Temporary pop-ups have long been a way to test a new concept without building out a full location. Creating an entire restaurant, after all, is a massive undertaking, even when not in the middle of an industry-wrecking pandemic. But, along the boulevard of online ordering, new locations are built with a handful of pixels, not a truckload of bricks.
Welcome to the age of virtual restaurants.
The premise for a virtual restaurant is simple. First, identify a gap in the market—often using a delivery system’s regional data to see which cravings went unsatisfied. Next, create a brand and menu to be hosted locally or on your favorite aggregator. Finally, find a place to cook and start filling orders, often alongside tickets from a traditional front-of-house. For Top Round Roast Beef in San Francisco, that meant running a fried-chicken joint, burger house, and ice-cream parlor all from within their existing sandwich shop. Others, like LA-based group Salted, are built from the ground up with only “delivery-first” brands.
New idea, online menu, real food. It’s that’s simple.
What’s not to love? According to Uber Eats, businesses with virtual banners running sidecar can expect an increase of sales by more than half compared to standard operating procedure. That sounds pretty good—with YOY reservations and walk-ins still down more than 60 percent globally due to COVID restrictions, it’s not just about an outlet to test new food types, it’s about keeping the lights on. In some cases, these online-only restaurants are bringing in more revenue than the actual business that supports them.
Here’s our predication for 2021–by the end of the year, every restaurant, big or small, will have a virtual banner under which they sell food catering to a different cuisine or market.
The model is not without its perils. Early in 2020, the internet roared “Fake Pizza!” in one hangry voice when it was revealed that orders from local-esque Pasqually’s Pizza & Wings were actually white-label Chuck E. Cheese pies. On the surface it seemed like a great idea, allowing Chuck E. Cheese to smooth out their demand curve and make use of excess capacity during the week. So, what might they have done differently? It starts with transparency and better communication (they do now have a section of their website explaining the concept). It’s not that customers don’t like the pizza; they just don’t like getting duped. And, at a moment when people are bending over backwards to support local businesses and tighten their own spending, knowing where their money is going is more important than ever. Instead, Chuck E. Cheese might have been more explicit about their new venture, and asked customers how a weeknight pizza should be different than a birthday party pizza. In that way they might have created a new brand that revelers can stick with even as they age out of the core demographic.
Here’s our predication for 2021–by the end of the year, every restaurant, big or small, will have a virtual banner under which they sell food catering to a different cuisine or market. There’s more at stake here than the upside on revenue. If nothing else, 2020 taught us that we need to be able to pivot. Additional brands help build resiliency (spreading risk more broadly) but they also create a laboratory for new ideas and concepts. More than an expanded menu, they establish a platform for innovation to ensure your business is always driving towards the next and the new, not moving away from last year’s trend.
To succeed in creating a virtual brand, focus less on the restaurant and more on the meal. Even though your brand may live (mostly) digitally, your diners are still having an entire experience here in the real world. Create an experience through the lens of hospitality–no different than if the diners at your virtual restaurant were walking through your actual front door. For some early ideas, build from your existing customer journey.
Promote a virtual business like you would any other traditional establishment, with reviews from your favorite critics, billboards in your target neighborhoods, and (post-pandemic!) partaking in events or festivals. Virtual restaurants are going to be a new concept at first. Instead of trying to pass them off as regular eateries, some education may be in order. If you’re operating from an existing location, a temporary brand takeover may do just the trick.
Got a virtual restaurant? Consider a virtual host—a video recording, an interactive bot, even an open Zoom channel to say hello and help people orient themselves. Without the visuals created by space and signage, your digital channels are your best storytelling tools. The ordering experience must be as much about filling a cart as it is expressing your purpose.
Escape, release, discovery: People eat out for more than just the food. Look for new ways to immerse your customers, transforming their desk or dining room, or pulling them elsewhere altogether. Think beyond the online portal and packaging (both important). Consider pairings with a good local beer, some moody lighting, even a playlist from Spotify to set the scene.
Showing up is table stakes; how you show up makes the difference between a good meal and a great one. Start with the vehicle itself: Vintage VW bus? Autonomous drone? Blacked-out cybertruck? Even with higher-volume and lower-cost offerings, a bit of theater can go a long way. Not in control of your delivery service? Consider a QR code on the package that links out to a live chat with the chef, or a recorded story about the goods in your bag.
“How was your meal?” doesn’t need to be reserved for dine-in only. Beyond getting feedback on the meal itself, this final touch is one last moment to describe and normalize this new typology.
Running a virtual restaurant may be a completely new operational paradigm, but the core outputs remain the same: great food and great service. Sooner than later, we’ll need to drop the “virtual” altogether in recognition of their core value—just one more way to grab a bite to eat.