What is a Virtual Restaurant?

January 14, 2022

According to McKinsey, the delivery market in the US has more than doubled in the last two years, following healthy historical growth of 8% a year.

Whether out of on-demand convenience or lockdown necessity, consumer habits are unquestionably evolving. As a result, many food businesses are ditching traditional brick & mortar expansion plans in favor of digital-first models—like virtual restaurants.

Let’s explore what makes virtual restaurant concepts unique, how they work, why they’re popular, and how REEF’s virtual restaurant model changes the game.

What is a Virtual Restaurant?

Virtual restaurants are commercial food businesses with concepts that are exclusively available online. Unlike traditional brick-and-mortar establishments, virtual restaurants don’t serve customers sitting in a front-of-house space. Instead, they cater to on-demand orders via delivery and pick-up.

Virtual restaurants provide a platform for creation and enjoyment without heavy capital investment—just one of the reasons they’re favorable side projects for celebrity entrepreneurs. Notable celebrity virtual restaurant concepts include MrBeast Burger by YouTube sensation MrBeast, Sides by content creator collective Sidemen, and DJ Khaled’s Another Wing .

How Do Virtual Restaurants Work?

Unlike ghost kitchens , which can operate from repurposed spaces like retail stores and warehouses, virtual restaurants often operate from an existing restaurant’s conventional kitchen.

There are two ways in which a virtual restaurant can spring to life:

1. Existing restaurants can launch a virtual restaurant concept to test new culinary ideas of their own. By taking this approach, a restaurant can avoid the risk and costs associated with any major menu changes or brick-and-mortar expansions.

Take Bob’s Pizza, a well-loved local pizzeria, as an example. While pizzas are their namesake, the Bob’s Pizza team may identify chicken wings as a top-performing menu category. To capitalize on the popularity of their wings without impacting their brick-and-mortar operation, they could launch a virtual restaurant concept, Bob’s Wings, to sell more of their proven revenue-generator. Thus, a new virtual restaurant is born.

2. Existing restaurants (or other commercial kitchen spaces) can partner with a third-party—like REEF—to launch a pre-existing virtual restaurant concept. It’s a mutually beneficial model.

  • Brick-and-mortar restaurant owners can prepare food for an existing virtual restaurant concept during their primary business’s quiet time. In return, they receive a share of the concept’s delivery revenue.
  • Virtual restaurant owners can grow their brand’s footprint without the downtime and expense associated with sourcing equipment, brick-and-mortar leases, and quality labor. It’s a high-impact, low-investment way to seed new markets, try new dishes—or simply build a virtual empire.

Why Have Virtual Restaurants Become So Popular?

Whereas today’s other major restaurant innovations—like ghost kitchens and food delivery apps—have been gaining traction since around 2013, virtual restaurants are a somewhat late extension of the food delivery revolution. Unsurprisingly, however, the model’s popularity has skyrocketed in response to the pandemic, as lockdowns shuttered dine-in services for restaurants around the world.

Virtual restaurants allow brick-and-mortar restaurant owners—and other commercial kitchen operators—to increase and diversify their income using existing resources. On the flip side, virtual restaurants allow creators with less resources and capital to still bring their restaurant concepts to life—all while reaching an existing, wide, local audience through popular food delivery apps.

Are Virtual Restaurants Right for Everyone?

Virtual restaurants are ideal to implement in kitchens that have the space, time, and bandwidth to run them. Like most business ventures, however, the virtual restaurant model comes with its share of risks and demands.

A standard virtual restaurant expansion plan could require striking up a relationship with tens—or even hundreds—of individual brick-and-mortar restaurants. A food entrepreneur would be tasked with vetting each one individually. They’d need to support and sustain a decentralized network of kitchens, each with their own operating times, delivery management technology, market conditions, and so on.

It’s not ideal—for either party. So we created a virtual restaurant model with a difference.

What’s The Best Alternative to Virtual Restaurants?

REEF empowers kitchen operators and food entrepreneurs with multiple ways to build the food empire of their dreams.

We’ve created a global network of reputable brick-and-mortar restaurant partners and culturally relevant concept creators. The result? A self-sufficient and mutually beneficial ecosystem within the food industry. Restauranteurs helping restauranteurs—just the way it should be.

Our turnkey approach to virtual restaurant management means both creators and kitchen operators can feel secure and supported. They can also enjoy:

  • Attractive revenue sharing: Unlike traditional ghost kitchens that charge steep monthly fees, we operate on a revenue sharing model. That means we don’t make money until you do.
  • Proven success: We operate over 95 brands across 4+ countries. We’ll use real-time data and constant communication to manage performance and implementation.
  • Full-scale support: We provide our commercial kitchen operators with everything, from recipes to technology, brand materials to marketing buzz, so your core operation is never disrupted.
  • Aggregated delivery orders: We’ll set you up with delivery management technology that simplifies your kitchen operation.

Interested in bringing a virtual restaurant concept to your brick-and-mortar kitchen space? Contact our virtual restaurants team.



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