Virtual brands: A passing phase or long-term shift in hospitality?

We explore the 12 ways that virtual brands are benefitting hospitality businesses.

Virtual brands seem to be flavour of the moment in the world of hospitality. But what is a virtual brand, and why the explosion in popularity? Should you be considering a virtual brand for your hospitality business and if so, what are the benefits?

What is a virtual brand?

A virtual brand is one that exists digitally, but with no physical presence. No physical restaurant, not even a bricks-and-mortar pickup outlet. A virtual brand offers food that is available via delivery only. 

It might be run from the kitchen of an existing restaurant or outlet, or the food might be prepared in a ‘dark kitchen’ - that is, a stand-alone kitchen that is not attached to any form of shop-front.

Virtual brands have been around for a few years, but the global pandemic, with its resulting forced restaurant closures and massive increase in food delivery, has seen them proliferate rapidly in 2020. 

The benefits of virtual brands

The pandemic may have accelerated their growth, but smart hospitality providers are realising that a virtual brand is not just a solution to a short-term problem. Virtual brands offer multiple, very real benefits that are likely to see their continued growth long after the world is allowed back into restaurants:

 

1. Additional income stream - virtual brands allow you to run more than one brand from the same kitchen, potentially increasing your revenue with no cost for additional staff or equipment. Even without a pandemic, it can be hard to keep the customers coming through the doors. A virtual brand can help you generate incremental orders when in-restaurant dining is down. 
2. Capitalising on a growing trend - the food delivery market is growing, and having one or more virtual brands means being positioned to take advantage of this growing phenomenon.
3. Rapid, lower cost, lower risk set up - compared to a restaurant, or even a take-away outlet, a virtual brand has a minimal set up cost. With no physical outlet to find and fit-out, delivery-only brands are the perfect way to try rapidly try new concepts without the risk and cost of a restaurant. 
4. Maximise ROI  - if you have an existing restaurant, with premises, equipment and staff, a virtual brand can help to make the most of your investment. Inevitably there are times when your kitchen is not at capacity and a virtual brand can help maintain volume in the kitchen.
5. Reach new geographical areas - if you want to take your food to a new area, a virtual brand, run from a dark kitchen delivered by a third-part is the most practical and cost-efficient way to get your great food to a whole new audience. 
6. Open to new entrants - because virtual brands can be run not only from an existing kitchen, but also from a dark kitchen, you don’t have to be an established restaurant business to launch a virtual brand. 
7. Reduce food waste - making efficient use of ingredients has long been an issue for restaurants. Having a virtual brand, which uses the same ingredients for dishes on delivery-only menus can help to use excess ingredients and reduce waste. 
8. Test new ideas - if you have great ideas for new dishes, flavours and cuisines, launching them via a virtual brand gives you the opportunity to diversify, whilst still protecting your current brand’s market position. 
9. Tailored to customer demand - if there is a gap in an area for a particular cuisine, you can tailor your brand offer to exactly what that market needs. 
10. Focus on the food - a successful restaurant needs so much more than just its menu - décor, atmosphere, location, wait staff, wine list. A virtual brand allows you to focus solely on what you do best - food and flavours. 
11. Customer insights - knowing your customer is essential to the success of any business, and virtual brands give you invaluable insights about who is buying your food - location, their favourite orders, order size and real-time feedback. This data is the key ensuring your brand continues to deliver exactly what your customers want. 
12. Marketing support - if you launch your virtual brand in partnership with a third party - such as Deliveroo, Uber Eats or Menu Log - they’ll offer help to locate regional demand for certain items, promote your virtual brand and track its success. 

Virtual brands may be the growth phenomenon of the pandemic, but there are multiple benefits that mean that this is more than a passing trend. Virtual brands offer a host of very real, long term benefits and are set to become an integral part of the hospitality landscape.