early as 2013, the huge growth of third-party delivery over the past half-decade – compounded by pandemic-related restaurant shutdowns – accelerated its rise. According to a recent article by Restaurant Business Online, there are more than 100,000 virtual brand restaurants in operation in the U.S. today – with more opening each week in new markets.
For operators, adding a virtual brand to an existing business can be a low-risk venture thanks to relatively minimal startup costs and the short time needed to get up and running. A virtual brand is an opportunity to expand a current brand’s audience or try out new dishes before officially adding them to the menu. It can fill a gap for a type of cuisine missing in a particular area. On the sustainability side, kitchens can reduce food waste by using ingredients more efficiently.
But the most lucrative reason for getting on board the trend is the ability to quickly turn a profit in a less-than-stellar economy. That’s why so many big names in the industry – like the parent companies of Chili’s, Outback Steakhouse and even Chuck E. Cheese – have launch virtual brands over the past year. Other brands have aligned with celebrities like Mario Lopez, Wiz Khalifa and even Mariah Carey (who together boast tens of millions of social media followers/potential customers) on new virtual ventures in 2020.
The additional revenue streams have meant returning to some level of “normal” even with continued restrictions. (For example, It’s Just Wings, the chicken wing concept operating out of Chili’s and Maggiano’s restaurants, says it is averaging $3 million a week in sales.) And that has some in the industry betting that this trend – with its many long-term benefits – will live far beyond the pandemic.