The Bottom Line
The Rise of Virtual Restaurants and the Future of Food Delivery
Alan Moore runs nearly 50 restaurants. Just a few years ago, this would mean millions of dollars invested in real estate, labor and other capital expenses, not to mention a complex operational strategy to keep things running smoothly. But in today’s day and age, this restaurant tycoon can oversee this myriad of brands with little more than a commercial kitchen, a strong marketing eye, and of course, a slew of delivery services that brings them to life.
“We created 4 brands 18 months ago and launched them. Burgers, tacos, pizza and the like. We came up with some cool names and launched them on Postmates and Doordash. That snowballed,” begins Moore, who not only runs these virtual restaurants but also commands a brick-and-mortar establishment, Cheebo in Hollywood. It was experimenting with the delivery platforms through Cheebo that led Moore to start these virtual brands and ultimately lead a consulting business for the space, Virtual Restaurant Consulting, with his brother, Paul.
“It’s a seismic shift and it’s consumer-led,” Moore said. The passion in his voice resonates through a thick English accent. “The delivery companies are taking over the whole world.”
He’s speaking to the rise of ‘virtual restaurants’ or restaurants that don’t actually sport dining rooms or even pick-up counters. Their physical presence is limited to a commercial kitchen space, and do 100% of their business through delivery platforms, such as Grubhub, Uber Eats, Postmates and DoorDash.
Moore sees virtual restaurants playing a pivotal role in the foodservice industry, and the delivery platforms completely changing the way that traditional brick-and-mortar restaurants structure their menus and operations.
“Running a virtual restaurant is no different than running a traditional restaurant, where you go to work everyday and nurture your business,” Moore said. “It’s not just creating a name and throwing it up on Postmates. You need to create the recipes, cost the menu, handle the photography, build it out of social media and truly bring the virtual restaurant to life. You have to monitor sales, pull up product mix reports, look at your pricing. It’s not just fire and forget.”
But while complex, significantly lower up-front costs open the door to many aspiring restaurateurs looking to break into the field. And Moore has perfected the process of opening a virtual restaurant, to the point of creating a step-by-step guide for new and prospective owners.
“In 6 weeks, someone will come out with hands-on knowledge of exactly what needs to be done and will have 1–2 virtual restaurants ready for launch,” Moore said. He also noted that it was easier to manage multiple virtual restaurant brands rather than just one, claiming that a kitchen is better utilized when several concepts are online.
Virtual restaurants typically take an In-n-Out style approach, with hyper-focused menus that revolve around a shortlist of core products. So instead of creating a single restaurant that serves burgers, fried chicken, sandwiches and mac ‘n’ cheese, you’d create four restaurants that specialize in each of those categories.
Of utmost importance, however, are several factors. Being transparent about the restaurant being a virtual restaurant, viewing delivery drivers as servers, and engineering your food for delivery are at the top of the list.
“You have to serve food that doesn’t just taste good out of the dining room, but also looks and tastes good after riding in the back of a Ford Fusion for 40 minutes,” Moore said. “Crispy fries will phase out. Crinkle-cut will become more popular because they stay good longer. We’re producing more spinach dishes than broccoli, because broccoli doesn’t last as long.”
This kind of engineering includes balancing beautiful photography and managing expectations.
“All the photography on the delivery platforms is on a plate, but of course your food isn’t delivered on a plate…customers often feel like they’re getting less food than what they see in the picture, even though it’s the exact same amount. We’ve been playing around with how to package food so that customers are satisfied with portion sizes.”
Moore says the name of the game is high-margin items that deliver well. This formula helps mitigate the logistical challenges and costs of delivery.
“The old model of food costs of 30–35%, labor of 35–40%, etc. has gone out the window. A traditional restaurant is going to struggle working with the delivery apps,” Moore said. “Food cost and packaging together needs to be 22%.”
And it’s not just the cost structure that will change, in Moore’s view. He sees a future where in addition to virtual restaurants, brick-and-mortar restaurants will have entirely separate menus solely dedicated to delivery.
“Restaurant food wasn’t necessarily designed for delivery,” Moore said. “The restaurant will offer a menu for delivery that…will be designed differently and conceived differently.”
Find out more about Virtual Restaurant Consulting at VirtualRestaurantConsulting.com.