For restaurant operators, 2022 will be a pivotal year filled with promise, challenges, and change. It’s promising because as coronavirus cases continue to decline, medical experts believe the pandemic phase of COVID-19 is nearing an end, and that means a full return to in-person dining cannot be far behind.
That’s certainly welcome news for restaurant operators who faced unprecedented challenges during the past two years. But, what does that translate into for virtual restaurants, which boomed during the pandemic? How large of a role will they play in the industry’s future? As more customers return to in-person dining, will consumer interest in ordering from ghost kitchens and virtual restaurants wane? And, what will it take to remain relevant amidst all the changes ahead?
We spoke with two leading restaurant industry experts about what they believe is critical to navigating the transition back to “normal” and how to come out on the other side profitable and with even more potential than before COVID.
It’s a Digital World. Embrace It!
As is often the case…necessity is the mother of invention. That was certainly the case for restaurant operators who had to pivot in a significant way during the pandemic just to survive. Unfortunately, many didn’t survive COVID shutdowns and an estimated 90,000 restaurants in the U.S. remain either temporarily or permanently closed. Those who did survive relied exclusively on takeout and delivery, which became their lifelines. And, since delivery service isn’t something most restaurants offer, they turned to third-party delivery service providers (DSPs) with their user-friendly apps for help. In fact, while most industries struggled during the pandemic, the food delivery service and app market saw explosive growth. In a recent survey focusing on delivery and digital ordering, nearly 60% of consumers said they use a mobile app when ordering takeout. What’s more, customers surveyed said they’d welcome even more technology and would be open to automated voice ordering and even robot or drone-delivered food.
No one knows better about the benefits associated with embracing the new digital-enabled era than Marc Butler, Senior Vice President of Strategic Planning at HOA Brands, which is the franchisor of Hooters, as well as the fast-casual brand, Hoots Wings.
Butler says virtual restaurants are a real trend in the industry right now and one he doesn’t see going away. HOA isn’t new to the virtual restaurant space, having launched its first virtual concept four years ago, after being approached by a DSP eager to add more virtual brands to its platform.
“Uber Eats came to us with a unique proposition involving virtual brands and the Dallas market. At the time, they were seeing a high degree of searches for burgers via their platform, but said there weren’t enough burger concepts to meet demand. Dallas is an important market to us, so we decided the time was right to develop a virtual concept focusing on burgers.”
Butler said while burgers are something that’s always been on their menu, a lot of people didn’t know they sold burgers. “So, we developed our first virtual restaurant concept: Hootie’s Burger Bar. We started testing it, initially in the Dallas market and ultimately, because of promising sales, we expanded it through our entire system. And, today, burgers account for about 10 percent of our total sales.”
Post Pandemic Rx for Virtual Restaurants
Virtual restaurants, like Hootie’s Burger Bar, as well as thousands of others, exist exclusively online and are delivery only. Orders are placed via DSP apps, the restaurant’s own app or the restaurant’s website. For existing brick and mortar restaurants, rolling out a virtual brand is an ideal way to capture incremental sales without the overhead costs associated with opening a new restaurant.
“Restaurant operators often ask me whether virtual brands are right for everyone, and my answer is they can be,” says Gregg Brickman, Corporate Executive Chef with Henny Penny. Before joining the leading global supplier of commercial foodservice equipment, Brickman was Sr. Director of Culinary Innovation at HOA Brands. He also worked with the renowned chef Wolfgang Puck.
Apart from staying abreast of trends and technological advances, Brickman and Butler say there are three primary things operators should focus on to ensure their virtual restaurants remain relevant:
Focus on What You Do Best.
Yes, it’s important to know the market and identify any existing opportunities, but Brickman says because it’s delivery, you lose control after the order leaves the restaurant. “Reserve the ultra-innovative, elaborate recipes for in-restaurant dining. With virtual restaurants, what you want to focus on is simplicity because with home delivery, what I’ve found customers want the most is great tasting comfort food.”
Brickman says you’re never going to get something that’s quite as good as what you’re served in a restaurant. But he says a dish that’s as close to being restaurant quality delivered to your house is the next best thing. Achieving that isn’t easy, but Brickman says having the right equipment is integral to ensuring consistency. “The biggest things with chefs are consistency and control. And, with home delivery, you’re losing part of that equation.” Brickman says with Henny Penny’s fryers and combi ovens, restaurant operators get the features they need to deliver the consistency their customers want.
Henny Penny Fryers
Brickman says there’s a reason the biggest names in foodservice fry with Henny Penny. “Our fryers aren’t just metal boxes that heat oil up to 350 degrees, they come equipped with automatic top off, and when you introduce fresh oil, they maintain exact, consistent temperatures. You also have automatic filtration, which filters out impurities, ensuring that the first guest gets the same great tasting food as the last guest.”
Henny Penny Combi Ovens
The FlexFusion Platinum Series Combi Oven is another product Brickman says will help virtual restaurant operators ensure consistency. “Our combi ovens come equipped with more than 250 recipes programmed right into the units. So, whether you’re baking, steaming, roasting, grilling or sous vide a dish, it’s going to help operators produce the same consistent product time and time again.
Keep it Simple!
With HOA Brands, which now has three virtual restaurants and is posed to open more in the future, Butler says understanding what you want to accomplish is essential. “I’d recommend starting by looking at your existing menu and asking yourself ‘what do I want to build awareness of?’ In our case, it was burgers.” Above all else, Butler says keep it simple and avoid “crazy” builds with 10 or more ingredients, which will only complicate things from an operational standpoint and overwhelm the customer.
Is It Worth It?
In the restaurant industry, where profit margins have historically been extremely tight, today’s operators now have to deal with increasing costs brought about by inflation, not to mention grappling with staffing and supply chain shortages. So, in the final analysis, is investing in a virtual brand worth it? Both Brickman and Butler agree that no matter if you’re a mom and pop single unit restaurant or a global brand with hundreds of stores worldwide, virtual restaurants can bolster profits. “At HOA Brands, it’s definitely been worth it. For all three of our virtual concepts, we have data that suggests a high percentage of these orders are incremental. Almost three quarters of the orders are placed by customers who have never ordered from our core Hooters brand before.”
To put the profit potential in perspective, Butler says their three virtual restaurants are generating about the same volume associated with several established brick and mortar Hooters restaurants.
“In the virtual restaurant space, the profit potential might not be in the tens of millions of dollars, but with the incremental sale, a lot of smaller numbers can add up to something big.”
Ready to explore the possibilities of virtual restaurants? At Henny Penny, our global network of distributors can help with everything from menu development and implementation to calculating your return on investment. Click here to find your local distributor and get started.
The post The Future of Virtual Restaurants in a Post-pandemic World appeared first on Henny Penny.