Ghost Kitchens are professional commercial facilities typically used for preparing delivery-only meals. Although some ghost kitchens are now offering pick up or shared outdoor dining spaces, it is best to think of a ghost kitchen as a shared kitchen (typically commissary space) used by multiple brands. Picture a hotel; only instead of rooms, identical cooking suites are available to rent designed for restaurant brands looking to expand their off-premise sales without adding to their brick and mortar overhead with an outpost to extend their delivery reach. Regional hot dog chain Dog Haus is planning to expand nationwide but it’s newest locations won’t have a dining room or bar. Instead they are using ghost kitchens “devoted to off -premise sales without a dining area, to grow it’s delivery footprint.” Through a partnership with Kitchen United, concepts from Chick-fil-A to Outback to Carrabba’s and Famous Dave’s are utilizing ghost kitchens as a “strategy for growing off-premise orders without burdening their already busy store locations” The Halal Guys and Canter’s Deli have spots at Kitchen United’s Pasadena, CA location.
A virtual brand is a delivery-only food concept sold exclusively online with no physical space for guests to interact with the brand. A single restaurant can have multiple virtual brands running out of their facility with all meals produced in their existing kitchen. This model allows operators an opportunity to lean in on food trends and leverage staff and facility capabilities to create a new branded experience that extends their audience reach beyond their core concept. Some estimate there are about 100,000 of these types of restaurants currently in operation, with more being launched every day. Take “It’s Just Wings,” a wings and deep-fried Oreo brand on Doordash, which is coming to you from more than 1,000 Chili’s and Maggiano’s kitchens.
Krispy Rice, an offshoot of Katsuya, a 13-unit sushi concept originally from Los Angeles has designed a $30 bento box designed to compete against higher-end sushi delivery like Sugarfish and is currently operating out of pre-existing Umami Burger and Katsuya locations.
Krispy Rice is a new delivery-only bento box brand spinoff of the Katsuya franchise. (Source: Krispy Rice)
Commonalities between the Ghost Kitchens and Virtual Brands
A virtual brand could be produced within a ghost kitchen. If a ghost kitchen, or shared kitchen space offered pickup of shared outdoor dining spaces, they wouldn’t be considered a “delivery-only” brand. However, there are distinct differences between the two and varying sales tactics to drive delivery-only sales.
Sales Tactics for Delivery-Only Virtual Brands
Target Market Evaluation
For delivery only brands, you are at the mercy of your delivery radius. The radius varies based on the marketplace (Doordash, UberEats, Postmates, Grubhub etc.), but the standard is 5-15 miles or estimated drive time. Understanding your market will help you build successful menus. For example, if there is demand for hot chicken in your area – and also a void in the market, this may be a virtual brand concept to explore.
To succeed as a virtual brand, you need to ensure your menu is optimized for each marketplace platform. Each marketplace will have a different strategy to ensure success. This strategy may include creating multiple virtual brands under your brand umbrella to ensure menu segmentation. Menus should be optimized to drive profitable sales, including copywriting, descriptions, allergens, tags & menu item names.
One of the most important aspects to a successful online-only, delivery-only brand is high quality, beautifully styled and appetite appealing photography. We do not recommend including your packaging in these photos.
Another critical component of any successful delivery only brand is the packaging. You need to ensure your items travel well. Hot food arrives hot, and cold food arrives cold. We have all heard the frustration with how to deliver crispy french fries or pesky items like burgers properly. This can be accomplished! Work closely with your packaging representatives and ensure you select packaging with proper ventilation. Always ensure your bags are sealed and tamper-resistant.
One of the main reasons operators do not want to join a delivery-only marketplace is high commission rates. These rates can range anywhere from 12%-30%. Most menus were never built with these types of margins in the first place, let alone now adding packaging costs into the mix. We recommend you look closely at your menu mix and either eliminate items that are not profitable or create new menu items. If you are creating a new virtual brand, always build in the highest possible commission rate.
It is good to note that you never have to offer your entire menu on a delivery marketplace. You can create a delivery specific menu for the platforms and have particular menu items only available if your guest orders direct. You can also include groceries, family meals, or special “date night” menu opportunities.
Training and Consistency
Kitchen operations and consistency will be the central focal point of your virtual brand or ghost kitchen. They will need essential training materials such as a safety program, packaging guidelines, a checklist for daily operations, gluten-free and allergen training, and menu item rollouts.
Not having the ability to create a guest connection in the traditional sense can be another reason brands prefer not to be on a marketplace platform. You will need to find new ways to connect with your guests. This can include a handwritten note, swag, offers to order directly, a small dessert, or anything else to show your guest you value them and are grateful they have chosen to order from you.
3rd Party Tactics
In the beginning, it is imperative to drive as many orders as you can to ensure you stay high on the marketplace algorithm. Put together a marketing budget and plan to achieve 100 orders in the first few days. This budget can include offering free delivery, BOGO deals, or X item with the purchase of another. You want to deliver a perfect experience each time to ensure you have all positive reviews as a few negative reviews will hinder your chance of success on each platform.