“Virtual restaurants are all about search engine optimization,” said Aaron Noveshen, CEO of Starbird, and founder and chairman of The Culinary Edge, a leading restaurant consulting company.
Nowhere is that more evident than in Starbird’s virtual branding. “Our brand is called Starbird. Our virtual brand is called Starbird Chicken,” to make it easier to find on a delivery app, said Noveshen. Starbird also operates the Starbird Wings, Starbird Salads and Starbird Bowls virtual brands, all for the same purpose.
All those virtual brands have been a boon for Starbird in other ways as well. “We couldn’t do ghost kitchens without multiple brands,” said Noveshen. Read more about Starbird’s virtual brands here.
Dog Haus, a beer hall concept, took a similar approach to build out its family of virtual brands. “We dissected our menu,” said Andre Vener, a co-founder of the company, and launched several virtual brands based on specific menu items. The company recently launched The Absolute Brands, a holding company for its virtual restaurants, which include Bad Ass Breakfast Burritos, Bad Motha Clucka, and Big Belly Burgers.
While Dog Haus’s adventures in virtual brands have paid off, it wasn’t always so successful. “Our SKUs started getting bigger, we started adding new kitchen equipment,” and “six months later we said stop. We already have a proven concept. What are we doing?” said Vener. Dog Haus refocused, limiting itself to ingredients it already had, equipment it already had, and emphasizing efficiency.
“We literally built our brands off of having the same people standing in the same position in the kitchen” to maximize efficiency, he continued. To launch Bad-Ass breakfast Burritos, they added just one item, a 14-inch flour tortilla, filling the burritos with ingredients they already had in stock. Noveshen said Starbird pulled off a similar feat, launching Starbird Bowls with only one extra ingredient: a brown rice and quinoa blend to form the base of the bowls.
Vener said Dog Hause ended 2020 with sales up 13.5 percent, largely off the strength of its virtual brands. That’s a strong intra-pandemic performance for a company whose core business is beer halls.
Another pitfall to avoid? Launching a virtual brand without enough marketing behind it. “You have to treat it just like a restaurant,” said Vener, and open with the same level of public relations and marketing fanfare. It’s not as simple as flicking a switch and activating third-party delivery, which Dog Haus learned the hard way, he said.
Vener and Noveshen were joined on stage by Tom
Krouse, the CEO of Donatos, and David Bloom, the chief development officer for Capriottis and Wing Zone, with Franchise Times Senior Editor Beth Ewen moderating.
Rather than building delivery-only kitchens, Bloom said he preferred to partner with companies such as REEF, Kitchen United and CloudKitchens to expand delivery reach. By partnering with third-party providers, the capital investment is lower, which “hopefully provides a better rate of return,” he said. “It works about half the time.”
Even without a physical storefront, restaurants are an expensive business to be in. “To be candid, our breakeven is about half of what our retail stores usually do” in sales, said Bloom.
Donatos’ delivery-only operations were the most unorthodox of those on stage. The company partnered with Red Robin to sell Donatos pizza out of Red Robin’s kitchens. It’s able to service 80 percent of its menu with just 250 square feet of kitchen space, said Krouse.
The partnership came together in 2017, and Donatos is on track to be inside all Red Robins locations by the end of 2022. In addition to driving sales, the partnership is significantly expanding Donatos’ reach. Krouse said that for the first time in the brand’s history, Donatos is able to sell franchises across the United States.
To end the session, the panelists reiterated the need to get the basics right. “Everything we talked about is just stuff to do with stuff,” said Bloom. The food still needs to taste good and travel well, and the right people still need to be in the right seats.
The Food On Demand Conference, presented by Food On Demand, Franchise Times and the Restaurant Finance Monitor, ran November 10-12 at the Bellagio in Las Vegas. Read more coverage from FODC here.