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Virtual restaurants: the new secret weapon of the restaurant industry
Learn how virtual restaurants are helping restaurants like yours and how easy it is to launch one with Grubhub
February 24, 2021
1 Min Read
Virtual restaurants: the new secret weapon of the restaurant industry
Sponsored by Grubhub
2020 was a devastating year for independent restaurants. But it also unleashed some amazing creativity and innovation. Among the most exciting examples: virtual restaurants. With this new model, restaurateurs around the world are using their existing staff and resources to serve more customers, generate more revenue, and diversify their business.
Keep reading to learn:
How 2020 changed the game for restaurant delivery
What virtual restaurants are and how they work
The different types of virtual restaurant models, and their strengths and weaknesses
How Grubhub can help you take advantage of virtual restaurants to grow your orders and customer base, even when times are tough
Navigating stormy waters
The year 2020 wreaked havoc on dine-in business, and the industry will never look the same—especially for independent restaurants. But restaurateurs have never been the type to pack it in when things get tough. Across the country and around the world, they’ve reimagined their businesses from the ground up to weather the storm. That effort has taken many forms: expanding delivery, embracing pickup, boosting online presence, and in many cases all of the above.
Delivery in particular has been a lifeline for independent restaurants. Looking at just one month last spring, NPD group found that overall restaurant traffic had dropped 22%—but delivery orders increased almost 70%.
Some restaurateurs, however, are digging even deeper, asking questions they’ve never considered before:
How can I bring in new orders and customers I haven’t been able to reach?
How can I make better use of excess staff and kitchen capacity when orders are slow?
How can I diversify my operations to take care of my staff and make my business stronger for the future?
Now, many have found a common answer: virtual restaurants. With explosive growth in online ordering and delivery, it’s now possible to launch a brand-new restaurant concept using existing kitchen and staff, with a storefront that exists entirely online.
Virtual restaurants 101
Sponsored by Grubhub
What is a virtual restaurant?
Virtual restaurants are delivery-only restaurant concepts that operate out of an existing brick-and-mortar restaurant. They accept orders exclusively online through apps and websites like Grubhub. And they offer a quick, easy way to generate new orders and revenues, without increasing overhead costs.
How do virtual restaurants work?
Virtual restaurants typically share a kitchen with an existing brick-and-mortar restaurant to prepare and package orders. Customers order from a secondary menu that’s available exclusively online, exclusively for delivery. Those orders are prepared by the existing restaurant’s staff alongside orders for the primary business.
"Virtual restaurants and other] facilities that produce food for delivery only could create a $1 trillion opportunity for food delivery in the next decade.” Michael Shaefer, Global Food and Beverage Lead, Euromonitor, via Restaurant Business, July 2020
Virtual restaurants can take a variety of forms. Two of the most popular are:
Create your own virtual restaurant: Sometimes, restaurateurs create their own virtual restaurant to drive more business and reach more customers with new flavors and concepts.
Example: Imagine a local gourmet burger restaurant, Anthony’s. Anthony, the owner and head chef, happens to have a passion for Korean-infused tacos. He decides to develop a virtual restaurant to sell those delicious tacos online under a different name (say “Krazi Kimchi Tacos”). Now, Anthony is running two restaurants—serving two sets of customers—using the same kitchen, ingredients, and staff.
Branded virtual restaurant: In other cases, virtual restaurants are partnerships, where an existing brick-and-mortar restaurant launches a pre-built, established virtual restaurant created by a third-party partner. The partner handles the menu, branding, packaging, and marketing, and more. The independent restaurateur handles cooking the food and fulfilling the orders with their existing kitchen and staff.
"I believe that five years from now a very large percentage of the independent restaurant community in this country will have a second brand that is not available to the people dining in their place and has no interrelationship to the building, except that they’re using the kitchen.”Robert Earl, Founder of Earl Enterprises and Virtual Dining Concepts and partner of Grubhub’s branded virtual restaurants portfolio
Why do virtual restaurants matter?
Virtual restaurants offer a way to bring new orders and revenue to your business—with minimal risk and without increasing overhead. By launching a virtual restaurant, you can:
Tap into new incremental revenue streams: Virtual restaurants provide a way for brick-and-mortar restaurants to bring in new orders, customers, and delivery sales without having to open a new physical location. And they do it quickly. Typically, virtual restaurants can launch in about 1/4 the time of a physical restaurant concept, at a fraction of the cost.
Reach new customers: By launching a brand-new concept from your existing space with a distinct menu and cuisine type, you can reach an entirely new set of customers, including customers who typically don’t order from your primary business.
Grow your business without adding overhead: You can use the same staff, ingredients (for the most part), and kitchen to operate a virtual restaurant concept, so there’s little or no new overhead. Instead, you’re just maximizing the output of your kitchen and staff.
Double your exposure on delivery sites like Grubhub: In other cases, virtual restaurants are partnerships, where an existing brick-and-mortar restaurant launches a pre-built, established virtual restaurant created by a third-party partner. The partner handles the menu, branding, packaging, and marketing, and more. The independent restaurateur handles cooking the food and fulfilling the orders with their existing kitchen and staff.
Source:
A pandemic surge in food delivery has made ghost kitchens and virtual eateries one of the only growth areas in the restaurant industry | The Gazette
How the pandemic accelerated the US ghost kitchen market '5 years in 3 months' | Restaurant Dive
2020 Trends: Expectations vs. reality | Restaurant Dive
Choose the right virtual restaurant concept for your business
Sponsored by Grubhub
No matter where you’re starting from or where you want to go, there’s a virtual restaurant concept that can help you get there. But that doesn’t mean that every concept is one-size-fits-all. Be sure to think through the differences between creating your own virtual restaurant and launching a branded virtual restaurant to find the right fit for your business.
For example, most of the early experiments in this space were created by independent restaurateurs and launched out of their existing brick-and-mortar space. Although many restaurateurs have done very well with them, creating your own virtual restaurant does come with challenges:
But branded virtual restaurants can offer a quicker, easier,
“turnkey” way to get in the game. Instead of creating your own virtual restaurant from scratch, you can use an established, nationally marketed, ready-to-launch pre-built virtual restaurant.
Longer timelines: It can take a long time and a lot of effort to develop a new virtual restaurant concept and menu from scratch.
Higher startup costs: From developing a new concept and menu to branding, packaging, marketing and promotion, the costs of creating your own virtual restaurant can add up quickly.
Limited exposure: A brand-new virtual restaurant concept with no established brand recognition or loyalty can take a long time to gain traction online. It could be a while before you build up a customer base and start seeing a return on your investment.
For all these reasons, as the virtual restaurant trend continues to evolve, many in the industry are exploring other possibilities.
"In my estimation, there are 15,000–20,000 virtual brands in this country already, but they are single units. And that poor restaurateur is going to have to try to work out how to do packaging, social media and marketing, all for one or two units.”Robert Earl, Founder of Earl Enterprises and Virtual Dining Concepts and partner of Grubhub’s branded virtual restaurants portfolio
COMMON CHALLENGES OF CREATING YOUR OWN VIRTUAL RESTAURANT
Grubhub has been right at the center of the virtual restaurant revolution, and we’ve seen lots of different approaches from both independent restaurateurs and major established brands.
Some virtual restaurants created by independent restaurateurs do quite well. But many do require more time, effort, and investment to get off the ground. Common challenges include:
Lack of initial public awareness of an unknown, unfamiliar brand, making it hard for the new concept stand out
Lots of early experimentation needed to create a menu and identify the right dishes and packaging that will hold up well for delivery
Extra time and expense needed to produce and maintain the branding Example: Investing in professional photos and adding to your online menu
Significant marketing costs needed to draw new customers
Branded virtual restaurants: a simpler, turnkey alternative
Like most virtual restaurants, branded virtual restaurants can be run from your existing brick-and-mortar restaurant, using your existing kitchen, ingredients, and staff. But branded virtual restaurants can offer a quicker, easier, “turnkey” way to get in the game. Instead of creating your own virtual restaurant from scratch, you can use an established, nationally marketed, ready-to-launch pre-built virtual restaurant.
Branded virtual restaurants have quickly become the top choice for independent restaurateurs looking to launch a virtual restaurant, for several reasons:
They’re turnkey: For restaurateurs who want to jump into virtual restaurants and quickly inject a new revenue stream into their business, branded virtual restaurants provide an instant, turnkey solution. The concept, packaging, marketing, and more are already fully developed. You just order the resources, prepare the food, and start taking orders.
They’re fully established: When you partner with an established branded virtual restaurant, you’re launching a mature, fully developed concept and menu, with branding and packaging expertly crafted by leading industry professionals. It all just comes with the package, without having to do any of it on your own.
They’re popular: Branded virtual restaurants come with national marketing campaigns, often backed by well-known celebrities and respected restaurant groups like Lettuce Entertain You. Customers in your market are likely already aware of these celebrities and brands, removing the biggest hurdle to making a new virtual restaurant stick.
They work: Independent restaurateurs on Grubhub working with branded virtual restaurants have seen average incremental order increases of more than 20%—with some brands seeing increases over 50%. Among customers placing orders with branded virtual restaurants, 40-95% are net-new customers for the restaurateur.
For all these reasons, branded virtual restaurants have quickly emerged as the wave of the future for the restaurant industry. Analysts have pegged virtual restaurants in general, and branded virtual restaurants in particular, as one of the most important growth areas in the coming years. Major financial firms are already making serious investments in this space. And some of the fastest-growing restaurant groups, like Virtual Dining Concepts, have made bringing branded concepts to independent operators a central pillar in their business strategy.
Introducing our portfolio of branded virtual restaurants
Sponsored by Grubhub
Grubhub has partnered with industry experts to offer a portfolio of pre-built virtual restaurants to our independent restaurant partners.
Our growing portfolio of Branded Virtual Restaurants includes a variety of cuisines created by expert chefs and backed by celebrities and well-known partners in the industry. You choose your virtual restaurant concept and we take care of everything you need to get started and set up for success:
• Double your exposure without opening a brick & mortar location
• National marketing support and promotion funding
• Expertly designed menus and pre-sourced ingredients
• Cross-utilize your existing ingredients for select concepts
• Branded and delivery- optimized packaging, including eye-catching logos
• Pricing models built with online ordering in mind
VIRTUAL DINING CONCEPTS
Branded virtual restaurants from Virtual Dining Concepts
We’ve partnered with veteran restaurateur Robert Earl—founder of Virtual Dining Concepts, Planet Hollywood and owner of over 350 restaurants—on three new branded virtual restaurants. These turnkey concepts are fully developed and ready to launch, and they’re available through Grubhub.
The Tyga Bytes virtual restaurant partnership has been great for our restaurant. The menu items are so simple and easy to prepare that our cooking staff loves when we receive orders for them. Selling Tyga Bytes has also helped increase our revenue, which could not have come at a more needed time. We have had to double our cooking staff just to keep up with the demand. I wish we could have partnered with them sooner.”
Tony Mack, Owner, Luconi NYC
Branded virtual restaurants from Lettuce Entertain You
We also offer two winning virtual restaurant concepts backed by the unmatched experts at Lettuce Entertain You Enterprises. Founded in 1971, this independent, family-owned restaurant group hails from Chicago and owns, manages, and licenses more than 130 establishments across the country.
Let Grubhub help you break into the virtual restaurant game
Sponsored by Grubhub
Virtual restaurants look to be one of the biggest emerging industry trends—and a huge boon for independent restaurateurs seeking to bring in much-needed revenues and strengthen their bottom line. Grubhub has been in the thick of this trend since its earliest days, and in the past few years, we’ve helped thousands of partners launch virtual restaurants on our platform.
Today, we’re partnering with industry leaders and innovators to become the first in our space to bring branded virtual restaurant concepts to independent operators. We’re working to make it as easy as possible for independent restaurateurs to add virtual restaurant brands to their operations—and see the rapid sales and revenue growth that come with them.
The benefits of launching a virtual restaurant with Grubhub
Expert insights and guidance: Working with hundreds of thousands of restaurants, we capture vast amounts of data on local tastes and trends in every market. When you launch a virtual restaurant with Grubhub, you’ll work with a consultant to help you identify the brands and cuisines most likely to take off in your area.
Increased customer reach: Like any restaurant joining Grubhub, you get the benefit of our hugely popular online marketplace, and the tens of thousands of hungry customers in your area using it. Of course, when you launch a new virtual restaurant in addition to your current restaurant listing, you double your exposure and reach customers you’ve never served before.
Simpler operations: With some branded virtual restaurant partners, your kitchen staff has to use multiple, separate tablets to receive and manage orders for each concept. Grubhub is the only partner that allows you to consolidate everything in one place, operating your virtual concept with the same tablet and interface as your brick-and-mortar restaurant.
High-profile, committed national partners: We’re working with some of the biggest names in the industry, like Planet Hollywood founder Robert Earl and Lettuce Entertain You Enterprises, to develop new concepts. These partners are all-in on the virtual restaurant trend.
A partner with a strong track record of success: Grubhub has made virtual restaurants a major area of focus in the past several years. We’re leading the industry in bringing branded virtual restaurant concepts to independent operators. And we’re already helping thousands of restaurants take advantage of this trend to grow their orders and customer base.
Ready to see how you can make virtual restaurants work for your business?
Visit get.grubhub.com/virtual-restaurants
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