Navigating the Virtual Brand Revolution: 7 Key Considerations for Restaurant Success

Welcome to the?OME?LinkedIn Newsletter.

In each issue we explore one of the hot topics in the world of restaurants and food delivery.

In this edition Shane O'Neill, explains the 7 key factors in success for any restaurant considering Virtual Brands.

If you are in the restaurant and hospitality business you are likely familiar with the concept of virtual brands. This isn't surprising, given that virtual brands have rapidly become the most dynamic and profitable driver of revenue in the restaurant industry in recent years. But before you decide to dive in, there are crucial aspects of this concept that require careful consideration to improve your odds of success.

The Rise of Virtual Brands: A Pandemic Acceleration

Initially conceived to utilise surplus kitchen capacity, virtual brands gained traction as a promising concept. Then, the pandemic hit. The urgent need for revenue, coupled with a shift towards online delivery, catapulted virtual brands into the limelight, compressing years of growth into a single transformative year.

A New Restaurant Landscape Emerges

Restaurants everywhere suddenly found themselves with surplus kitchen capacity, giving rise to the virtual restaurant brand industry. Start-ups, both experienced and newcomers, rushed to partner with restaurants. However, not all partnerships yielded positive results. As the market matured, a more sustainable model emerged.

The New Normal: Evolving Business Models

With pandemic restrictions easing, restaurants are back to in-person dining, but the industry has fundamentally changed. Off-premise sales are a significant revenue source, consumer dining habits have evolved, and online delivery orders continue to dominate the market. This begs the question: where do virtual brands fit in now?

Embrace Virtual Brands for Success

Expanding with virtual brands remains a viable strategy, not just to fill excess capacity but because it's now essential for success. The challenge lies in choosing the right virtual brand amidst a sea of options.

Seven Crucial Categories for Evaluation

To make an informed and profitable decision, consider seven essential categories:

1. Turnover: What is the turnover rate of the brand? How many operators have dropped the brand in the last six months? An turnover rate exceeding 20% may indicate issues.
2. Pricing: Determine whether the brand permits the restaurant to have a say in pricing. If not, seek a clear justification. Restaurants typically possess a deep understanding of local price dynamics and consumer behaviour.
3. Packaging: Investigate whether the brand offers distinctive packaging, logo branding, stickers, and other branding elements. These may impact costs, but they play a crucial role in setting the brand apart online and fostering a strong customer-brand relationship.
4. Margin and Profit: The restaurant should receive the lion's share of revenue. Be sure that you clearly understand the margin split and that the brand provides a comprehensive cost and pricing guide for evaluating margins on each menu item.
5. Customisation: Determine whether the brand can be tailored to align with the restaurant's specific operations and inventory. Customisability plays a vital role in managing unforeseen waste and costs. However, it's worth noting that maintaining a consistent core menu across multiple locations contributes to brand recognition and success.
6. Prep Time: Evaluate whether incorporating these brands will demand extra time for food preparation, potentially resulting in higher labour costs. Ensure that any increased costs align with a corresponding boost in revenue. ?
7. Sales Reports: Inquire whether the brand offers comprehensive reports detailing sales and fulfilled orders, including breakdowns by brand and delivery service. Accurate reporting plays a critical role in payment audits and maintaining transparency.

Virtual brands hold immense potential to elevate your restaurant's profitability. However, it's important to acknowledge that this industry is still relatively young and marked by swift changes. Nevertheless, adhering to essential standards, as outlined above, is paramount. Reputable virtual brand companies like?OME?will always be happy to provide satisfactory answers to these questions. Asking these questions empowers restaurants to make informed decisions, and identify the optimal brands that align with their business objectives.

OME - September 29 2023

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OME?drive new revenue into your kitchen. Our software gets more done with less people and our data driven brands open you up to a world of new customers.

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Sean Murray?Niall Reynolds?Shane O'Neill,?Donal Egan?John Farrell(FCA/FInstLM)?Dmitry Skorinko?Hosted Kitchens?Fintan Gavigan

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