The virtual restaurant revolution

Why ghost kitchen franchises are evolving as fast as the technology enabling them

In the last few years, we’ve borne witness to huge changes in the QSR industry. Thanks to advancing technology and the growth of third-party on-demand food delivery platforms – accelerated by the pandemic – the order-in culture is booming. This, in turn, has enabled an explosion of virtual brand restaurants and ghost kitchen spaces.

A virtual kitchen is a delivery-only model which eliminates the eat-in option for diners and focuses purely on off-premise sales channels. Let’s say you already own a restaurant and want to introduce a new brand to your customers. Starting up a new brand with new premises is time-consuming, not to mention expensive. Instead, you can opt for a virtual restaurant that runs from the same kitchen as your existing traditional restaurant – a digital-only storefront serving customers with a delivery-exclusive menu.

London-based Peckwater Brands, founded by Leo Bradshaw and Sam Martin, helps restaurants to maximise their full potential by offering delivery franchises to already-operational kitchens.

“Peckwater acts as a partner to existing commercial food preparation sites, including restaurants, cafes, bars, hotels, pubs and more,” explains COO and co-founder, Sam. “We allow businesses with the surplus capacity to increase revenues by offering secondary menus through our virtual food brands. Through delivery aggregators, businesses can increase order volumes and generate additional revenue by accessing wider customer segments. Our support with marketing, customer analysis, and point of sale (POS) integration allows these businesses to become more profitable while still fulfilling their existing obligations.”

Peckwater currently owns and operates more than a dozen brands in the UK with international expansion plans into Europe, the US and the MENA region already underway. Their approach is to tailor the brands they already operate in each country and create new brands to appeal to the food tastes and trends of the local consumer. And speed is key. They are able to identify areas for potential expansion and then rapidly prepare a host kitchen to be running a new brand within a matter of days.

“Our proposition is appealing to hospitality businesses because our virtual food brands can be integrated so swiftly and easily into existing kitchens, making growing at scale possible and accelerating revenues and profitability,” continues Sam. “We are not hampered by the expensive and time-consuming process of setting up new ghost kitchens, as the host kitchens we work with are already fully equipped, staffed and operational.

“Our partners typically operate between one and three of our virtual food brands from their kitchens, depending on their capacity and capability. We select food brands that are optimised for the individual host kitchen: it is important to be aligned in terms of the necessary equipment and core ingredients so that adjusting to the new menu takes as little training and extra materials as possible.”

Ghost kitchens

Ghost, or dark, kitchens are another strand of the virtual kitchen concept. They don’t even need an existing brand from which to launch, as they can offer a delivery-only menu to their target consumer from a delivery-optimised kitchen space designed to cut unnecessary costs such as premium-location rent. There’s no storefront to host customers, and your location can be easily set up in a small commercial kitchen space or on third-party premises alongside other virtual kitchen brands. But established brands can use them too, to gain presence and brand awareness in new geographical markets.

WoWorks is one brand that’s utilized the ghost kitchen concept to gauge the level of interest in outlying markets and gain exposure for future franchise development. Brian Farris is chief development officer. “We have been fortunate to find great partners who represent the brands in the same consistent manner as our traditional locations,” he says. “They offer a limited menu, based on shared ingredients alongside our proprietary ingredients, to guests through 3PD vendors. Guests can browse our menus through the 3PD sites for delivery and have a WOWorks brand experience without needing a brick-and-mortar store to fulfil.

Brian cites that the main benefit of this strategy is the gained brand awareness in markets that may not be established already. “Our goal is for the continued growth of the brand, whether it be via traditional locations, or outlets for our menu items and name. This method helps with our distribution efficiencies and costs for all the locations. Lack of brand awareness can be a drawback, but thankfully, we have not seen this as a detriment as everyone loves a good salad, acai bowl, falafel, etc,” he adds.

Future of QSR

Time moves rapidly in the QSR market and Taster Brands is not only turning the traditional restaurant model on its head, but it’s evolving the dark kitchen model too. “Unlike traditional restaurants, we obsess over the delivery channel,” says CEO and founder Anton Soulier. “Everything we create is designed to be delivered – from our packaging through to the perfect blend of flour in our pasta that means dishes can withstand travel.”

The entrepreneur credits the virtual kitchen concept as a key player in the evolution of how we eat – especially during the pandemic when restaurants were able to invest in extra kitchen space to expand their delivery offering. “Taster has evolved beyond this model,” he continues, “and we want to shine a light on our operations and have a more direct relationship with consumers rather than being ‘dark’ or hidden. For example, 100 per cent of our franchise partners run click & collect, and an increasing number operate fully Taster-branded sites on busy high streets.

“Our model is a new take on the traditional franchise model – the McDonald’s or Domino’s of the world – and we partner with entrepreneurs and business owners who really recognise the growth in the delivery market. With low set-up costs, we can create a supercharged, profitable business for the right partner and our commitment to training and support also means that we can scale without compromising on quality.”

And this model is proving successful. In five years, Taster holds the seventh biggest market share on delivery in France and Belgium after major players like KFC and Burger King.

Partnering with a leading TV chef and household name, Jamie Oliver, Taster has launched Pasta Dreams, a forward-fronting collaboration with a bold Italian-themed menu and strategy designed to challenge customers’ preconceptions of delivery food.

“At Taster we are creating ‘foodie delivery food’ – designing innovative menus with world-class chefs and creators, then expanding via our network of franchise partners,” continues Anton. “We launched Pasta Dreams initially from two pop-ups – one in the centre of London’s Soho and another in Paris. This is the beginning of a long-term partnership plan to expand Pasta Dreams across the UK and France, followed by other European countries. We’ve just launched our first site outside of London with a partner in Bristol who currently runs two Taster brands and is now adding Pasta Dreams as a third.”

Staying on top

The challenge for all virtual brands to succeed is visibility. “The delivery channel is extremely competitive so it’s only the best brands that stand out to consumers,” says Sam. “We’re tackling this by partnering with world-class foodies and chefs like Jamie Oliver, as well as developing more direct-to-consumer channels such as click & collect.”

Anton Soulier adds: “Food brands with on-site locations have the benefits of visibility and high-street credibility, while our virtual brands can only be found on third-party aggregators. This is not a problem for us, however, as our online visual branding, customer analysis and the quality of our food brands give us all the credibility and reach we need in the digital age.”