Big Name Brands Go Virtual

As dine-in experiences return as options in various parts of the world, the question on the minds of restaurants and food brands is how much energy they should revert back to their brick-and-mortar experiences.

While everyone is rejoicing about the idea of being able to meet up with friends for lunch again, some brands are opting for a more hybrid approach to this new normal. Brands such as Wendy's, PepsiCo, Applebee's and IHOP are all keeping the dine-in experience front and center but investing into virtual kitchens, also known as ghost kitchens, that only provide food for pickup or delivery.

Wendy's in particular is committing to the virtual kitchen trend which they believe will be the next step in restaurant innovation. The fast food powerhouse announced it's plans to open up 700 virtual kitchens in the US, UK and Canada.

By utilizing streamlined restaurant tech to connect delivery partners and pick-up customers seamlessly to the restaurant, Wendy's CEO Todd Penegor confidently told analysts he expects a largely positive reception to the new ghost kitchen start up.

He stated, "If you look at the economics, it's early to tell what we can do from sales out of each of those vessels, but we're expecting the sales in the range of $500,000 to $1 million per unit." with the expected completion date of 2025 for all locations to be up and running.

How Virtual Kitchens Leverage Restaurant Tech

One of the reasons ghost kitchens have caught the eye of big brands and solo entrepreneurs alike is that the amount of existing restaurant tech available is rapidly increasing. From taking orders on multiple platforms to connecting these orders with delivery partners, the new technology brings the entire process right to your restaurant SaaS.

Having this ability to manage inventory, menus, orders and delivery all in one dashboard lets brilliant chefs and kitchens have the opportunity to bring their creations to their city no matter their level of tech experience.

Virtual kitchens are also finding homes in food halls all around the world, turning large commissary kitchens into melting pots of different cuisines and offerings all of which are powered by online and mobile orders. Patrons are able to browse the food hall's selections online or through each individual vendors website allowing multiple restaurants to be ordered from and picked up all at the same location.

A surprising group has shown interest in in the virtual kitchen trend, PepsiCo which is looking to do a limited run of pop up ghost kitchens as part of a marketing campaign that has you choose your Pepsi product first, then get paired with the perfect meal to compliment the taste. The 30 day experiment has aptly been dubbed "Pep's Place" and even has a custom website for customers to use as an ordering platform.

Traditional Restaurants Are Opting for a Hybrid Approach

Applebee's and IHOP, both owned by parent company Dine Brands, have both seen tremendous growth over the last year which is the expected outcome of dining sanctions being lifted in multiple regions. The impressive part of this success is that for Applebee's, the growth has put their sales 6.1% higher from March 2019 to March 2021.

It comes as no surprise that such a long-running and popular chain such as Applebee's was able to rebound from the pandemic, but it wouldn't have been possible without their decision to adapt to new restaurant tech and lean into contactless delivery and pickup. The company saw takeout and delivery orders making up 37% of their sales with fellow franchise IHOP seeing 33% of their sales coming from off-premise dining.

Wanting to get ahead in the virtual kitchen game, Applebee's is even opening delivery-only ghost kitchens with two locations in the United States currently open in Philadelphia and Los Angeles. Miami is the next locations stateside but the brand has already has experience with existing kitchens in Dubai and Saudi Arabia.

Dine Brands' CEO John Peyton is excited to see be part of the next step in dining experiences.

"This will be material, the work we've been doing with ghost and virtual kitchens. We're learning a lot and I think it will be a future incremental," Peyton said. "We are all in on virtual brands and ghost kitchens as a capital-light way to reach new customers in new markets and expand our brands' footprints."

Virtual kitchens aren't the only way Dine Brands is looking to take advantage of the shift to off-premise dining. In February, the company launched virtual brand Cosmic Wings that uses Applebee's locations as the storefront. A virtual brand offers unique customer experiences between multiple menus coming from the same kitchen.

With so many heavyweights entering the virtual kitchen ring, it's only a matter of time before more time and resources are invested into this new age of food service. Whether you're looking to bring your own creations to the world or simply want to test the waters for expanding your current brand, virtual kitchens may be exactly what you're needing.

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