What virtual restaurants are and how they differ from ghost kitchens
Pros and cons to consider before launching a virtual restaurant
Best practices and common pitfalls to avoid
Silicon Valley began funding delivery-only startups in 2016 , but it wasn’t until 2019 that virtual restaurants started making waves. With the advent of COVID, the trend has taken off with some of the largest concepts, like MrBeast Burger , generating $100M in revenue across 1,600 virtual kitchens in roughly 15 months.
With that level of success, it’s no wonder restaurant brands of all types are seriously thinking about launching one of their own. But there’s a lot to consider—from unique offerings and packaging to competition, location, and marketing.
To help you determine if a virtual restaurant is right for your business, we’ve compiled a guide of opportunities, challenges, and best practices based on our experience launching over 75 virtual restaurant brands.
A virtual restaurant is a delivery-only concept with a full menu that exists solely online and is often listed on third-party marketplaces, with no traditional, brick-and-mortar restaurant space.
Virtual restaurant brands can operate out of an established restaurant or a ghost kitchen. While the terms are often used interchangeably, a ghost kitchen (aka a dark/cloud kitchen) is a shared commissary space without a dining room that one or more virtual restaurants can rent to prepare off-premise meals.
Guests can place an order for delivery via a virtual brand’s website or a third-party marketplace.
Some virtual concepts are spinoffs of traditional brands, such as Cosmic Wings (Applebee’s), The Burger Den and The Meltdown (Denny’s), and Thighstop ( Wingstop ). However, there are also a variety of non-restaurant-affiliated virtual brands like Mariah’s Cookies and Nascar Refuel .
While virtual restaurants have proven to be a worthy venture for some brands, there’s plenty to consider before diving in. Here are just a few of the potential opportunities and challenges of launching a virtual brand.
In the process of helping dozens of virtual restaurant brands get off the ground, we learned a thing or two about how to set a concept up for success. Keep these tips in mind for a strong debut and sustainable growth over time.
It’s estimated that virtual restaurant brands will become a $1 trillion industry by 2030, but it’s important to remember that the trend is still in its infancy. Many virtual brands are actively trying to figure out their niche and the key to earning repeat business.
According to research from Datassential, the future of virtual brands is mainly dependent on consumer education and transparency. While the research firm estimates that more than 13,000 virtual brands are operating in the U.S., it found that half of restaurant-goers had virtual brand awareness and just 34 percent have ordered from one.
To establish trust with consumers and gain a loyal following, virtual brands must prioritize quality, consistency, transparency, and exceptional service. By following the best practices above and teaming up with a knowledgeable tech partner, virtual restaurants can be a lucrative venture for traditional brands and startups alike.
To learn more about best practices for virtual brands and how Olo can provide support, contact us today.
Main Photo Credit: Tima Miroshnichenko from Pexels
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