What is a virtual restaurant (and how do I start one)?

Running a restaurant has always been hard. Staying profitable when margins are thin and competitors abound is an uphill battle. Long-term success in the restaurant industry generally requires going beyond making delicious food (although that’s a definite requirement). It’s also important to be adaptable and willing to get creative when required.

Early in the pandemic, that meant adding food delivery for restaurants that didn’t already offer it. Now, as the popularity of delivery continues to grow, some savvy eateries are branching into creating virtual restaurants.

A virtual restaurant is an online-only food delivery business that works out of the same kitchen as a brick-and-mortar restaurant but functions as a distinct brand. For example, an Italian restaurant mostly known for its pizza and pasta dishes could start a virtual restaurant focused on soups and salads. That gives them a way to capture orders from customers who want lighter fare, while still serving their core audience of pasta lovers under their main brand.

Virtual restaurants are new enough that you may see the term used to describe multiple innovations. In particular, people sometimes use the phrase interchangeably with 'ghost kitchens'. Although they’re similar, the 2 terms describe 2 slightly different ways of doing business:

• Ghost kitchens, also referred to as commissary kitchens, are delivery-only restaurant brands that work out of a commercial kitchen space. Ghost kitchens don’t have a brick-and-mortar location open to customers. They operate only the kitchen side of a restaurant, without any of the in-person service elements. Restaurants with an existing brick-and-mortar location may use ghost kitchen facilities to expand their footprint within new or existing markets, while taking advantage of facility space that’s optimised for the delivery experience.

• Virtual restaurants are delivery-only restaurant brands that use an existing brick-and-mortar restaurant’s kitchen to create food for a second brand. Customers can still show up to the in-person side of the business, but they won’t see or be able to order from a menu for the virtual restaurant brand, just that of the original restaurant. Restaurants with an existing brick-and-mortar location may launch a virtual restaurant at that location to invest in new concepts, while taking advantage of their existing ingredients, space and staff.

The main feature that ghost kitchens and virtual restaurants share is how customers experience them. They are both considered 'dark kitchens', which means people can place orders with them only online — either through a third-party delivery app or a restaurant’s website — and enjoy their food only by delivery.

Virtual restaurants differ from traditional restaurants in that they primarily exist on third-party delivery platforms and don’t require an upfront investment in a new storefront. Instead of promoting your virtual restaurant in the broader community to entice new in-store customers, the focus is on investing in online channels to reach customers who regularly use apps to place food orders.

While some of the goals and tasks involved in running a virtual restaurant overlap with those of a traditional restaurant (you still need to focus on making delicious food and providing top-notch customer service), the main ways you promote the business and interact with customers are different. Your business strategy should emphasize understanding the mindset of customers on food delivery apps, prioritising the delivery experience and earning strong reviews on the platforms.

Starting a virtual restaurant may be low risk, but it’s not no risk. Before you decide to open one, keep in mind a few important considerations, like these:

One of the most important ingredients in creating a successful restaurant brand is building a strong reputation with customers. When you have 2 brands to build, all the results of that work will be split between the 2 — you’ll need double the positive reviews and word of mouth to build a comparable reputation for each of your brands. If your primary restaurant brand is pretty well established, that lets off some of the pressure. But you’ll still want to be strategic about giving both your restaurant brands the investment they require.

While the overhead costs of starting a virtual restaurant are comparatively low, someone still has to do the work of preparing and packing up all the orders that come in. Your kitchen staff will be tasked with learning a whole new menu. Plus, they’ll have to balance preparing the new items and the existing ones, while making sure it all comes out delicious.

You can make this easier on your staff by creating a virtual restaurant concept that’s compatible with the kind of food they prepare now. If burritos are a mainstay on your existing menu, launching a bowls concept that uses the beans, rice and meat your team already makes would be much easier than trying to add phở dishes into the mix.

A delivery-focused business will have different challenges and priorities than one designed with the in-person experience top of mind. If your restaurant has been offering delivery for a while already, you may already have this part down pat. But if you’re still working out the kinks, it’s crucial to consider factors like the kind of containers you use to transport your food, how you package it, and which food items will taste the best after spending time in transit.