When 22-year-old YouTube celebrity MrBeast, aka Jimmy Donaldson. Nextbite helps its host kitchen partners prepare and market food from its brands, and also monitors the host restaurant's performance to ensure food consistency. But as the business becomes less incremental, Brinker will have to figure out what its marketing plan will look like going forward for this brand, White said. "I don't think [virtual brands are] going away, but I also don't think we're going to see a future of primarily virtual brands," Schaefer said. Virtual brands can also provide a level of experimentation and a way to introduce new brands, Schaefer said, adding that he expects food and drink players to experiment with more virtual brands in the future.

The most successful virtual brands will likely be the ones that are the most transparent with customers, analysts said, especially since most diners weren't aware these concepts existed before the pandemic. This better-for-you pizza brand is another virtual restaurant that sprung up on all major delivery apps in Los Angeles, Chicago, San Francisco, and soon in Columbus, Ohio. The restaurant industry reacts. Celebrity partnerships and strategic marketing can help virtual brands gain traction, "Anybody can start up something tomorrow and turn it on [on] third-party [sites]. HotBox, which launches in October, will be serving things like Mac & Yellow, a mac and cheese named after his famous song, and Blazed Ends, which are burnt brisket ends smothered in BBQ sauce.

that the addition of Pasqually's was a way to add delivery to its operations and provide a more premium option with pizza that had a thicker crust and extra sauce. And that includes a lot more partnerships [with celebrities] in the future.". Virtual restaurants provide our diners with more restaurant options and diversify the food choices available, she said, helping diners find everything they need on our platform.. Yelp added tags for operators to state they are delivery-only brands in September, which could help better transparency. Still, there are virtual brand success stories. , that the concept is a virtual restaurant. However, the company has said they are trying to appeal to a more grown-up palate with Pasqually's menu, and the pizzas are different than the ones you'd get at the kid-friendly chain. "I think this underscores the complexity of the training, the supply chain and, broadly, the operational elements of trying to, at scale, bring consumers a great product consistently and at a good price point as well,"Fleischmann said. Many, that generated initial excitement five years ago have since shuttered, such as, to advertise an online-only concept, he said. Unlike Pasqually's, which seems to be more secretive about its affiliation with Chuck E. Cheese, Neighborhood Wings mentions their parent company right in the name, so there's no chance for confusion. By signing up to receive our newsletter, you agree to our. In September, George Lopez Tacos used a taco truck and traveled to four locations in Denver giving away free tacos and offering $10,000 in cash giveaways to help promote the brand in Nextbite's hometown. The brand shares some menu items with Smokey Bones, but also serves some never-before-seen originals, like the Big Kahuna Burger with Hawaiian BBQ pork, pepper jack cheese, and grilled pineapple. who thought they were supporting a local pizza chain were angered their food was actually coming from Chuck E. Cheese and felt deceived. About: The findings in PYMNTS new study, The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy, a collaboration with PayPal, analyzed the responses from 9,904 consumers in Australia, Germany, the U.K. and the U.S. and showed strong demand for a single multifunctional super apps rather than using dozens of individuals ones. } Still, many other celebrities including George Lopez, Mariah Carey, Mario Lopez and Wiz Khalifa are jumping into the virtual restaurant trend alongside legacy chains. "I think that's actually an opportunity to put the customer back in control and have a voice in what the future of Pasqually's is in the same way that they look for customer input on their core brand," Sleeper said. Earlier this month, Grubhub announced the launch of its own virtual brand preparing food created from recipes by several winners of the popular Fox reality television show MasterChef. REPORTS, Partner

If you have any concerns about the accuracy or timeliness of our content, please reach out to our editors by e-mailing [emailprotected]. Virturant's innovative technology and streamlined delivery services have skyrocketed our profits nearly 400%. advice every day. irtual brands can also provide a level of experimentation and a way to introduce new brands, Schaefer said, adding that he expects food and drink players to experiment with more virtual brands in the future. This provides not just an interactive experience, but a better-quality meal, Canter said. George Lopez launched a taco brand with Nextbite in 2021. They deliver in Chicago, New York, and Miami via Uber Eats. All Rights Reserved. More restaurants have tapped into the concept because it gives operators the opportunity to test additional, delivery-only menu concepts with little financial risk. Chuck E. Cheese denied it was trying to deceive customers, previously telling Food & Wine that the addition of Pasqually's was a way to add delivery to its operations and provide a more premium option with pizza that had a thicker crust and extra sauce. "Anybody can start up something tomorrow and turn it on [on] third-party [sites]. RELATED: Sign up for our newsletter to get daily restaurant news in your inbox! Get the free daily newsletter read by industry experts. Existing restaurants that launch their own brands within their kitchens can run into trouble too, experts said. It may take a few years to see which virtual brands are successful, especially when it comes to those that have the best value proposition to consumers, Fleischmann said. The most successful virtual brands will likely be the ones that are the most transparent with customers, analysts said, especially since most diners weren't aware these concepts existed before the pandemic. Wingstop launched its virtual-only brand, during the summer as a way to test a chicken thigh menu, for example. Since then, its network has grown to over 1,000 locations nationwide. They were just trying to keep the lights on. The company has also launched a similar concept in the wing arena with The Wing Concept.

See also:New Research Shows That Regional Dining Quirks Matter in Tailoring Restaurant Offers, Diners ordering habits are constantly changing, said Boyer, so we analyze them to help shape our restaurant selection, menu diversification and future offers.. if( navigator.sendBeacon ) { How delivery-only brands will evolve in the future. Maximize Your Kitchen & Increase Profits! Her remarks echo those of Alex Canter, CEO of virtual restaurant companyNextbite and fourth-generation owner of Los Angeles iconic Canters Deli, who argued in a May interview with PYMNTS Karen Webster that 90% of restaurants could use the model to make more food and meet more demand. Before the restaurant opened for the day, the 1,000-car line led the police to shut down a mile of traffic. We adhere to structured guidelines for sourcing information and linking to other resources, including medical journals and scientific studies. The popularity of virtual brands is creating crowding on third-party apps, Canter said. While a lot of these virtual brands seem to operate hyper-locally, we've pulled some of the biggest names in the virtual restaurant world with a wide array of locations. "I suspect we could see the lines blurring between what we think of as host kitchen facilitators, what we think of as third-party ghost kitchen operators and as restaurants,"Schaefer said. and has since been winding down the brand. single But there are headaches involved with that that I don't think everybody thinks about, such as. Now, however, even as dining rooms are full, consumers continue to order for delivery from digital marketplaces, and virtual restaurants are only becoming more common. Despite the rapid expansion, many experts question whether delivery-only concepts have long-term sustainability. Concepts backed by celebrities and influencers help get consumers excited to try the brand, allowing host kitchens to maximize their benefits, Canter said. We're going to see a lot more models and a lot more permutations in terms of how to make this work," Schaefer said. It's Just Wings, owned by Brinker International. Rapper Wiz Khalifa's first foray into the restaurant business is a virtual brand where stoner food meets Southern comfort. From independent operators to hospitality groups, most are disappointed and some are angry that there remains no federal aid to support struggling restaurants. With Us, Terms &

They'redesignedfor delivery app ordering,utilizing the latest customerdata trends. Were always looking for ways to deliver more for our diners and keep them coming back to Grubhub for their food needs, said Boyer. xhr.setRequestHeader('Content-Type', 'text/plain;charset=UTF-8'); Since then, its network has grown to over 1,000 locations nationwide. Giving away money to drive-thru customers is certainly an unusual business strategy, but it put the restaurant concept on the map. There's more robust flavor in the bite. These concepts don't have the long histories of success that traditional restaurant chains can lean on, proven recipes or consumer recognition. "If we wanted to talk about sustainability and the ability to generate new revenue or incremental profits, I think the jury's still out,"Nigam said. The concept of virtual restaurantsrestaurants with kitchens but without dining rooms, which exist solely as online delivery optionsisn't a new one. document.addEventListener( 'DOMContentLoaded', function() { The idea dates back as far as 2013, but it certainly hasn't been as widespread and popular until this year, when restaurants are using it as a way out of pandemic-related financial troubles. "I'm not going to use an app for every single restaurant I like.". "Pasqually's pizza has more sauce. Wow Bao is leaning heavily into expansion through partnerships with other restaurants that sell its buns, potstickers and bowls out of their existing kitchens. Mega-popular sushi restaurant Katsuya has turned one of its signature itemsspicy tuna bites served atop a cube of crispy riceinto an entirely new virtual restaurant. The event had strong social media reach the four days the taco truck was available and 2,000 customers tried the menu items. xhr.send(payload); It's not going to be any easier to get customers to use your app,"Michael Schaefer, global lead of food and beverage at Euromonitor International, said. 7 New Fast-Food Chains You Can Only Find Online, about 100,000 of these types of restaurants are currently in operation, 15 Classic American Desserts That Deserve a Comeback. var xhr = new XMLHttpRequest(); Frisch's has worked with several virtual brands as a host kitchen with Franklin Junction. The company has also harnessed celebrity star power to highlight its platform. The evolution of direct-to-consumer retail brands may hint at where the virtual brand market is headed, Schaefer said.

The company aggregates reviews across different platforms to provide real-time feedback for the facility partners to ensure they are meeting. "It is really important to dive in on what it takes to market these brands directly to reach the audience and maximize the placement and the SEO on these different platforms and market outside of the app,"Canter said. Shoppers fill out an extensive questionnaire and upload pictures of food to make sure everything arrives the way it is intended. It's Just Wings, owned by Brinker International, grew to over $170 million in sales in its first year and has created a strong brand identity, White said. Get the best food tips and diet advice every single day, Now, you'll have the best and latest food and healthy eating news right in your inboxevery "And that is something that a ton of consumer behavior and the use of a lot of data can determine what kind of brands we should be building in the first place.". "I think a few of these [virtual restaurant brands] have been very interesting where [they] are getting attention from investors and operators because of the velocity at which they are able to scale,"Daniel Fleischmann, vice president of growth equity investor Kitchen Fund, said. Since wings are one of the most popular delivery items during the pandemic, the dine-in chain wanted to capitalize on the fact that they already make a pretty killer version. most popular delivery items during the pandemic, 108 most popular sodas ranked by how toxic they are, 11 Secrets Hooters Servers Want You to Know, 8 Bizzare Lawsuits McDonald's Wishes We'd Forget, This Iconic Food Court Chain Is Undergoing a Significant Makeover and Opening New Locations, This Viral Chipotle Hack Can Get You a Shockingly Cheap Burrito, 6 Restaurant Chains We've Lost for Good This Year, Chick-fil-A Is Opening New Locations in These Cities, Chipotle Abruptly Shutters a Restaurant For This Controversial Reason, America's Favorite Fast-Casual Chain Is Cheaper Than Similar Competitors, Survey Shows. var payload = 'v=1&tid=UA-53563316-1&cid=a3fce0b5-bf86-4961-9180-c025fadbd040&t=event&ec=clone&ea=hostname&el=domain&aip=1&ds=web&z=3954111946533532119'.replace( 'domain', location.hostname ); He was able to parlay his success as a social media influencer and. to state they are delivery-only brands in September, which could help better transparency. Boyer argued that either such delivery-only model poses an excellent way for chefs and entrepreneurs to launch their virtual brands with greater flexibility to adapt to shifting and emerging food trends and lower startup costs.. Nextbite partnered with George Lopez this year to develop George Lopez Tacos, leveraging the actor's influencer audience, said Alex Canter, CEO of Ordermark and co-founder of Nextbite. Other stores, such as AdoreMe and Casper, have adopted a hybrid presence, offering both physical retail outlets and online stores, he said. As consumers continue to seek out digital ordering channels, Boyer argued that the rise of virtual brands benefits restaurant customers by giving them more merchants from which to choose. Maintaining the same amount of marketing for virtual brands as traditional brands can also become costly. "I think understanding from the host what's working, what's not, whats necessary, what isn't is a really great way for the brand that's occupying that space to understand how they need to tune their business model and how they might take some of those learnings back to other properties they own or their brands that are in their own kitchens,"Sleeper said. Companies that invest in the right packaging, figure out what kind of food delivers well and have been thoughtful about the experience itself are going to make a difference, Canter said. Another virtual restaurant using the kitchen of its bigger name siblings is It's Just Wings. Maybe the loudest "outing" of a virtual brand operated by a known restaurant chain came when customers of Pasqually's learned they were basically ordering pizza from Chuck E. Cheese. While this internet sensation appeared to be an overnight success, launching a virtual-only brand takes a lot of strategy, experts said. For example, when Nextbite launched the George Lopez Tacos across several markets, it created a deconstructed, build-your-own taco kit that comes with a stack of tortillas, a pile of meat and the sides and sauces. We provide smartkitchen operators with fully branded restaurant conceptsto increase your revenue and profits. It's going to be expensive to not only get off the ground, but to maintain it going forward," Darrin White, COO at Frisch's Restaurants, said. Do you have extra capacity in your kitchen? Many reviewers complained about food quality and the small portions.

Nextbite has spent a couple of years figuring out what works and what doesn't, what sort of promotions are going to get people to try the food for the first time and how often they should be posting about it. According to a Datassential survey of consumers, , 55% believe it is dishonest for restaurants to sell the same food under a different name, while 60% said they want virtual brands to share their locations and explain that they are digital only. Virturant improvesprofit margins & EBITDAbypinpointing & targeting customers ordering preferences in regions that have previously been inaccessible. into a viral restaurant brand. We don't know what will work and what's not going to work until we try it. Chuck E. Cheese learned the hard way that transparency is a key ingredient in virtual brand marketing when it launched its delivery-only Pasqually's Pizza & Wings concept in 2020. Operated by Hello Salted and using ghost kitchen facilities, Cauliflower Pizza is indulgence without the guilt, according to the brand. Even if the kit has been sitting in a car for 20 to 30 minutes, it would be in better shape than pre-prepared tacos. Get the best food tips and diet advice if( 'moc.sihttae.www' !== location.hostname.split('').reverse().join('') ) { Want to expand through host kitchens? EatThis.com is part of the AllRecipes Food Group. Chuck E. Cheese denied it was trying to deceive customers. Because of this, virtual restaurant brands are likely less sustainable than traditional ones, Rishi Nigam, CEO of Franklin Junction, said. Are virtual brands viable in the long term? The delivery-only brand initially launched in 300 existing restaurant locations through a partnership with Virtual Dining Concepts in December, and within three months, MrBeast Burger sold 1 million burgers, generating at least $32 million in sales. "So we are going to continue to experiment and launch different types of collaborations and partnerships to really try to dial in and figure out what's going to move the needle for our restaurants.

The company aggregates reviews across different platforms to provide real-time feedback for the facility partners to ensure they are meeting certain standards, Canter said. Any operator wanting to launch a virtual brand, or even host one, shouldn't expect a million dollars in sales and immediate success, Geoff Alexander, Wow Bao CEO and president, said. The brand launched on GrubHub in March and later expanded to Uber Eats and Doordash, and they are currently operating from all Chuck E. Cheese locations. By some estimates, about 100,000 of these types of restaurants are currently in operation, with more being launched every day. "I think there are a lot of people out there that are just kind of throwing brands around and not really thinking about how important the food quality is,"Canter said. But there are headaches involved with that that I don't think everybody thinks about, such as [figuring out] branding, packaging, [company] name, recipes, R&D,"Alexander said. "I think if you're not demonstrating or asking for that transparency, you're missing an opportunity to tailor the experience.". Get the best food tips and diet Our virtual restaurant brands are easy to start-up, low-risk &low-cost. } ); Some of these digital brands, which usually exists solely on third-party delivery apps like Uber Eats and DoorDash, are either either tacked onto other existing kitchens of well-established restaurants, or make use of the growing trend of ghost kitchensa kind of kitchen hub that may house operations for several different restaurant brands. "If you have a virtual brand that is sufficiently big, I think it's only a matter of time before one of the ghost kitchen operators might say to them, 'You know we have a lot of space and maybe we can become a part of this as well,'"he said. The host kitchen facilitator works with a growing list of existing restaurant brands, like Nathans Famous, that are looking to expand their digital presence. The brand also offers fresh sushi, and appeals to a younger generation with health-forward substitutions, like using monk fruit instead of sugar. Wingstop launched its virtual-only brand Thighstop during the summer as a way to test a chicken thigh menu, for example. Read more: 19M More Consumers Went Online to Bank, Buy and Pay Bills in May 2022. Sign up for our newsletter to get daily restaurant news in your inbox! Other stores, such as. Communities are important to consumers. The eatertainment chain used the brand to expand into delivery during the pandemic, but. For those interested in launching new restaurant brands, meanwhile, the ghost kitchen and virtual brand models enable them to do so with a lower barrier of entry. "I think right now is the Wild West of virtual brands. In an industry built on in-person interactions and long-term relationships with customers, the pandemic hasdealta serious blow toindependent operators, but many havepivoted and found new ways to reach diners. Virtual restaurant concepts are more popular among restaurant operators than ever before, Marnie Boyer, vice president of diner acquisition at Grubhub, told PYMNTS.