The way we purchase food from restaurants has changed considerably in recent years. The standard dine-in or takeaway, and sometimes a pizza delivered to your doorstep, have been rattled by the arrival of third-party delivery services like Uber Eats, DoorDash, Grubhub, and more. DoorDash leads the roster with 66% market share.
But it is not just delivery that has changed the landscape, all fueled by mobile apps and digital marketing. Restaurants have added their own twist to the saga with virtual brands. These show up on apps as nearby restaurants, but you would be hard-pressed to find them in real life, because there are no signs announcing their presence.
No, they exist only online and in a kitchen known by a different name.
Many of the big chains are doing it, like Chili’s (Brinker), Hooters, Outback (Bloomin’ Brands), Applebee’s, and Wingstop. Even children’s party palace Chuck E. Cheese does it, with their Pasqually’s Pizza.Imagine learning the next day that the pizza you had delivered last night actually came from Chuck E. Cheese. Yuck.
Denny’s has also ventured into these waters with Banda Burrito, The Melt Down, and The Burger Den. And now it has inked a deal with third-party facilitator The Franklin Group to expand these concepts across 250 franchisees in the Denny’s system.
To be fair, there has been a small shakeout in the virtual brands sector of late, with Red Robin terminating its concepts and sticking solely to its main brand. But that is not unusual in any industry for weaker concepts to be shed, and new ones to replace them.
Virtual brands allow a restaurant chain to make better use of under-utilized facilities, especially during parts of the day in which customer traffic may sag. Having complementary products can help fill out those peaks and valleys.
They also allow restaurants to test new menu items or concepts, as well as serve different markets. But in many cases, the product is pretty much the same as if you went to Hooters or Chili’s. It’s just in a different package.
Some might consider it disingenuous, even misleading, for a restaurant to employ virtual brands. Essentially, it could be considered as smoke and mirrors, and perhaps problematic if different pricing strategies are used for identical products. Imagine if CPG (consumer packaged goods) companies did that. There would be riots.
The range of food items falling into the virtual brands category is somewhat narrow, typically limited to pizzas, burgers, and wings. These travel well with readily available packaging. While the courier services will attempt to deliver just about anything—including menu items that might seep, spill, or swish around en route—it just makes matters easier if there is some standardization.
Virtual brands are not to be confused with ghost kitchens, although there could be an overlap in some instances. Essentially, a ghost kitchen is a commercial-grade kitchen at which multiple brands are prepared on shared facilities. There are variations on this as well, such as the one in Atlanta owned by Inspire Brands, and featuring the brands under its corporate umbrella, including Arby’s, Buffalo Wild Wings, Jimmy John’s, and Sonic Drive-In. DoorDash also owns ghost kitchens, which it typically leases to local mom-and-pop operators, and with whom it has exclusive delivery rights.
And if you are wondering, a food hall is kind of the same concept as a ghost kitchen, with shared food prep facilities among numerous small food service operators. It’s just that it is all visible to consumers.
Meanwhile, virtual brands continue to proliferate, much like craft breweries. They satisfy our urgings for something different. In the case of Denny’s and its burrito, burger, and patty melt brands, the food may be much the same as what you would order off the standard menu, but at least it sounds different.
You just didn’t know it. Until now.
Dr “Virtually Right” Gerlich
