How to make virtual brands work for you, according to Minor DKL, Concept Eight, Piccolo Me and P’Nut Street Noodles
Executives share key tips on what to think about when considering this model.
Once a fringe idea, the continued success of virtual brands across markets has restaurant brands experimenting with their own set of delivery-only offerings.
Locally, how can chains who are considering an entry in this growing space make these concepts work for their existing portfolio?
A key step is ensuring it is “complementary” to one’s current operations, as explained by Concept Eight CEO Grant Lee.
“We found that the virtual brands work best in our most successful businesses that had strong operations to begin with. They couldn't solve the problem of a poor performing restaurant,” he said. Lee revealed the company is going through a refurbishment program that sees them increasing the size of their kitchens and reducing the size of their dine-in areas
“We don't need the big dining rooms anymore because we're doing a lot more business in home delivery and takeout. I think that's something to consider,” he added.
Aside from understanding one’s target market, making sure staff and kitchens can handle the extra orders is important as well.
“Once we switched on virtual brands and started moving into burgers and stuff, it was a real shock to the system because we were used to making three, four or 500 coffees a day and now we're doing one [to] 200 burgers. For us, it was a real learning curve,” Piccolo Me co-founder Charlie Hachem shared, recalling the company’s experience during the early stages of the first major lockdowns.
Currently, they have a catalogue of seven virtual brands spread out across 28 of their brick and mortar cafes. Their new company Go Dark aims to support other physical sites that want to dabble into virtual brands.
“It's very important not to just just go in as a full-on virtual brand unless you're a dark kitchen where that's your corporate business model,” he added.
Jarrod Appleby, chief growth officer of Minor DKL Food Group—which has three virtual brands and has a few more in development—stressed the benefits of having a clear objective for the brands and a proper tech stack.
“We understood that there were opportunities in leveraging virtual brands in complimentary dayparts, which basically means looking at dayparts that perhaps you're not as strong,” he explained.
“It can't just be a name on an Uber Eats page. You've got to actually put a little bit effort on creating something that's a real brand,” he said. “We certainly see further opportunities across a lot of different dayparts and different demographics.”
P’nut Street Noodles founder Ankur Sehgal advised a data-driven approach in determining what categories can work to complement one’s existing range. The brand has launched one virtual brand with more to come over the next months.
“We worked with Deliveroo. We got a list of items that they said, as we suggested a menu to them, ‘Okay, this is more searched, these are things less searched’,” he shared.
“One of the things we have been able to do quite lucky at was being able to leverage that data even across our non-virtual business.”
The executives’ comments were part of the QSR Media Sandhurst Conference’s first ever Virtual Brands panel, held last October 18. Other inquiries they responded to included the rise of celebrity virtual brands, further synergy with third-party platforms and relevant changes to franchise agreements as a result of the creation of delivery-only concepts.
