Best Practices, Benefits, And Disadvantages Of Virtual Restaurants.
In 2016, Silicon Valley started investing in firms that exclusively offered delivery, but it wasn’t until 2019 that virtual restaurants began to gain traction. The trend has gained momentum with the introduction of COVID, with some of the biggest ideas, like Mr. Beast Burger, earning $100M in sales over 1,600 virtual kitchens in little over 15 months.
With that kind of success, it seems to sense that restaurant companies of all stripes are seriously considering setting up their own. Yet, there are several factors to take into account, including competition, location, marketing, special offers, and packaging.
Based on our experience establishing over 75 virtual restaurant brands, we’ve put up a list of potential, difficulties, and best practices to assist you in deciding whether a virtual restaurant is a correct choice for your company.
A Virtual Restaurant: What Is It?
A virtual restaurant is a delivery-only concept with a complete menu that only exists online, is often offered on third-party marketplaces, and does not have a conventional, physical location. Visitors may make a delivery order via the website of a virtual band or a third-party marketplace.
There are many things to think about before launching a virtual restaurant, even if it has shown to be a worthwhile investment for certain firms. The possible benefits and difficulties of establishing a virtual brand are listed below.
Opportunities
Little Overhead: Without a dining area and front-of-house employees, there are fewer ongoing costs, such as equipment, payroll, and utilities.
Extra Income: For established businesses with untapped kitchen space, virtual brands may be a significant source of additional income.
Companies have the flexibility to test menu favorites or recycle items to create new meals.
Reduced Food Waste: Virtual businesses may reduce food waste and benefit the environment by utilizing delivery data to inform food preparation choices as well as dividing and recycling products in a communal kitchen.
Attract New Clientele: To reach new clientele, well-established companies might revitalize their brands or completely reinvent themselves.
Fast to Start Up: Setting up a virtual brand may be far less time-consuming than setting up a physical restaurant since it doesn’t need a physical location or a huge workforce.
Space for Growth: If a virtual idea is a success, it may be easily adopted into a physical restaurant or even acquired by a parent company, as happened when Wingstop added Thighstop to its standard menu.
Challenges
High Partner Commissions: To increase sales, a lot of virtual businesses depend on third-party marketplaces, which may levy commissions of up to 30%.
Developing relationships with customers might be more challenging for virtual companies since they have fewer opportunities to interact with customers.
Brand building: Virtual ideas without a parent brand must create everything from the start, including an audience, branding, and marketing.
Controlling the quality: If culinary personnel must juggle orders from many ideas, quality may suffer. Also, companies have less control over order accuracy and customer service if delivery is exclusively handled by third parties.
Reputation management: Reviews have the power to create or destroy a restaurant’s image, but because virtual brands only exist online, they are particularly at risk.
Data that is inaccessible: When controlled by third-party marketplaces, guest data might be challenging to obtain and use unless virtual businesses accept orders directly via their websites.
Staff Overload: If brands are unable to successfully handle the flow of orders from a virtual concept and their conventional restaurant operations, they run the danger of overpowering their personnel.
Virtual Restaurant Best Practices
Throughout the course of assisting hundreds of virtual restaurant brands in their initial development, we picked up a few tips on how to position an idea for success. For a solid start and long-term sustainable development, keep these suggestions in mind.
Well-Researched Business Plan: Just as you wouldn’t start a physical restaurant without one, the same rules apply to starting a virtual one. It is crucial to do in-depth market research, analyze the competition, spend for marketing, have a clear corporate structure, and make financial predictions.
Compact, Targeted Menus: Successful virtual companies have distinct yet straightforward menus. They are simple, designed for easy conversion, and come with enticing images.
Professional branding: To raise awareness, provide a consistent guest experience, and build trust, every customer touchpoint—from your website to packaging to marketing—should be distinctively branded.
Direct Ordering: Marketplaces may be an effective tool for generating first orders, but a direct ordering restaurant website and/or app is essential for developing an actionable database and strengthening customer connections. Because of this, Virtual Dining Concepts used markets, social media, and freebies to promote MrBeast Burger and get consumers to download its branded ordering app.
To grow your audience, it’s important to understand who your current audience is. Although some companies, like Wingstop, have found success by using their existing fans to discover a market for their virtual idea, other companies have partnered with celebrities to create buzz. For instance, Mariah’s Cookies used Instagram to reach over 10 million of Mariah Carey’s followers in order to increase brand exposure in 30 important U.S. areas. In the end, companies should focus on their advantages and adopt approaches that resonate with their target audience.
Numerous Delivery Service Providers: Given that successful virtual restaurants need quick and dependable delivery, marketers have to think about permitting various delivery service providers.
Retention initiatives: Virtual companies must give retention efforts top priority if they want customers to return and grow in value over time (e.g., direct online orderers to download your restaurant app for quicker service; encourage email subscribers to sign up for SMS messaging for insider perks; give weekend regulars a reason to order during the week, etc.)
Participate in Reviews: For virtual eateries, reputation management is crucial. By swiftly reacting to both positive and negative online reviews, brands may help customers feel heard and valued.
Test and Modify Effective virtual businesses regularly adjust their approach in light of data and input from customers to determine what is and isn’t working.
Bottomline
Virtual businesses must put quality, consistency, transparency, and great service at the top of their priority list if they want to build customer confidence and a devoted following. Virtual restaurants may be a profitable business endeavor for both established companies and start-ups by adhering to the best practices listed above and collaborating with an experienced tech partner.
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