Virtual Dining - The Future of Food Exploration

June 17, 2023
David Sunnyside

Virtual restaurants are restaurant brands that only exist online through third-party apps. They cook food from a menu that’s designed for delivery, like pizza, chicken wings or burgers.

Restaurants that launch virtual brands leverage marketplaces and social media to generate buzz. They also build an actionable guest database through a direct ordering website and/or app.

What is Virtual Dining?

Virtual Dining is a trend in which restaurants launch food brands without a physical restaurant space. These virtual restaurants prioritize delivery and pick-up orders. They can be independent ventures known as ghost kitchens or alter egos of existing restaurants. Virtual restaurants can be built around a single signature item like wings or pizza or an entire cuisine like Japanese, Italian or Mexican.

Virtual brands are marketed through social media, television or celebrity endorsements. They often focus on QSR favorites that travel well and are easily searched in local food ordering apps. Consumers are wary of restaurants claiming to have both sushi and spaghetti, but virtual brands can prepare these different menu items in the same kitchen space without raising suspicion.

Moreover, these virtual restaurants can take advantage of spare capacity at existing restaurants to maximize online ordering revenue. This makes them perfect examples of Exponential Organizations (ExO) — businesses built to leverage opportunities created by data made possible by digital tools.

Why is Virtual Dining a Trend?

Many established restaurant companies are launching spinoff brands that offer delivery-only menus. Pizza, chicken wings, and burgers are popular choices since they travel well and don’t require much additional equipment to make. These virtual brands are sometimes called ghost kitchens or virtual franchises and are prepared in existing restaurant kitchen space. Customers place orders through the virtual brand’s website or third-party delivery apps.

With the coronavirus pandemic, more people are staying indoors and ordering delivery meals. This has helped boost online ordering revenue at restaurants and has also led to more demand for ghost kitchens.

Virtual dining is a promising growth opportunity for restaurant brands. However, it’s important for restaurant owners to prioritize quality and transparency when establishing these new ventures. Also, it’s critical to have a solid plan that includes thorough market research, a business structure, and financial projections. Lastly, it’s essential to have a strong technology partner that can support your digital operations.

What are the Benefits of Virtual Dining?

Virtual Dining can bring new life to existing restaurant brands as it offers a cost-effective way to expand their service. It also allows restaurateurs to offer a more diverse menu without the risk of opening another restaurant.

However, just like any other business venture, Virtual Dining comes with its challenges. The key to success is having a well-researched business plan, including a competition analysis and market forecasting, budgeting, and a comprehensive marketing strategy.

Additionally, it’s important to have a scalable platform to support growth and deliver a high-quality customer experience. For example, a virtual restaurant should leverage marketplaces to drive initial orders, but a direct ordering app is essential for building a database and deepening guest relationships.

In addition, virtual restaurants should use high-quality food holding equipment to keep their dishes at the correct temperature. This is crucial for ensuring the integrity of the food during delivery. Virtual dining companies should also be mindful of high partner commissions, which can significantly impact revenue.

What are the Challenges of Virtual Dining?

Creating and launching virtual food brands requires extensive research, strategic planning, a thorough budget, a well-developed business structure, financial projections, marketing goals and more. These efforts will help ensure a strong debut and sustainable growth over time.

Virtual restaurants have existed long before Covid-19, but they’ve gained popularity during the pandemic thanks to the rise of food delivery apps like DoorDash, Grubhub and Uber Eats. In fact, some brick-and-mortar restaurants use their own kitchen space to prepare multiple virtual restaurant brands’ menus in one location without listing the different restaurants on their physical menus or websites.

However, this model can be challenging to manage due to kitchen capacity constraints and staffing limitations. Also, it can be difficult to maintain consistency and quality when preparing meals for multiple brands in one space. In addition, it can be hard to collect guest data when restaurants rely on third-party marketplaces. Fortunately, solutions like NextBite allow restaurant companies to maximize online ordering revenue and launch new delivery-only brands by using underutilized labor and kitchen capacity.

David Sunnyside
Co-founder of Urban Splatter • Digital Marketer • Engineer • Meditator
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