On a recent afternoon, the kitchen at Denny's in the Jackson Heights neighborhood of Queens was buzzing with activity.
Employees placed hamburger patties on the grill and removed fries from a vat of hot oil. Some orders were delivered to customers sitting at booths, while others were packed in boxes and stored for pickup. Most of the takeout orders were from Denny's menus, but some were from Bar Garden and Meltdown, delivery-only brands owned by the Denny's chain.
The strategy of maximizing kitchen resources blossomed during the coronavirus pandemic, when restrictions banned indoor dining and customers increasingly ate at home. With kitchens idle, many restaurants across the country, desperate for income, switched to delivery mode.
The result has been an explosion of so-called ghost kitchens and virtual brands, restaurants that operate solely online without a physical space. Overnight, catering venues and restaurants alike turned into ghost kitchens, offering food and meals only by delivery. At the same time, celebrities, influencers and others created their own virtual brands. Mariah Carey served cookies, George Lopez put his name on a taco, and Wiz Khalifa's menu included a bowl of chicken nuggets on top of macaroni and cheese.
Investors poured billions of dollars into the space, and startups and established companies made expansion plans. Some Kroger stores have ghost kitchens, and Wendy's announced plans to open 700 delivery-only stores in 2021. That same year, commercial real estate firm CBRE predicted that ghost kitchens would account for 21% of restaurant sales by 2025.
But as the pandemic subsides and customers return to in-restaurant dining, major chains find themselves overburdened with kitchens and increasing customer complaints, forcing them to rethink their delivery-only strategies. It was done. Wendy's withdrew from the project and Kroger closed its ghost kitchens last year.
“Consumers are going out to eat at restaurants again and are craving a relationship with the brand itself,” said Dorothy Calva, senior research analyst for food services at Euromonitor International. She said, “Virtually her brand had no connection with consumers.”
During the pandemic, Brinker International, which owns Chili's Grill & Bar and Maggiano's Little Italy restaurant chains, created two virtual brands: It's Just Wings and Maggiano's Italian Classics. Both were embraced by hungry Americans tired of cooking for themselves.
But as more customers chose to share mozzarella sticks in person, the company's restaurants were overwhelmed with orders, making it difficult for kitchens to use different brands. As a result, Brinker closed Maggiano's Italian Classics last year, omitting It's Just Wings and instead putting some fan favorites on the restaurant's menu.
“Everyone thought running a virtual brand would be easy if you had the labor and equipment, but the reality is that most delivery times for virtual brands are , during normal restaurant busy hours.” Executive. “We were also flooded with virtual orders, making it difficult to get through the busy dinner rush.”
But the rush of orders during the dinner rush isn't the only challenge facing restaurant chains. Customers using delivery apps such as Uber Eats and DoorDash Drivers have to deliver multiple orders at once, so not only do they deal with long wait times, but they may also wonder where their food is made. This leads to food quality issues. Last year, Uber Eats removed 8,000 “stores” from its list due to complaints of poor quality, inaccurate orders, and duplication, where multiple nearly identical restaurants operate in the same location. It means that.
“During the pandemic, many customers were burned by receiving food that was not the quality they expected from these new virtual brands,” Kalva said. “This has created a pretty bad perception of a lot of virtual brands.”
In fact, Jimmy Donaldson, known to his legion of YouTube followers as Mr. Beast, wasn't satisfied with the quality of his eponymous burger.
In 2020, Mr. Donaldson partnered with Ghost Kitchen concept operator Virtual Dining Concepts to bring Mr. Beast Burger to 1,700 stores nationwide, including diners like Friendly's and Italian chains like Buca di Beppo. I placed it.
But last year, Donaldson filed a petition with New York's top government seeking to terminate the contract, saying Virtual Dining Concepts was focused on expanding its business after receiving “thousands” of customer complaints about food quality. filed a lawsuit in court. than the quality of the product.
Virtual Dining Concepts countersued Donaldson and his investment firm, accusing them of breach of contract after he made several public criticisms of the company and its food in a series of posts on social media. Litigation is active.
Virtual Dining Concepts executives say the virtual brand doesn't deserve the bad press it's received in some quarters during the pandemic. They claim that complaint rates for virtual brands with hot food delivery are the same as those for traditional brick-and-mortar restaurants.
“If you're going to eat a burger at a restaurant, that's something else. Now, put your burger in a box and wait 35 to 40 minutes for delivery,” says Planet Hollywood founder and founder of the virtual dining concept. Robert Earl said. “We're talking about heat and steam that worsens the texture of the burger. It's not a perfect science, it's delivery.”
Virtual Dining Concepts has cut some of its concepts created during the pandemic, but company executives say there has been growth in some of its virtual brands, including Pardon My Cheesesteak and Man vs Fries.
But restaurants say one lesson they've learned during the pandemic is to stick with what they know. Pizza restaurants shouldn't start making hamburgers, they say, and vice versa.
Amid the pandemic, Chuck E. Cheese created Pasqually's Pizza & Wings, a virtual restaurant that serves a more grown-up version of the pizza featured on delivery apps like GrubHub and DoorDash and served at children's birthday parties at the restaurant. Did.
“We were already in the pizza business, so it's not like we're offering something that's foreign to our kitchen,” Chuck E. Cheese CEO David McKillips said. “It’s in our DNA.”
McKillips said delivery-only business has slowed as customers return to Stuffed Crust Pizza and Skee Bowl, and some of Pasqually's popular dishes are now on the Chuck E. Cheese menu. It is said that there is
And some chains are still adopting virtual brands to continue operating and, in some cases, expanding their services.
“Most of our restaurants are open seven days a week, so we have the unique opportunity to fulfill customer orders at different times of the day,” he said, testing a third virtual brand, Vanda. said Kelly Valade, president and chief executive officer of Denny's. Burrito.
Additionally, most of the customers who order at Burger Den and Meltdown are young, as opposed to the typical older population that dines at Denny's restaurants.
“If you want another consumer to eat your burger, why not lean back?” Valard said.
