If you’re a restauranteur in the 2020s, chances are, you’ve already taken some steps to get your restaurant online and reach the millions of consumers who discovered – and stuck with – online ordering in the days of the pandemic.
But in 2023, there’s a new buzzword going around – Virtual Brands.
Also called Online Restaurants or Delivery-Only Restaurants, virtual brands are one of the many ways restaurants of all sizes are capitalizing on the changing trends in the hospitality world post-COVID as more and more customers turn to online platforms for their dining needs.
But what exactly is a virtual brand? And how can you create one that’s both authentic and effective? Today, we’re tackling the topic FAQ-style! We’ll answer all your burning questions about virtual brands and equip you with the tools and knowledge you need to succeed in the online space. So grab a cup of coffee, and let’s dive in!
What exactly is a virtual brand?
In the food service and hospitality industry, a virtual brand refers to a type of restaurant concept that operates exclusively online, often through third-party delivery platforms such as Uber Eats, Grubhub, or DoorDash.
Virtual brands are typically created by existing restaurant owners or culinary entrepreneurs looking to expand their reach without the overhead costs associated with opening a physical location. These virtual restaurants often offer a focused menu with unique dishes that cater to a specific audience or demographic.
For example, a burger joint might create a virtual brand that offers only vegan burgers, or a sushi place might create a delivery-only restaurant that offers poke bowls. These online restaurants operate from the same kitchen as the parent restaurant but with a separate menu, branding, and online presence.
Virtual brands can be a great way for restaurant owners to make more money without the need for extra space or staff. Plus, they can also help owners test new concepts and dishes before opening a physical location.
Virtual brands can help restaurants:
- Increase sales, not overhead
- Reach new customers
- Fill slow periods and limit food waste
However, virtual restaurants also bring with them a few complexities. So, it’s essential to have a solid strategy in place to make sure they’re successful and sustainable in the long run.
Even big-name brands are getting in on the virtual restaurant action
Several big restaurant brands have launched virtual brands in recent years as a way to expand their offerings and reach new customers. Here are some examples:
- Chili’s: In 2020, Chili’s launched It’s Just Wings, an online restaurant that operates out of its existing kitchens and offers a menu focused on chicken wings.
- Applebee’s: Also in 2020, Applebee’s launched Cosmic Wings, a virtual brand that operates out of its kitchens and offers a menu focused on chicken wings and other comfort food items.
- Famous Dave’s: In 2020, Famous Dave’s launched Clark Crew BBQ, a virtual brand that operates out of its kitchens and offers a menu focused on smoked meats and barbecue.
- Red Robin: In 2021, Red Robin launched Chicken Sammy’s, a virtual restaurant that operates out of its kitchens and offers a menu focused on chicken sandwiches. They followed up with two additional delivery-only brands, including The Wing Dept. and Fresh Set.
Many other chains and independent restaurants have also started virtual brands as a way to expand their reach and appeal to new customers.
Is a virtual restaurant the same as a ghost kitchen?
While both virtual restaurants and ghost kitchens are related concepts in the restaurant industry, they are distinct from each other.
A virtual brand is a type of online-only restaurant brand that operates exclusively through online ordering and delivery platforms. A virtual brand can be created by an existing restaurant, using its existing kitchen and staff to offer a new, unique menu that caters to a specific audience or demographic that the parent restaurant may not currently serve.
In contrast, a ghost kitchen, also known as a virtual kitchen or cloud kitchen, is a physical facility that is solely used for food preparation without a traditional storefront or dining space. Ghost kitchens typically operate multiple restaurant brands from a single kitchen, often using the same staff and equipment to prepare food for delivery only. These brands can be either owned by the ghost kitchen operator or by separate businesses that use the facility for their food preparation needs.
How can a virtual brand help a restaurant increase its revenue?
Creating an online restaurant brand can be a lucrative way for a restaurant to expand its offerings, reach new customers, and increase revenue. However, it’s important to have a solid strategy in place and to carefully consider the logistics of marketing, delivery, and customer service to ensure that the virtual brand is successful over the long term.
Here are a few of the ways a virtual brand can help increase restaurant revenue
A virtual restaurant helps your restaurant reach a wider audience
By creating a virtual brand, a restaurant can potentially reach a wider audience beyond its physical location. This is especially true if the online restaurant offers a menu that caters to a specific audience or demographic that the parent restaurant is not currently serving. By tapping into this new market, the restaurant can increase its revenue significantly.
A virtual brand helps with a restaurant’s overhead costs
Creating a virtual brand allows a restaurant to expand its offerings without the need for additional physical space or staff. This means that overhead costs, such as rent, utilities, and staffing, can remain low. As a result, the profit margins on virtual brands can be higher than those of physical locations.
A virtual brand can create new revenue streams for a restaurant
For example, if the restaurant has excess kitchen capacity during certain times of the day or week, it can use this capacity to fulfill orders for the virtual restaurant. This means that the restaurant can generate additional revenue during times when it would otherwise be idle.
Use a virtual restaurant to test and validate new concepts and menu items
Creating a virtual brand allows a restaurant to test new concepts and menu items before committing to a physical location. This can be a valuable way to gauge customer interest and demand before investing in a brick-and-mortar location. By testing new concepts and menu items through a delivery-only brand, a restaurant can potentially save a lot of money and avoid the risks associated with opening a new physical location.
Explore new collaborations and partnerships with a virtual brand
Creating a virtual brand can also open up opportunities for collaborations and partnerships with other businesses. For example, an online restaurant brand specializing in vegan burgers could partner with a local health food store to offer their burgers as part of a meal kit. This type of collaboration can increase revenue and build brand awareness for both businesses and is a favorite strategy of the big-name brands we covered above.
You can learn more about how virtual brands benefit restaurants, and how to start and manage a virtual brand with MenuLabs here.
Are there downsides to creating a virtual brand for a restaurant?
While creating a virtual brand can be a great way for restaurants to increase their revenue and reach new customers, there are also some complexities and risks to be aware of. Here are a few potential challenges and how restaurants can mitigate those risks:
One of the biggest challenges of running a virtual restaurant is managing the logistics of delivery. Restaurants need to ensure that their food is delivered promptly and in good condition, even when third-party delivery platforms are handling it.
To mitigate this risk, restaurants should invest in high-quality packaging that keeps the food hot or cold as needed, and they should work closely with delivery partners to ensure that orders are being fulfilled correctly and on time.
When a restaurant creates a virtual brand, it’s important to ensure that the branding and messaging of the new brand are clear and distinct from the parent brand. If customers become confused about which brand they are ordering from, it could hurt both the virtual restaurant and the parent brand.
To mitigate this risk, restaurants should invest in strong branding and messaging for the virtual brand, and they should ensure that all marketing materials clearly differentiate the two brands.
Cannibalization of existing business
When a restaurant creates a virtual brand, there is a risk that it will cannibalize sales from the parent brand. To mitigate this risk, restaurants should carefully consider the menu offerings of the delivery-only restaurant and ensure that they complement, rather than compete with, the offerings of the parent brand. Additionally, restaurants should consider pricing the virtual brand’s menu items slightly higher than those of the parent brand to avoid undercutting sales of the existing business.
When a restaurant creates a virtual brand, it’s important to ensure that the quality of the food is consistent across both brands. This can be challenging, especially if the virtual restaurant has a different menu or uses different ingredients than the parent brand. To mitigate this risk, restaurants should invest in high-quality ingredients for both brands and ensure that their kitchen staff are well-trained on all menu items.
When a restaurant creates a virtual brand, it’s important to ensure that customers have a positive experience with both brands. This means ensuring that orders are fulfilled correctly and on time and that customer service is responsive and helpful. To mitigate this risk, restaurants should invest in customer service training for their staff specifically related to the online brand. They should also work closely with their delivery partners to ensure that any customer service issues are addressed promptly.
Overall, creating a virtual brand can be a great way for restaurants to expand their reach and increase revenue, but it’s important to consider the potential risks carefully and to have a solid strategy in place to mitigate those risks.
Are there extra costs associated with a virtual brand?
While the increased revenue can more than make up for it, some extra costs may come with creating a virtual brand. Here are a few examples:
Marketing and advertising
Creating a virtual brand requires marketing and advertising to build brand awareness and attract customers. This may include investing in social media advertising, paid search advertising, or other digital marketing strategies. These costs can vary widely depending on the scope and scale of the marketing efforts.
Online ordering and delivery platforms
In order to operate a virtual brand, restaurants will need to partner with online ordering and delivery platforms such as Uber Eats, Grubhub, or DoorDash. These platforms typically charge fees for each order, ranging from 10-30% of the order total. You can mitigate these costs by working with an online ordering service like MenuLabs that eliminates high delivery commissions and fees.
Packaging and supplies
Restaurants will need to invest in high-quality packaging and supplies to ensure that their food is delivered promptly and in good condition. This may include custom-branded packaging or insulated bags to keep food hot or cold.
Kitchen equipment and staff
Depending on the scale of the online restaurant, restaurants may need to invest in additional kitchen equipment and staff to handle the volume of orders. This can include additional cooking equipment, prep stations, or delivery drivers.
Technology and software
Restaurants that don’t already have these in place may need to invest in technology and software to manage orders, payments, and delivery logistics. This can include point-of-sale systems, delivery management software, or customer relationship management software. If you’re planning on launching a virtual restaurant (or two or three!), it’s critical to choose a technology partner that is set up for both traditional and virtual restaurant brands and one that integrates seamlessly with online ordering.
Overall, the costs associated with creating a virtual restaurant can vary widely depending on the scale and scope of the project. However, restaurants should carefully consider these costs and factor them into their budget and business plan to ensure that the virtual brand is profitable and sustainable over the long term.
How to Create a Virtual Brand
Creating a virtual brand requires careful planning and execution, but it can be a valuable addition to your restaurant’s business strategy. Here are five steps to take to get started.
- Research: Start by researching the current market demand and identifying gaps that your virtual brand can fill. This will help you develop a concept that is unique and has the potential to attract customers.
- Develop a menu: Create a menu that fits the concept of your virtual brand. You’ll want to consider creating a menu that is different from your primary restaurant to attract new customers.
- Branding: Develop a branding strategy that reflects the personality of your virtual restaurant. This includes choosing a name, creating a logo, and designing a website.
- Choose a delivery platform: Partner with a third-party delivery platform such as Uber Eats, DoorDash, or Grubhub to offer delivery services for your virtual brand.
- Marketing: Use social media, online advertising, and other marketing strategies to promote your virtual brand and reach new customers. Check out our list of must-have restaurant marketing strategies for plenty of ideas and inspiration.
- Test and evaluate: Monitor the performance of your virtual brand and make adjustments as needed to ensure its success in the long term.
By taking the necessary steps to research, develop a menu, brand your virtual brand, choose a delivery platform, and market your offering, you can successfully expand your restaurant’s reach and appeal to new customers. Remember to monitor the performance of your virtual brand regularly and make adjustments as needed to ensure its success in the long term.
What are some examples of virtual brands?
Virtual brands can come in all shapes and sizes – the possibilities are endless. Here are just a few examples to draw inspiration from.
- Pizza restaurant: A pizza restaurant could create a virtual brand specializing in gourmet pizzas, such as artisanal toppings, gluten-free crusts, or unique flavor combinations. This virtual brand could also focus on late-night delivery or catering to specific dietary needs, such as vegan or keto.
- Chinese restaurant: A Chinese restaurant could create a virtual brand that specializes in dumplings or dim sum, which are popular items but may not be offered as extensively on the regular menu. This virtual brand could also offer regional specialties from different parts of China, such as Sichuan or Cantonese cuisine.
- Mexican restaurant: A Mexican restaurant could create a virtual brand that specializes in tacos, which are a popular and versatile dish that can be customized with different fillings and toppings. This virtual brand could also focus on plant-based or vegan options, such as jackfruit or mushroom tacos.
- Burger restaurant: A burger restaurant could create a virtual brand that specializes in sliders or mini-burgers, which are a popular option for catering or as a snack. This virtual brand could also offer premium toppings or condiments, such as truffle aioli or caramelized onions, to appeal to a more upscale audience.
- Indian restaurant: An Indian restaurant could create a virtual brand that specializes in street food, such as samosas, chaat, or dosas. This virtual brand could also offer regional specialties from different parts of India, such as Punjabi or Bengali cuisine, or focus on fusion dishes that combine Indian flavors with other cuisines, such as Indian-inspired tacos or pizza.
How to craft the perfect menu for your virtual brand
When putting together a menu for a virtual restaurant brand, there are several key factors that you should consider to ensure that the menu is appealing, profitable, and sustainable. Here are a few factors to keep in mind:
Customer preferences and trends
Consider what types of food are popular and trending among your target audience. Look for opportunities to offer unique or innovative dishes that stand out from competitors and appeal to customer preferences.
Pricing and profit margins
Determine the ideal price point for your menu items based on factors such as ingredient costs, competition, and desired profit margins. Consider the costs associated with creating the virtual brand and ensure that your pricing strategy is profitable and sustainable.
Ingredient availability and sourcing
Ensure that you can source high-quality ingredients at a reasonable cost and in a timely manner. Consider partnering with local suppliers to ensure freshness and quality, and be prepared to adjust your menu if ingredients become scarce or too expensive.
Menu size and complexity
Consider the size and complexity of your menu, and ensure that it’s feasible for your kitchen staff to handle the volume of orders. Be careful not to offer too many menu items, which can lead to inefficiencies and waste. Focus on a smaller menu with a few key signature dishes that stand out.
Delivery logistics and packaging
Consider how your menu items will be packaged and delivered, and ensure that they can withstand transport without compromising quality. Invest in high-quality packaging that keeps food hot or cold as needed, and work closely with delivery partners to ensure that orders are fulfilled correctly and on time.
Let’s take example number five from above – the Indian Restaurant whose virtual brand specializes in street food. Their virtual brand’s menu could look something like this:
- Samosas (spiced potato and pea turnovers)
- Pakoras (vegetable fritters)
- Papdi Chaat (crispy crackers with spiced chickpeas, yogurt, and tamarind chutney)
- Kathi Rolls (grilled flatbread with spiced chicken, paneer, or veggies)
- Pav Bhaji (vegetable curry served with soft rolls)
- Chole Bhature (spicy chickpea curry with fried bread)
- Masala Fries (french fries with Indian spices)
- Raita (cucumber and yogurt dip)
- Mango Lassi (sweet mango and yogurt drink)
- Gulab Jamun (sweet fried dough balls in syrup)
- Kulfi (Indian-style ice cream in flavors like cardamom or pistachio)
This menu offers a variety of classic Indian street foods focusing on bold flavors and vegetarian options. This menu should appeal to a wide range of customers looking for flavorful and unique Indian cuisine.
Sounds great, right? And it’s likely mostly comprised of ingredients that are already found on the main restaurant’s menu!
A virtual restaurant brand menu should be customer-focused, profitable, and sustainable, but most importantly, a virtual brand’s menu must be crafted with online ordering in mind. By carefully considering factors like customer preferences, pricing, ingredient availability, menu size and complexity, and delivery logistics, you can create a menu that stands out from competitors and drives revenue for your business.
Should a virtual brand offer a hyper-specialized menu or a full, varied menu?
When it comes to creating a menu for a virtual brand, there is no one-size-fits-all approach. Whether it’s better to offer a limited, hyper-specialized menu or an extensive, full menu depends on a number of factors, including your target audience, competition, and the resources available to your business.
Here are some pros and cons of each approach to consider:
Limited, hyper-specialized menu:
- Pros: By offering a limited menu that focuses on a specific cuisine or type of dish, you can create a strong brand identity and appeal to customers who are looking for a unique, high-quality experience. This approach can also streamline your operations and reduce waste.
- Cons: Offering a limited menu may limit your appeal to a wider audience, as some customers may be looking for a broader range of options. Additionally, it can be more difficult to adjust your menu based on customer feedback or changes in ingredient availability.
Extensive, full menu:
- Pros: Offering an extensive menu that covers a wide range of cuisines and dishes can appeal to a broader audience and give customers more options to choose from. This approach also allows you to adjust your menu more easily based on customer feedback or changes in ingredient availability.
- Cons: Offering an extensive menu can be more challenging to manage and may lead to inefficiencies or waste. It can also make it more difficult to create a strong brand identity and differentiate your virtual brand from competitors.
The best approach will depend on your specific business goals, target audience, and available resources. It’s important to consider the pros and cons of each approach carefully and to conduct market research and customer surveys to determine what type of menu is most likely to be successful for your virtual brand.
How to keep a virtual restaurant separate from the mother restaurant
When creating a virtual brand, it’s important to ensure that the new brand stays separate from your main restaurant. Here are some ways to do that:
Use unique branding
Develop a unique brand identity for your virtual restaurant with a separate name, logo, and website. This will help to differentiate the virtual brand from your main restaurant and create a distinct identity for the new brand.
Create a separate menu
Create a separate menu for your virtual brand that is distinct from the menu of your main restaurant. This will help to reinforce the separate identity of the virtual brand and avoid confusion among customers.
Use separate social media and advertising
Use separate social media channels and advertising campaigns for your virtual brand rather than promoting the virtual brand through the same channels as your main restaurant. This will help to create a separate identity for the virtual brand and avoid confusion among customers.
Have dedicated staff and kitchen space
Consider using a dedicated team of staff and separate kitchen space for your virtual brand, rather than relying on the same staff and kitchen space as your main restaurant. This will help to ensure that the virtual brand is being managed separately from your main restaurant and that there is no overlap or confusion.
Creating a virtual brand can be a powerful way for restaurants to increase revenue and reach new customers in the ever-growing online food marketplace. By leveraging the benefits of digital marketing, delivery platforms, and unique branding and menu development, virtual restaurants can offer a profitable and sustainable way for restaurants to expand their offerings and grow their business.
However, it’s important to carefully consider the complexities and risks associated with creating a virtual brand, such as maintaining separate branding and messaging, managing delivery logistics, and investing in technology and staff.
By following best practices and staying focused on the needs and preferences of their target audience, restaurant owners can create successful virtual brands that complement their existing business and drive long-term growth.