International & emerging brands general manager Jarrod Appleby talks to QSR Media about the food group’s approach in creating virtual brands, including Burgers with Bite - now the largest concept of its kind in Australia.
Virtual brands, delivery-only concepts that leverage existing brick and mortar spaces, have proliferated across markets and touted as one of the latest trends to change the face of foodservice.
Whilst not entirely new, the COVID-19 pandemic shuttering dining rooms all over the country led to a paradigm shift towards food delivery and takeaway, making these concepts mainstream.
Major foodservice companies are taking it seriously, with Dine Brands, Bloomin’ Brands and Denny’s taking advantage of their infrastructure to diversify into the virtual kitchen world.
Locally, the clearest case would be Burgers with Bite by Minor DKL Food Group, currently housed in 200 The Coffee Club stores in Australia and 40 stores in New Zealand, making it the largest premium burger virtual brand in the two markets.
Speaking to QSR Media, Jarrod Appleby, the group’s international & emerging brands general manager, says Burgers with Bite was developed as an easier way to explore menu innovation and , appeal to a new target market, and acquire customer insights for the broader business.
“We felt that we needed a channel to innovate further within the burger category and fast casual space,” he said. “The Coffee Club is a predominantly breakfast, brunch and lunch business so there’s only so much space on the menu for us to test menu ideas. However, by leveraging a virtual brand we can test 20 ideas at once and fast-track customer insights.”
Wanting to get a bigger piece of dinner is also a factor, with Appleby seeing virtual concepts as a means to do so without adding labour costs.
“Profitability is paramount...you pay a delivery aggregator, so it’s critical to avoid adding any incremental labour. It’s also important that the opportunity leverages dayparts where you have staff on the roster,” he explained.
Burgers with Bite, officially launched and scaled up in 2019, is described by Appleby as a Street Fighter brand geared towards Millennials. During the height of the coronavirus crisis last year, Minor DKL also launched Sir Benedict, a brunch concept spotlighting eggs benedict; along with Burgs & Shakes, offering the namesake categories for family-oriented occasions.
Sir Benedict is so far live in 150 locations whilst Burgs and Shakes is growing with approximately 100 sites already live, he added. The group, Appleby revealed, is looking to test a number of new categories later in the year.
“Ultimately, we want to ensure in the beginning that the food is fit for delivery and that the concept doesn’t inhibit our store operations and customer experience,” he said, in reference to their criteria for launching a virtual brand.
Gaining incremental sales, insights on pricing
The larger business also gained insights on naming conventions around products and price points due to their trio of virtual brands.
“We have taken those learnings and implemented within our physical brand product mix as well. There’s been numerous examples where a product with proven success through our delivery-only channel made its way onto the physical menu at The Coffee Club,” he said.
The numbers speak for themselves. According to Appleby, some stores have increased their sales by up to 10 to 20% through leveraging virtual concepts.
“For franchise partners, they get the benefit of incremental sales. There’s limited cannibalisation, because it’s a completely different brand to their home brand and in most cases, attracts a new customer that they previously didn’t have. That is by far the key benefit,” he added.
There have also been unique cases outside of the country where virtual concepts have proven to thrive without the benefit of a proven restaurant brand. This is exemplified by MrBeast Burger, tied to the eponymous YouTube content creator that rapidly opened 300 U.S. locations in December, opening the door to celebrity/influencer-endorsed concepts.
Whilst the group is open to a similar case, Appleby said their focus remains on delivering a high quality product that is fit for purpose.
“Celebrity endorsements are a great way to grow your brand quickly. But ultimately, if you don’t have fantastic food offers that can be delivered hot, then it’s just not going to work.”
Appleby also ruled out the idea of franchising its virtual concepts outside of Minor DKL’s network.
“At this point of time, our strategy is to leverage our existing businesses in our own locations. So it’s not on our roadmap yet, but we look at it with interest.”
Burgers with Bite's Double Stacked burger. Photo: Supplied
Treating virtual brands as “real” brands
Commenting on virtual brands as a whole, Appleby says the space is still evolving and expects it to be more prevalent. The challenge for those interested for long-term growth, he says, is to ensure such brands are treated as “real” brands.
“You can’t just put a name on Uber Eats and create a menu. That may drive sales in the short term, but it will not drive sales in the long term. I’ve definitely seen that with other companies; they’ve created it just as a way to drive sales. And that’s probably the wrong way of looking at it if you want it to be a longer-term initiative,” he explained. “When we’re creating a brand, we’re creating a real brand and a tailored customer experience.”
Moving forward, he expects Minor DKL’s virtual brand portfolio to have a larger international presence.
“Minor DKL wants to be the leader in the virtual brand space. I can certainly say that virtual concepts will become a bigger part of our international strategy in relation to convenience and delivery. Burgers with Bite is already quite successful in New Zealand and I can definitely see it expanding more globally. The Coffee Club has 13 markets globally so we should be looking at virtual concepts, rolling out into more countries.”
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