Try searching for a place to enjoy food from MrBeast Burger, Tyga Bites, or Guy Fiere’s Flavortown Kitchen, and you won’t find a single physical location to dine at. That’s because these restaurants—some of the hottest new brands in the country—don’t have any dine-in locations.
Instead, these virtual food brands rely on the internet, ghost kitchens, and delivery services to fulfill orders. Virtual food brands are anything but traditional, and they’re catching on.
So, what contributed to the rise of virtual brands, what makes them so profitable, and how can you profit from virtual brands without creating one from scratch?
We answer these questions in the paragraphs below.
Why are virtual food brands so hot right now?
What caused the boom in virtual food brands? Here are a few factors:
- An increase in the number of ghost kitchens, which slash some of the main costs associated with typical restaurants. These kitchens exist to fulfill online delivery orders only. They caught on rapidly when the pandemic forced customers to go online with their food ordering. Ghost kitchens don’t include any space for guests to dine in, and they can set up shop in places where rent is exceptionally cheap, like parking lots and unused retail space.
- The proliferation of smartphone technology, which makes ordering food fast and easy. If you have access to a smartphone, you have access to a restaurant.
- The rise of third-party food delivery apps that make it affordable and easy for customers to order food online. Ordering through an app doesn’t require chopping veggies or wading through traffic.
- The proliferation of the gig economy, which created both the supply and demand for part-time workers to deliver food
- The growing amount of underutilized retail space and kitchen space
- The COVID-19 pandemic, which accelerated the shift toward online ordering (out of necessity)
- A general decline in at-home cooking, which has been in progress since the rise of highly processed foods that grew in popularity after the second World War.
Beyond that, people in the Western world crave convenience and time savings just as much as they crave food from their favorite restaurants. Why’s that?
According to research done by Harvard professor Ashley Whillans, people today feel like they have less time than people in the 1950s. That remains true even though we work fewer hours per week compared to workers in the 50s.
So, when a company comes along and promises they’ll deliver quick, affordable, nostalgic food without us needing to put down our phones or get in a car (or call anyone), we’re in the perfect place to say “yes” to that offer.
These circumstances created the fertile ground that virtual brands need to thrive.
What makes virtual brands so profitable?
Here’s the answer: Virtual brands slash the most significant costs associated with the traditional restaurant model. The factors below also contribute to the profitability of virtual food brands.
- Virtual brands do not require large kitchen spaces or any front-of-house space, which means they pay significantly less rent compared to traditional restaurants.
- Virtual brands are incredibly nimble. They can operate out of a food truck, un-used space in a strip mall, existing restaurants with more space than they need, hotels, and trailers parked in convenient locations. They can locate wherever, and they benefit from operating close to their customers.
- Virtual brands operate a limited menu, which lowers the cost and effort of maintaining a more extensive menu and inventory. Limited menus also save on training costs because they’re easier to learn how to cook. Smaller menu = less training time.
- Virtual brands do not require any front-of-house staff—no hosts, servers, or cashiers required. Cutting back on labor is where virtual brands save the most on costs.
- Once a chef finalizes the menu, virtual brands only need a few line cooks to prepare food and get it out the door.
- Virtual brands can cut even more costs by ordering bags of pre-prepped ingredients (like chopped vegetables), which eliminate the need for keeping another prep cook on the payroll.
- And since they collect every order through a smartphone app, virtual brands make it extremely easy for customers to add extra items to their orders.
Imagine this: You’re about to click “buy” on a virtual order when a little box pops up on your phone that asks something like, “Add a discounted dessert to your order?” It’s tough to say “no” to that!
And that’s after you already said “yes” to the suggestion earlier to buy a unique appetizer that the ordering app suggested when you logged on.
Can you profit from a virtual brand without being a venture capitalist or creating a brand yourself?
Although creating a virtual brand offers one way to profit from this trend, it’s not the only way. Existing restaurants, hospitals, hotels, schools, and other facilities with commercial kitchens can earn extra revenue by providing kitchen space to ghost kitchens and virtual brands.
Many different organizations are already earning revenue by leasing their space to the ghost kitchens that cook meals for virtual food brands.
These organizations and facilities include:
- Hotels & resorts: By leasing their unused or under-used kitchen space to ghost kitchens and virtual brands, hotels and resorts can create an extra stream of revenue.
- Restaurants: Whether they’re slow on business or they just have extra space, restaurants can lease space to ghost kitchens and virtual brands. Or they can have their staff cook virtual food brand menu items on behalf of the brands. The brands will give the host restaurant a cut of each sale.
- Underutilized or vacant retail space: The retail apocalypse is in full swing, and strip malls have taken a real hit. But these spaces can be retooled into commercial kitchens that cook for virtual food brands. Ghost kitchens love operating out of these spaces because of the affordable rent.
- Food truck owners: If food truck owners want to cook for virtual food brands or lease their kitchen to one, they have options. Many virtual food brands are looking to partner with food trucks because of their mobility and because they’re affordable to rent.
- Breweries, bars, and cafes: As with restaurants, these businesses might have extra kitchen space to lease out to ghost kitchens during their off-hours. If a brewery opens at 2 pm on the weekdays, it can lease its kitchen space out to a ghost kitchen before the doors open for customers.
- Mobile kitchen owners: Mobile kitchens offer the perfect place for ghost kitchens and virtual brands to operate. You can move them anywhere—including places like parking lots—where rent is cheap and delivery drivers have easy access.
- Community centers & religious facilities: These places host a lot of big events, which means they likely have commercial kitchens that—even when used regularly—still sit idle for days or weeks at a time. These places can earn additional money for their communities by renting kitchen space out to ghost kitchens and virtual brands.
- Schools & hospitals: Although these kitchens see a lot of use, they might still have extra space to spare. And if they do, they have the opportunity to host virtual brands. Both schools and hospitals have hours where they’re less busy, which offer good opportunities for ghost kitchen staff to make meals. If a school kitchen is vacant after 4 pm, for instance, it might offer the perfect location for a dinner-only virtual brand.
Interested in ghost kitchens & virtual brands? We can help…
There’s more to running a successful virtual food brand other than finding a good location. You need a certain number of basic supplies on hand to keep the operation running smoothly.
That’s where NCCO can help.
We’ve been supplying ghost kitchens and virtual food brands with affordable, practical everyday foodservice solutions since the very beginning.
Whether you need tamper-evident labels, automated labeling systems, or register rolls and ribbons, we have you covered.
To discover the supplies that every ghost kitchen and virtual food brand should have on hand, check out Need to Know Ghost Kitchen Essentials: Equipping Your Cloud Kitchen for Success.
And if you’re interested in learning more about ghost kitchens, we have just the resource you need: What’s the deal with ghost kitchens?