Restaurant & Café Magazine | April 2020

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diversifyingyour business

“By having another concept you can stretch your labour. You have to pay bills and rent so having another revenue stream helps us maintain that.” Jamie Mitchell

The Virtual Space

Since the outbreak of the Covid-19 pandemic the virtual world has been embraced by millions of people around the globe who are stuck inside. The digital world is constantly evolving and the trend for brands to move online is one that will continue long after the pandemic is over. Is your business taking up virtual space? Because it should be. VIRTUAL BRANDS, REAL BENEFITS At the end of 2019 online food delivery company, Deliveroo revealed it had 2,000 virtual restaurant brands on its platform in the UK, Deliveroo called it an industry milestone. The off-premise trend has exploded over the last couple of years, the outbreak of the Covid-19 pandemic has highlighted the vital need for this trend and how it will continue to shape the foodservice landscape after the pandemic is over. A virtual brand is an online only concept which allows restaurants of all sizes to create new or bespoke menus for customers from their current kitchen, under new branding.

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A virtual brand allows you to use your existing kitchen and resources to offer a second delivery-only concept and menu to generate additional volume and revenue. In markets where Deliveroo launched virtual brands, participating restaurants saw an increase of 75 percent in order volume. 84 percent of customers ordering from the virtual brand never ordered from the original restaurant menu, highlighting that the service provides new revenue streams. The idea behind a virtual brand is for a restaurant to set-up and run a second or multiple food offerings from an existing premises. The new offering is run out of the same kitchen with food prepared by the same chefs but under a different brand name.

This also provides restaurants with an opportunity to better utilise staff outputs and reduce food waste. In the foodservice industry, virtual brands are also known as Ghost Kitchens/Restaurants. A typical ghost restaurant is able to accommodate the preparation of several different types of cuisines. Without a physical dining location to renovate, front-of-house staff, and menus to reprint, companies can also try out new brands and cuisines with less effort and expense. An individual can set up a ghost kitchen to start their own brand, which is identified with their own online restaurant, it is a tempting option for independents as ghost kitchen setup costs are lower, and the time taken is shorter, than for a kitchen that also serves a walk-in restaurant. Existing restaurants can opt to start a ghost restaurant, providing food from their kitchen for a different brand name. For example, a pizza place could start preparing Mexican style burritos to sell under a different brand. The restaurant does not sell the new items in their physical pizza store, this is a way to attract consumers in search of burritos without confusing customers of the pizza brand. Another advantage of this strategy is that it makes testing out new dishes or menus easier because only a change in the online menu is needed

to trial a new dish. Virtual restaurants are becoming increasingly popular as technological advances continue to improve. Many businesses are investing heavily in virtual restaurants and the technology that makes them possible. One of New Zealand’s first ghost restaurants was Hot Lips, run by Jamie Mitchell and Mike Shand. Mitchell said that five business partners opened Hawaiian raw fish salad restaurant Ha Poke in Auckland’s suburb of Ponsonby in April 2018, but in August of that year decided to create Hot Lips, an American-style fried chicken concept to sell on Uber Eats. “By having another concept you can stretch your labour. You have to pay bills and rent so having another revenue stream helps us maintain that,” Mitchell said. Like with all new endeavours, there are some pitfalls to virtual brands that must be considered and teething problems that will need to be fixed over time. A key difference between virtual brands and a brick and mortar eatery is the personal touch. In a restaurant, personal interaction has always been important, a good or bad experience can mean winning or losing a loyal customer. If a customer simply views your restaurant as an interchangeable place on a delivery app, there is little room for meaningful interaction. By not having a dine-in option, a virtual restaurant also loses its opportunity to put a face to the name. This is why it is so important to embrace social media and customer interaction online. While a ghost kitchen might not have a physical space in the real world, it should have a large online presence and virtual footprint. There is also an issue when it comes to delivery. If you choose third-party delivery it is important to choose