On the Line / Operations / What is a Virtual Restaurant?

What is a Virtual Restaurant?

Embrace the future with a delivery-focused virtual restaurant concept.

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Virtual Kitchen Hero

DISCLAIMER: This content is provided for informational purposes only and is not intended as legal, accounting, tax, HR, or other professional advice. You are responsible for your own compliance with laws and regulations. You should contact your attorney or other relevant advisor for advice specific to your circumstances.

Virtual restaurants aren’t the VR eateries you’re thinking of, where you can be immersed in a digital world while eating dinner. That doesn’t mean they aren’t just as cool and a great tool for your restaurant. Virtual restaurants might help you make the most of your kitchen’s take-out window.

We're providing everything you need to know about delivery-focused virtual restaurant brands and concepts with this detailed guide.

What are Virtual Restaurants?

Virtual restaurants are delivery-focused restaurant concepts that operate out of a brick-and-mortar kitchen. You’ll find them in the burger joint on the corner rather than the Metaverse.

Essentially, virtual restaurants are a facelift to a restaurant’s ability to diversify production and maximize revenue. Imagine a pizza restaurant that makes breakfast sandwiches for delivery until mid-afternoon. Separating the brands ensures both are focused and the kitchen's long hours are maximized for profitability.

That’s right – virtual restaurants are delivery-only brands that operate from the same kitchen as a traditional restaurant. Virtual restaurants allow brick-and-mortar businesses to pivot to meet the increasing demand for high-quality delivery.

Many customers don’t realize they are ordering from virtual restaurants or ghost kitchens because they interact with the brand entirely through delivery apps and marketplaces such as Toast Takeout

Why are Virtual Restaurants growing in popularity?

Delivery-only restaurants became popular as food service markets adapted to the COVID-19 pandemic. Customers demanded delivery options, and delivery services partnered with restaurants to create excellent delivery experiences.

Virtual restaurants and other delivery-only concepts fill a crucial niche in local communities – they help customers who can’t or prefer not to return to restaurants in-person access great meals.

As people extend their work-from-home indefinitely, demand increases more than ever for convenience. Delivery-focused virtual restaurants provide options at all times of the day, from breakfast to a late-night snack.

On top of that, the delivery-only model is flexible and encourages creativity and experimentation. Chefs who want to play with new flavors, textures, and cuisines can test them with less risk. 

Virtual restaurants provide flexible solutions for targeting specific delivery markets, whether it’s to test out a new brand or refresh the delivery experience from a long-standing restaurant institution.

Types of Virtual Restaurants

There are two main categories of virtual restaurants. We’ll call them virtual brands and virtual kitchens, although the industry has yet to settle on terms for this budding sector.

Virtual brands engage with delivery customers on applications and through delivery rather than in storefronts. This lets a restaurant serving food that doesn’t travel well compete in the delivery market. Virtual brands are also a great way to experiment – to test a new product or concept in a market.

Virtual kitchens are primarily a way for successful brands to expand their reach. For instance, a popular chain diner brand might offer delivery to customers out of their range by partnering with other restaurants equipped to prepare some of their menus. 

What are the advantages of a Virtual Restaurant concept compared to a traditional restaurant?

Virtual restaurants are popular because they offer distinct benefits to brick-and-mortar restaurants struggling to stay competitive amid the demand for delivery. They complement traditional restaurants, offering the best of both worlds. 

A virtual restaurant can give creative industry professionals a low-risk testing ground for new recipes or concepts. It allows you to test your exciting new ideas, like that Korean-Mexican fusion taco concept you’ve been dreaming of in your restaurant’s kitchen.

Grow your restaurant’s revenue by putting your kitchen space to work on two concepts simultaneously. Perhaps the demand for delivery has not been kind to your diner – virtual restaurants can keep your investment profitable by pivoting to meet demand.

What are the disadvantages of a Virtual Restaurant concept compared to a traditional restaurant?

Two (or more) restaurant concepts might get crowded under one roof. Here are three things to keep in mind:

  1. Running a virtual restaurant concept doesn’t take the same time or investment as a brick-and-mortar concept. But, it is another business you’re responsible for.
  2. Be careful not to overwhelm your staff by expecting your virtual restaurant to be an instant success – be patient and train your staff on delivery-specific expectations.
  3. Building dishes that travel well also sometimes means not having complete control over the menu. You can’t put sea kelp foam in a to-go box and expect it to be presented thoughtfully to the customer 40 minutes later.

Differences Between Virtual Restaurants and Ghost Kitchens

If virtual restaurants are delivery concepts that operate from the kitchen of a brick-and-mortar establishment, then what are ghost kitchens and cloud kitchens?

Ghost kitchens, also known as cloud kitchens, are 100% delivery concepts that operate out of shared kitchens or kitchen pods. Just like virtual restaurants, ghost kitchen brands are tailored to delivery.

The main difference is that ghost kitchens are delivery-only, whereas virtual restaurants operate from a hybrid dine-in and delivery space. 

How does a Virtual Restaurant work?

The logistics of a virtual restaurant take advantage of the popularity of third-party delivery services to create or expand operations. Your restaurant might already be fully equipped to start a virtual restaurant brand.

To start a virtual restaurant, you will need to:

  • Establish a virtual brand or partner with a well-established franchise to prepare a delivery menu in your restaurant's kitchen.
  • Partner with third-party delivery services and list your virtual restaurant on app marketplaces.
  • Have your virtual restaurant staff prepares meals and hand them off to delivery drivers.

Plated to Deliver

Let’s face it – that pork entree with the perfect balance of profit and pizzaz won’t pack the same punch in a plastic takeout tray. Virtual restaurants help you craft menus that deliver a restaurant-quality experience at home.

Think about things like the temperature of your dishes – the toastiness of the bun or the crust on that steak – and how the construction will hold up in transit. Design a menu that keeps customers satisfied and coming back for more.

How can I start a Virtual Restaurant?

Building a virtual restaurant requires the research and planning that a traditional restaurant brand requires. To guarantee success, you can't miss a step!

  • Conduct a market analysis – before you build a business, you want to check out the competition and local demand for your concept.
  • Build a business plan – business plans set you up to respond to all the risks and contingencies that come with operating any food service business.
  • Hire and/or train a staff – ghost kitchens might be able to run on skeleton crews, but be sure that you have enough skilled people for your business to operate consistently.
  • Build a sample menu – for testing, training, and fundraising.
  • Finance your virtual restaurant – while the startup costs don’t include a dining room, the right financing ensures your new brand’s success.
  • Localization – if you are developing a virtual restaurant brand with your sights set on expansion, think about how your brand will perform across markets, not just locally.

As you create your virtual restaurant plan, be sure to research the laws in your area. Your state, county, or city might have special laws on the delivery of prepared food.

Head over to our full article on how to start a ghost kitchen for a detailed guide to writing a ghost kitchen business plan.

How can a Virtual Restaurant help my business to grow?

When you operate a virtual restaurant out of your existing restaurant, you gain access to a section of the market that is unique from who you serve in your restaurant. You’ll sell different food to different people and gain new, loyal customers.

Virtual restaurants stand out on delivery marketplaces because their menus and prices match the market – the wants and needs of consumers – the same way your brick-and-mortar restaurant is.

Examples of Virtual Restaurants

Sam’s Crispy Chicken is one of the brands owned and operated by C3 or Creating Culinary Community, which operates several other virtual brands like Umami Burger and Krispy Rice. Some common features of C3 brands focus on simplicity paired with clever culinary fusion.

WowBao is an Asian street food brand that started in Chicago but was able to rapidly expand into 500+ dark kitchen and ghost kitchen locations. Steamed buns don’t require much equipment to prepare. Plus, their simple branding ensures they succeed in every market they reach.

Related Resources

Want to start a virtual restaurant?

Does a virtual restaurant sound like the perfect way to grow your brick-and-mortar’s profit margins? With the future of the restaurant industry prioritizing contactless efficiency, opening a virtual restaurant can be a wise move.

If you’re curious to learn more about virtual restaurants, check out all of our resources:

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