Is Joining a Virtual Kitchen Franchise the Right Option for You?

Is Joining a Virtual Kitchen Franchise the Right Option for You?

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Virtual kitchens still remain one of the hottest trends in the restaurant industry. They initially began in 2018 but became widely popular during the COVID-19 pandemic. During the national shutdown, restaurants weren't able to have customers dining in. Restauranteurs decided that they would shift the business model to accommodate the changes that were going on.

Instead of just shuttering up, like almost 100,000 restaurants did during the first six months of the initial shutdown, these restaurants moved to a model focused solely on take-out and delivery. They finetuned the menu offerings, which whittled down the menu considerably. Menu items that didn't fare well during transportation were slashed.

Some people thought that virtual kitchens would go away as restaurants began to reopen in a more normal fashion. However, restauranteurs have discovered that keeping virtual kitchens going is still wildly profitable.

Definition of a Virtual Franchise

A virtual kitchen is simply one that doesn't have an eat-in dining space. Some virtual kitchens are now offering franchise opportunities to investors and restauranteurs. These are often housed in full-service restaurants or fast-food establishments. Some national restaurant chains have established virtual kitchens within their own kitchens. For example, Chili's now has It's Just Wings as its virtual kitchen, and Wing Stop has Thigh Stop as its virtual kitchen.

There are also virtual kitchens that aren't affiliated at all with the restaurant that houses it. Restauranteurs are renting or leasing out unused or little-used spaces to virtual kitchens. This helps the main restaurant by creating a source of revenue when the store is usually not profitable, and it helps the virtual kitchen owner by providing a space that meets current foodservice codes where they can prepare customer meals. These independent virtual kitchens have the added benefit of being able to take advantage of keeping up with the current restaurant food trends.

One important note about these virtual kitchens is that many are now integrating their menu offerings with the restaurants they're housed in. This is a lot easier when the virtual kitchen is a sub-business of the main restaurant. It's possible with other virtual kitchen models, but it might be a bit more complex.

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What Else Should You Consider?

Many people are pulled to the possibility of opening a virtual kitchen because the model seems easy, but there are still risks. Being able to balance out the risks and the benefits of virtual kitchen ownership is important for those who are going to try to build a successful virtual kitchen in their area.

Advantages of a Virtual Kitchen Franchise

The most basic virtual kitchen models have many benefits that may entice you into either entering into an established virtual kitchen franchise or starting your own virtual kitchen.

  • Relatively low startup costs: You don't have to purchase or build a restaurant, go through food service inspections, or worry about zoning. Instead, you have the advantage of joining in an already established location.
  • Low overhead: Your primary overhead costs are rent, payroll, and inventory. You won't have to worry about property taxes, security monitoring, janitorial services, equipment leasing or repairs, or high utilities. The costs that you do have are considerably lower than a traditional restaurant.
  • Optimized customer experience: Your business model is focused solely on delivery and takeout so you can tailor dishes to the packaging and transportation that's possible. You can even finetune the preparation process to get the food out as quickly as possible to your customers.
  • Easy experimentation for new menu items: Customers who order food from virtual kitchens are much more likely to be open to trying new dishes. This makes the virtual kitchen an ideal place to see how the local market responds to new ideas.

Challenges of a Cloud Kitchen Franchise

The risks of a virtual kitchen aren't as pronounced as the ones with a traditional kitchen. Still, these are important to consider when you're trying to decide if a virtual kitchen is a good business venture for your needs.

  • Limited availability: A virtual kitchen is limited only to the delivery area decided by the delivery partners it works with. This could mean that you're unable to reach valuable demographics since people can't come in to enjoy your menu options.
  • Time constraints: All dishes you choose for your virtual kitchen have to overcome the 30-minute takeout box test. This means that the menu items still have to be tasty after sitting in the closed takeout box for that amount of time. If they do, the dish has a better chance of being a successful option because it's still good for customers once it's delivered.
  • Loss of customer experience: You're relying on third-party delivery apps like DoorDash and Uber Eats to bring customers your food. They have the final say in the customer experience during the delivery process, so you lose the ability to make things right immediately with the customer if there's something that goes amiss.

Who is an Ideal Candidate for Virtual Kitchen Ownership?

The ideal candidate for virtual kitchen ownership has several characteristics. These are all focused on being able to balance the needs of their business with the satisfaction of the customers they're serving.

  • Motivated: You must be motivated if you want to open a virtual kitchen. A lot of the checks and balances that you have with a traditional restaurant aren't present in a virtual kitchen. You'll rely a lot on technology and other people to be able to get things done but you can't let challenges in those areas negatively impact your business.
  • Ability to adapt: One thing that is likely going to remain true about virtual kitchens is that they're always evolving. Since you're working in another restaurant's space, you have to be able to adapt to the things going on in the kitchen. Because working in a shared space isn't ever easy, your ability to calmly adapt to the changes that go on within the workspace.
  • Innovative: Innovation is the cornerstone of virtual kitchens. This includes everything from finding local ingredients from unlikely sources to integrating the newest ordering or delivery technology so the process continually becomes easier. Cuboh makes this part of virtual kitchen ownership easy with a simple integration program that comes complete with a user-friendly dashboard and informative reports.
  • Focused on customer experience: Even though you can't control the customer experience once the food leaves your virtual kitchen, you have to be able to ensure customer satisfaction. Finding ways to do this can be a challenge. For example, you could include a card asking for online reviews, but you should include a tagline about contacting you if there's any issue with the meal. Customer loyalty programs can also help with this.

Should You Open a Virtual Kitchen Franchise or Venture Out on Your Own?

One of the biggest decisions you have to make when you're thinking about opening a virtual kitchen is trying to decide what type to open. The main difference between opening a franchise and venturing out on your own is that you'll have support and experience on your side if you choose a franchise.

Starting a virtual kitchen franchise means that you're accepting the knowledge of the franchisor. They'll handle many aspects of the business model for you so you can focus on running the virtual kitchen. The downside to this is that you don't have as much control over things like the menu items. You have to be willing give up some of the control of the virtual kitchen in exchange for participating in a proven business model with a well-known name.

If you want to have complete control of the virtual kitchen, including the menu offerings, the virtual kitchen franchise option might not be the best for your needs. The downside to venturing out on your own is that you're starting from scratch and won't have the recognition of an already-established brand.

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