The industry can add two more novel virtual restaurant companies to the list. The first, a revenue-sharing model, Trivr Eats. The second is the first legally defined virtual restaurant franchise: Local Culinary. Both emphasize speed to market and a focus on high-quality culinary offerings, but with their own special operational models.
Trivr founders Frank Chiodo and Brady Grover said they’re looking closely at the small independent operator who has plenty to do aside from coming up with a new virtual brand.
“One the initial questions is, ‘Can you take 50 to 100 more orders?’ The answer is typically, yes,” said Grover.
Not many restaurants would say no to more orders, especially as the number of restaurants per capita remains high and there is a lot of excess capacity in kitchens across the country, not to mention an ongoing lack of in-house dining. Getting more orders for the core menu would be nice, but Grover said that’s not always easy, especially for concepts with food that doesn’t travel especially well.
“It becomes a question of how do you take those orders? How do you get more people in with the same model or keep doing what you’re doing and add a new revenue stream with a great product that travels well that we know is purchased and can be that lift on the third-party apps,” said Grover. “We can plug you into something that is really easy.”
He said the company has created a small stable of brands that they know work on third-party delivery platforms and have marketing plans that send people toward the order button. It’s doable by any restaurant operator, Grover stressed, but the investment in time and money to develop those skills can be prohibitive. Spotting trends in the data is another key, as much of the data is hard to get and harder to analyze. Much of the team has a deep background in data and tech that they use to essentially outsource the geekier overhead to Trivr instead of the restaurant.
The company charges no upfront fees and there is no cost to operators until sales start rolling in. Grover said they wanted to keep the barrier of entry very low, especially for small, independent restaurants that don’t have ample cash today.
“There’s really no initial cost, it’s a revenue split of the sales,” said Grover. “It’s really low risk and low barrier of entry, and all the ingredients that we use area already being used in a lot of restaurants.”
He said roughly 55 percent of each sale goes to the restaurant, 30 to the platforms and Trivr takes a 15 percent cut. He said they’ve seen a $2,000 to $5,000 lift in sales per week once things are up and running.
Virtual concept provider Local Culinary also splits the revenue with operators, but under a tried-and-true franchise royalty model. The first franchise in the space takes a 5 percent royalty.
The company reported incredible growth so far. Since completing its franchise disclosure document in November, the company grew to 50 locations across the U.S. Founder and CEO Alp Franko said his franchise sales team told him the hardest thing would be the first 10 deals, a number he blew past with exceptional speed.
He said the key to his company’s model is ample franchisee support, but also keeping things efficient even with a stable of 50 brands to choose from for each location. Above all, he stressed, it’s about putting out really good food. If that isn’t there, customers don’t order again. Especially without a brick-and-mortar location, there’s no down-the-block factor for mediocre food. But doing that across 30-plus concepts is quite a trick.
“We are all restaurant operators so we talk chef-to-chef, that’s very important,” said Franko. “That’s our knowhow and why people are paying us for a franchise and a territory. It’s to have this knowledge around how do you handle 25 different kinds of cuisines in the same kitchen with the same prep.”
It’s a puzzle that is made more difficult by inventory costs. Franko said the various menus all utilize the same products across brands, like a crispy chicken cutlet that goes on a chicken sandwich but also on a sister brand’s crispy chicken barbecue pizza.
“In addition to that, it’s really the food costs report. Unfortunately, in the franchise world, nobody is helping to optimize the costs. We have a special department that is helping our franchisees to optimize the cost of the operation, and that’s mainly the food costs,” he added.
There are other costs as well, but Franko said the equipment is standard, the buildout is cheap without a polished front of house and the real estate is not necessarily Main and Main. In all, he said, a location can get going with 30 brands for about $100,000, including the franchise fee. Many new operators are taking over leases to further speed things along with existing licenses and utilities.
As for bringing 30 brands to a market, Franko said that monumental task is taken care of by the onboarding team while the operator learns to make everything from Chinese food to street tacos. He said the hardest thing might be picking the 30 brands to bring online. Soup, obviously, was nixed from the Miami location and Franko said they analyze search and sales data by ZIP code to hone the list further. Then it’s up to the operator who might want to do more pan-Asian cuisine than Mexican.
He said all those brands are a strength of the company, but not everything. That’s key, while it’s easy, maybe even fun to think up a new restaurant brand, how it dovetails with the operation, the delivery ecosystem and other in-house brands is not easy. Running a virtual restaurant has a whole host of not-so-fun complexities for operators.
“If you want a menu and you want a logo, please call me and I will give you one of mine. Really, that’s not a solution for you, the solution is not the logo or menu but how do you do it all together,” said Franko. “It’s like if I give you a key to a Ferrari, if you can’t drive the Ferrari there is no sense in having it.”