The Rise of the Virtual Restaurant Franchise

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No one can deny that the global pandemic has had a huge impact on consumer habits, changing the way we buy, shop and consume. Most businesses had no choice but to adjust their offerings and operations in order to survive and generate alternative revenue. The strange and difficult times that we all lived and worked in also saw the birth of new concepts, new businesses and even new industries.

One sector that has exploded in popularity since the start of the pandemic is the virtual restaurant sector, driven by demand for in-home dining and food delivery services. A virtual restaurant is a restaurant that does not offer dine-in options to customers, but operates solely by offering delivery or pickup through online ordering and third-party apps, allowing customers to enjoy quality food in the comfort of their own home. A virtual restaurant can take a position within an already established catering business, sharing the kitchen space but offering a different (often niche) menu specifically for delivery and operating as a visible and very distinct brand on its own. whole. Or they may operate from a space often known as a “ghost”, “dark” or “cloud” kitchen where the sole purpose of the business premises is to serve as a meal preparation center for the restaurant. virtual and from which orders are shipped.

With the boom in virtual restaurant popularity, virtual restaurant brands are now making waves in the franchise world – either as an offshoot of an existing franchise restaurant chain or as a brand new virtual franchise brand. .

Many established on-site restaurant franchise brands quickly recognized the huge potential of the virtual restaurant brand. They and their franchisees already have the physical premises, the kitchen and staff in place as well as the business expertise, but most have been on a rollercoaster ride over the past few years due to the pandemic and other pressures such as supply chain issues. . Having the ability to explore new opportunities to increase revenue using their existing premises, team and expertise with relatively little additional capital investment is an attractive proposition for existing and new franchisees.

An example of this is Dickey’s BBQ, the fast-casual barbecue franchise brand that originated in Dallas, Texas in 1941. Dickey’s first launched its Wing Boss delivery-only concept in December 2020 as a strategy to support its existing franchisees during the pandemic. and provide them with additional potential income streams. It proved so successful that it was followed by the launch of the Big Deal Burger virtual brand, at that time, Laura Rea Dickey, CEO, said, “Dickey’s is actively creating innovative opportunities for our owner/operators to generate additional revenue. After seeing success with our first virtual brand, Wing Boss, we started exploring other delivery-only concept ideas. Big Deal Burger makes perfect sense to us. Our franchisees already have the right equipment to run it, so it’s a convenient way to capitalize on the growing delivery trend.”

Big Deal Burger has since been followed by Trailer Bird, a hot chicken offering. And, closing the loop, Wing Boss launched its first physical location in Texas in late summer 2021 and is now available as a virtual franchise offering to new franchisees outside of the Dickey’s network.

Stand-alone virtual restaurant franchises, also known as “ghost franchises”, are also hitting the market – often with some force! MrBeast is a celebrity YouTuber who launched Mr BeastBurger virtual brand in December 2020 and announced that he was launching three hundred restaurant franchises overnight. The model invites existing independent restaurateurs to support a Mr BeastBurger franchise to complement their existing kitchen operations, giving the new franchisee the benefit of celebrity exposure and strong negotiated agreements with third-party delivery apps to make place orders quickly. And even without celebrity endorsements, the ease and speed with which a partner kitchen can pick up and launch a virtual franchise brand makes it an extremely attractive proposition for the business owner looking to grow and generate revenue. quickly, often with the freedom to support multiple virtual brands depending on the terms of the agreement.

The lower start-up costs typically associated with a virtual franchise mean that a relatively new brand can enter the franchise market and scale quickly, and can offer its franchisees a seemingly lower risk investment than a traditional brick-and-mortar franchise. and mortar. However, as an industry in its infancy, the jury is still out on whether virtual restaurant franchises have the ability to remain a good long-term investment. Will they turn out to be a flash in the pan, or is there room for virtual and traditional restaurant franchises in these post-pandemic times?

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Cecil N. Messick