Operations

The virtues of virtual kitchens, plus a few myths revealed

Restaurateurs are popping out virtual brands today like candy from a Pez dispenser, leaving more than a few misconceptions about these concepts in their wake. Here, a virtual kitchen company executive sheds light on some of those myths as well as the virtual brand's many virtues.

Some of the virtues of virtual kitchen brands have gotten buried in the many misconceptions about them. (Photo: iStock compilation)

December 1, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

Whether you refer to your kitchen-only delivery concept as a ghost, cloud, dark or virtual kitchen, the business model remains essentially the same in that these restaurants only physically exist as production and distribution points. As hard as these concepts are to wrap your head around as physical entities, lots of restaurateurs and entrepreneurs have fully put their faith in them.

We speak here of everything from Ghost Truck Kitchen, a New Jersey-based virtual restaurant brand that partnered with a plant-based product provider, to deliver samples to the public, to brick-and-mortar casual dining concepts, like Smokey Bones, which spun off virtual brands.

Brands that want to start a virtual brand don't have to go at it alone thanks to companies, such as UberEats, which are happy to help with step-by-step guides.

Before going that route, however, operators could make a virtual stop at a restaurant name-generating site like BNG, where they simply put in the concept's primary attributes. and BNG spits out lists of possible names for your brands, like "Homemade Dude," which it generated when I put in "vegetable, comfort, artisan and homemade."

"Business models like Kitchen United are good for the restaurant industry because we help operators create a low-cost, streamlined business channel to expand their reach and/or offload congestion at their traditional brick-and-mortar location."
-Joy Lai, Kitchen United

Yes, it's the age of instant-restaurant generation folks, but before you fritter away an entire day of fruitful work on BNG, take note that some companies that were in the virtual restaurant space before the pandemic say entrepreneurs and other business people, need to be wary of the fact that all this heated ghost kitchen activity might be spawning a few potentially dangerous business myths.

Joy Lai, COO of Kitchen United — a virtual kitchen concept born born three years ago in the pricey restaurant-realty markets around Pasadena, California — having a clear understanding of what these concepts can and cannot do now will make all the difference later in the business's successful execution.

Joy Lai (photo provided).

See below to read out interview with her.

Q: Let's just pull the pants down on some of these myths right off the bat, beginning with the notion some have that these are less-than fully professional foodservice brands?
A:There seems to be a blanket assumption that facilities set up for take-out and delivery are dark, unregulated, unclean, unsafe and a bit sketchy, which appears to stem from a veil of secrecy among some companies in the industry. ...

We actually aren't big fans of the term "ghost" or "dark" kitchen, which implies an unwelcoming and mysterious facility. Our facilities — or "kitchen centers" as we call them — have a local neighborhood presence, consumer-facing brand and a dedicated front-of-house with kiosks for walk-in ordering, staff members to address any questions and a well-organized area for order hand-offs.

In the back-of-house, we have 10-16 separate kitchens with different restaurant brands all staffed with their own team members. We often equate our model to a food hall — there's just no hall.

Virtual restaurants are brands that offer food for delivery and/or takeout only without a traditional brick-and-mortar set up. Oftentimes these are brands that were started by or spun off an existing traditional restaurant brand.

Q: What other commonly held beliefs about these concepts do you think do these businesses an unearned disservice?
A:Another myth is that these facilities should be located in massive warehouse facilities on the outskirts of town. In our site selection process, we favor densely populated areas right off "Main and Main." This makes our kitchen centers accessible and visible to delivery personnel and consumers alike.

For delivery service personnel, traveling a long distance to and from the outskirts of town costs them time and money, and they end up delivering cold, soggy food, which can lead to dissatisfied customers.

Another myth is that facilities like ours threaten the traditional restaurant model. Kitchen United is made up of restaurant people, and everything we do is to support our partners and the industry as a whole. While we see great opportunity for our model, we believe there will always be a place for dine-in restaurants.

Human beings are inherently social and will continue to meet with loved ones around a table at their favorite restaurant for a long time to come. Our aim is to support the success of restaurants with a new and cost effective business model.

Q: Alright then, why are they good for the industry and what typically attracts entrepreneurs or restaurateurs to this restaurant model?
A: Business models like Kitchen United are good for the restaurant industry because we help operators create a low-cost, streamlined business channel to expand their reach and/or offload congestion at their traditional brick-and-mortar location.

The pandemic further increased the need for and adoption of delivery and take-out with mass shuttering of dine-in or limited capacity. Off-premise has proven an effective way to keep business going during these challenging times.

Q: So you have a lot of experience with these types of businesses and the people who lead them, and I'm wondering if you could tell those considering a virtual brand where to start to determine their idea's ultimate feasibility?
A:First and foremost, you should be sure there is demand for your cuisine in the specific market area where the brand will be established. If the city you are looking to start a new concept in is full of chicken wing concepts, you should go for a different type cuisine or even daypart so as not to enter an already crowded arena.

Kitchen United collects and digests data for all of our locations specific to cuisine preference, demographics and other insights that support the success of our partners. Consider too that if you launch a menu and it doesn't perform as well as you thought it would, you can often swiftly adjust your offering … given an inherently limited menu scope, ingredient needs and streamlined staffing.

"There seems to be a blanket assumption that facilities set up for take-out and delivery are dark, unregulated, unclean, unsafe and a bit sketchy, which appears to stem from a veil of secrecy among some companies in the industry."

Q: Speaking of staffing, what types of guidance can you offer relative to that subject for virtual brands?

Kitchen United location with a prominent front-of-house presence. (Photo provided)

A:Focus on how you can optimize labor for your menu mix and don't be afraid to switch up the way you would typically do things in your traditional brick-and-mortar to accommodate for the smaller space dedicated to pick-up and delivery only.

Importantly, you will need to bolster a winning marketing strategy for your brand so that you can gain consumer awareness and loyalty without traditional brick-and-mortar marketing signage.

Q: Now Kitchen United actually does put quite a bit of emphasis on the physical kitchen centers or food preparation facilities that house a collection of virtual brands and I wonder if you can tell us why that was important.
A:Our kitchen centers … have a local neighborhood presence, consumer-facing brand and a dedicated front-of-house with kiosks for walk-in ordering, staff members to address any questions, and a well-organized area for order hand-offs. In the back-of-house, we have 10-16 separate kitchens with different restaurant brands all staffed with their own team members. We often equate our model to a food hall – there's just no hall.

Q: Why is walk-up so important to your business model, since that level of presence is not shared by all virtual brands?
A:Takeout makes up 35%-40% of the business at our kitchen centers. There has been such excitement around delivery, but we often forget the opportunity for another important piece of off-premise business that is takeout from consumer orders either as walk-ups, or via digital ordering in advance.

Walk-up and takeout orders are important to the overall revenue mix for a restaurant because they remove the higher commission costs third-party delivery services charge restaurants for delivery. Lastly, walk-up traffic illustrates the welcoming and transparent setting we provide for everyone who enters our kitchen centers.

Q: Marketing remains a challenge for this online-prioritized restaurant concept so are there any things you do at Kitchen United centers that you think helps makes this vital business component work better in the virtual setting?
A: There is an inherent challenge in building brand awareness in a facility like ours, as consumers are still learning about the model and we do not have the traditional brick-and-mortar signage that helps with brand exposure. This is why it's key for our partners to have an aggressive digital customer acquisition strategy and invest in their "digital storefront" such as their social media, Google My Business and Yelp listing.

We do everything we can to bolster visibility for all of our operator partners through the signage we facilitate outside and inside of our facilities and as part of our direct to consumer marketing effort which includes hyper-local grassroots marketing and digital advertising done on behalf of our restaurant partners. Ultimately, when the restaurants succeed, we succeed, so we work hand-in-hand with them to build their brand visibility.

About S.A. Whitehead

Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.