Try searching for a place to enjoy food from Motu Indian Kitchen, Tasty Korea, or Poke by Tombo and you won’t find a single physical location anywhere. These restaurants (some of the hottest in the UK) don’t have any locations for customers who wish to dine in.
Instead, these “virtual food brands” rely on the internet, dark kitchens, and delivery services to get their food to their customers. And while these virtual restaurants are anything but traditional, they’re catching on rapidly.
What contributed to their rise and what makes them so profitable? How can you profit from them without creating your own?
Find the answers below.
Why are virtual food brands so hot in the UK?
What caused the boom in virtual food brands? Here are a few reasons:
- A boom in dark kitchens: These kitchens exist to fulfill online delivery orders only and they slash the costs associated with traditional restaurant models. They caught on rapidly when the pandemic forced customers to go online. Dark kitchens don’t include any space for guests to dine in, and they can set up shop in places where rent is exceptionally cheap, like car parks and unused retail space.
- The proliferation of smartphone technology: Easy to use, affordable and widely available smartphones makes ordering food fast and easy. If you have access to a smartphone today, you have access to a restaurant.
- The rise of third party food delivery apps: These apps make ordering food online affordable and easy. Ordering through an app doesn’t require chopping any veg or sitting in traffic.
- The proliferation of the gig economy: The gig economy (and the tech that makes it possible) provides both the supply and demand for part time workers to deliver food.
- The growing amount of underutilised retail space and kitchen space: With the retail apocalypse underway, the UK now has an abundance of unused retail space. These places offer affordable, accessible locations for dark kitchens to set up shop.
- The COVID 19 pandemic: When the world shut down, online ordering became the only way to order food. This drove many hesitant restaurant growers to embrace digital technology.
- A general decline in home cooking: This trend, which has been in progress since the fifties and sixties, continues to make ordering in seem like the better option, especially now that it’s so easy.
Beyond the factors listed above, people in the West crave convenience and time savings just as much as they crave their favorite restaurants.
Why’s that?
According to research conducted by Harvard professor Ashley Whillans, people today feel like they have less time than their peers in the 1950s. That remains true even though we work fewer hours per week than workers in the 50s.
So, when a company comes along and promises to deliver quick, affordable and nostalgic food without the customer needing to put down their phones or get in a car (or call anyone), customers can’t resist. The ease of ordering online makes it an easy “yes!”
What makes virtual brands so profitable?
Here’s the answer: Virtual brands slash the most significant costs associated with traditional restaurants. The factors below also contribute to the profitability of virtual food brands.
- Virtual brands do not require large kitchen spaces or any front of house space, which means they save loads on rent.
- Virtual brands are incredibly nimble. They can operate out of a food truck, an un-used retail space, hotels or even trailers parked in car parks. They operate close to their customers, which makes for fast, fresh food.
- Virtual brands operate a limited menu, which lowers the cost of maintaining an extensive menu. Limited menus lower training costs because they’re easier to learn. Put simply: smaller menu = less training time.
- Virtual brands do not require any front of house staff—no hosts, waiters or cashiers required. Cutting back on labour is where virtual brands save the most.
- Once a chef creates the menu, virtual brands only need a few line cooks to prepare food and get it out the door.
- Virtual brands can cut even more costs by using pre-prepped ingredients (like chopped vegetables), which eliminate the need for keeping another prep cook on the payroll.
- And since they collect every order through a smartphone app, virtual brands make it extremely easy for customers to add extra items to their orders.
Can you profit from a virtual brand without creating one?
The short answer is, of course, yes.
While creating a virtual brand offers one way to profit from this trend, it’s not the only way. Existing restaurants, hospitals, hotels, cafes and other facilities with commercial kitchens can earn extra revenue by providing space to dark kitchens and virtual brands.
The following locations and facilities offer ideal locations for dark kitchens to lease:
- Hotels & resorts: By leasing their unused kitchen space to ghost kitchens and virtual brands, hotels and resorts can create an extra stream of revenue.
- Restaurants: Whether they’re slow on business or have extra space, restaurants can lease space to dark kitchens and virtual brands. Or they can have their staff cook virtual food brand menu items on behalf of the brands. The brands will give the host restaurant a cut of each sale.
- Underutilised or vacant retail space: Dark kitchens are already retooling unoccupied retail space into commercial kitchens for virtual food brands. Dark kitchens love operating out of these spaces because of the affordable rent.
- Food truck owners: If food truck owners want to cook for virtual food brands or lease their kitchen to one, they have options. Many virtual food brands are looking to partner with food trucks because of their mobility and because they’re affordable to rent.
- Pubs & cafes: As with restaurants, these businesses might have extra kitchen space to lease out to dark kitchens while closed. If a pub opens at 12 pm on the weekdays, it can lease its kitchen out to a dark kitchen before the doors open for customers.
- Mobile kitchen owners: Mobile kitchens offer the perfect place for dark kitchens and virtual brands to operate. You can move them anywhere. This includes places like car parks where rent is cheap.
- Community centers & religious facilities: Even when used regularly, these spaces still sit idle for days or weeks at a time. These places can earn additional money for their communities by renting kitchen space out to dark kitchens and virtual brands.
Schools & hospitals: Although these kitchens see a lot of use, they might still have extra space to spare. And if they do, they have the opportunity to host virtual brands. Both schools and hospitals have hours where they’re less busy, which offer good opportunities for dark kitchen staff to make meals. If a school kitchen is vacant after 4 pm, for instance, it might offer the perfect location for a dinner virtual brand that serves dinner only. There are plenty of those to choose from.
Are you interested in dark kitchens & virtual brands? We can help you learn more
There’s more to running a successful virtual food brand other than finding a good location. You need a certain number of basic supplies on hand to keep the operation running smoothly.
That’s where NCCO can help.
We’ve been supplying ghost kitchens and virtual food brands with affordable, practical everyday foodservice solutions since the very beginning.
Whether you need tamper-evident labels, automated labeling systems or till rolls and ribbons, we have you covered. To discover the supplies that every dark kitchen and virtual food brand needs to succeed, check out Need to know ghost kitchen essentials: Equipping your dark kitchen for success.