How Restaurants Can Use Virtual Brands to Reach More Customers

Here’s a fun fact: the very first online ordering and food delivery service came from Pizza Hut in 1994. Since then, we’ve come a long way since the days of phone orders. And thanks to the COVID-19 pandemic, many restaurants have turned to a new delivery business model: virtual brands. 

As a delivery-based model, it packs tons of benefits, including offering an avenue for restaurants to find new ways to drive sales and reach more customers. And owners can take advantage of this all while keeping their staff and customers safe. Industry experts believe this trend is here to stay. As of 2020, there were 1,500 ghost kitchens in the US. There were also 750 in the UK, more than 7,500 in China, and more than 3,500 in India.

But what exactly are virtual brands, and how can your restaurant use them to reach more customers?

What Is a Virtual Brand?

Virtual brands are a delivery-only concept — essentially, restaurants without a storefront. Because they aren’t tied to a physical location, orders for virtual brands can be fulfilled from anywhere. For example, some are run out of the kitchen of an established brick-and-mortar restaurant but only serve food on delivery and present a different concept than the restaurant they work from. Other virtual brands work from standalone kitchens with no dining room and are not accessible to the public. These workspaces are sometimes known as virtual kitchens, dark kitchens, ghost kitchens, or cloud kitchens.

The virtual brand model is appealing in many ways. For one, restaurant owners can run an additional restaurant using their existing location and staff, allowing the opportunity for expansion at low startup costs. Or, if they choose to operate their virtual brand from a ghost kitchen, they can focus their attention and capital on the food without having to wrestle with the extra space, staff, and money required to maintain an in-house dining room. With either approach, this business model allows eateries to increase sales and reach new customers without the headache of higher operational costs.

Although virtual brands crept onto the restaurant scene in 2014, the idea rose to true popularity during the global pandemic when most restaurants were forced to shut their doors. Many restaurants used this delivery-only model to keep steady revenue flowing while providing safe alternatives for staff and customers in their community. In 2019, even before the virus gave the world pause, ghost kitchens were valued at $40 billion, and that number is expected to keep rising..

 The concept is simple. Customers view the menu and place an order through a third-party app or an online system. The virtual brand staff receives the order and prepares it. Once the food is ready for delivery, the customer is notified, and a driver delivers the order.

 Though straightforward, this process behind virtual brands has proven effective. Plus, it harbors a few additional benefits to help neighborhood restaurants delight more local diners. 

How Virtual Brands Help Restaurants Reach More Customers

Improve Sales with Multiple Brands

Although the recent rise of virtual brands stemmed mainly from the pandemic, studies show that restaurants continuing to offer delivery-only options can significantly impact their respective markets. That is because restaurants can now benefit from additional revenue streams. They can set up and deliver multiple brands from a single location or set up a whole string of kitchens for their different operations.

Most successful restaurant concepts require a focused, unified vision for their menu. But running multiple brands allows restaurateurs to expand their culinary horizons, even if they’re running those brands out of a single location. This can pay off dramatically, as branching out to different types of cuisine is a surefire way to reach more customers. Plus, virtual brands are driven by data, making them the ideal avenue for pinpointing customers’ desires and serving various demographics. In this way, you can discover a coveted niche in your area and rise to meet an unfulfilled need. Broadening your offerings gives you the best chance to maximize your local customer base. After all, what may not entice one foodie may be irresistible to another.

Expand Your Delivery Radius

Most restaurants only have a delivery radius of five to ten miles. But if you leverage the versatility of virtual brands, you’ll find that they’re among the most practical and cost-efficient ways to gain exposure. Because these restaurants often don’t have a physical dining space or pick-up options for customers, you can operate your business as a pop-up event. Each week or month, you can cook from a different location, expanding your delivery radius and reaching new and other customers than those around your home kitchen.

Test New Dish Ideas

Sometimes, when running a brick-and-mortar location, you must shelve experimental dishes in favor of old favorites that continuously earn you revenue. However, operating a virtual brand grants you the freedom to explore and experiment with different flavors, cuisines, and dishes without threatening the reputation of your more established operation.

Foodies enjoy feeling like they’re part of an elite crowd, and offering specialty or off-menu dishes creates buzz. That fear of missing out can fuel a customer’s need to try your virtual brand offerings, and once that positive experience gets shared via word-of-mouth, it can quickly grow your customer base. And if any dishes are a runaway success, you can always consider segueing that menu item to your main restaurant.

Entice New and Loyal Diners by Focusing on the Food

Another way virtual brands can help restaurants reach more customers is by allowing them to focus on food. When running a brick-and-mortar establishment, you must divert some focus to considerations like décor, the perfect location, and hiring the right customer-facing staff. 

With virtual brands, you can give more love and time to the food side of your operation. Focusing on your food lets you evaluate and perfect the presentation and transportability of delivery orders while tweaking dish flavors and to-go menu offerings. Ultimately, food quality and deliciousness is the number one defining factor for a restaurant’s success. So, by doubling down on this factor, you can quickly please and expand your customer base.

Don’t Forget About Brand Visibility

Building brand awareness is a challenge for virtual brands as this model doesn’t have traditional brick-and-mortar signage that helps with visibility. Creating a solid digital presence and storefront is essential to attract and acquire customers. One way to do this is to make sure to rank high on delivery platforms. How? Essentially, by creating a simple online ordering experience and providing fast delivery to ensure customer happiness.

Bonus: Reduce Food Waste

Experts report that the US generated an estimated 22-33 billion pounds of food waste pre-pandemic. However, an unexpected side effect of virtual brands is that restaurants are reducing food waste brilliantly. Restaurants operating multiple brands out of one kitchen can strategically craft their menus to ensure that they find creative ways to use any remaining ingredients in their dishes.

This minimizes the number of ingredients that wind up in a landfill. Advertise this bonus strategically — say, through social media — and you may capture the attention of more environmentally conscious diners. For some, this may align with their values and inspire them to try your restaurant.

Deliverect

It’s becoming increasingly clear that virtual brands are here to stay. And if you play your cards right, your restaurant can reap many benefits.

A crucial part of your virtual brand’s success is having the right technology on your team. Incorporating a restaurant management tool like Deliverect can help you keep track of your multiple locations, streamline your orders, monitor inventory, and provide insightful reports that help reach more customers.

Don’t wait until this trend becomes oversaturated. If you’re interested in learning about Deliverect and how it can enhance your restaurant and virtual brands, contact our team today!