Casey Lewis scrolled through Seamless and was looking for a bacon, egg and cheese sandwich when it came to her mind: “What are all these random breakfast suggestions?” Lewis has lived in Williamsburg for years and describes herself as a regular user of Seamless, but on April 6 she noticed a variety of new businesses listed on the Shipping app: All Day Breakfast, The Best Breakfast Company, Anytime Breakfast Sandwiches, and others. “The names were so generic,” she says. “Something seems off.”
It turns out that all three businesses – and more than a dozen others – are connected to the same address in Williamsburg, which belongs to the neighborhood’s decades-old Kellogg’s restaurant, which is open 24 hours a day. Lewis, who Tweeted on Twitter As for the individual who scratched his head earlier this month, he is not the only one who got confused.
At first glance, Kellogg’s-related businesses may resemble ghost kitchens, but are actually part of a newer class of online restaurants called “virtual brands,” according to Scott Landers, founder of Delivery Consulting Figure 8, whose clients included restaurants. Chains like & Pizza and Mexico.
While ghost kitchens operate out of separate commercial spaces that do not have a physical dining room, virtual brands operate out of white and open restaurants that already exist. Companies come with the brands – which usually consist of a logo, name and short menu only – and then give them a license for restaurants and bars, which execute the recipes and pack them for collection and delivery.
National restaurant chains like Chili’s, TGI Friday’s and Denny’s have been running virtual brands for months, but are now getting on board smaller, more independent operators. Take Anytime Breakfast Sandwiches, one of the businesses Lewis encountered at Seamless. The virtual brand delivers its food from a number of restaurants across the city, including Skylight Diner in Manhattan, Brooklyn Bagels and Cafe in Staten Island, and Kellogg’s Diner in Brooklyn.
Profit Cookers is one of several companies that create and license virtual brands for restaurants at the moment. The Florida-based company comes from founder Kirk Morillo, a restaurateur who previously worked in the Virturant virtual restaurant group before launching Profit Cookers in January. Since then it has licensed a portfolio of 23 brands, which prepare everything from burgers to burritos for breakfast, to up to 50 restaurants and bars nationwide. The Clujs Diner is one of them.
“The best restaurant for that is a diner,” Morillo says, “because they already prepare everything.” Part of the pitch is that restaurants may already be preparing dishes similar to what the virtual brands they take on offer, and in some cases the same ingredients can be used for a number of concepts.
For a restaurant like Kellogg’s, which serves hundreds of items on the menu with more words than certain privacy agreements, signing was simple. “We were looking for ways to pick up our shipping business,” says Irene Sidrakis, owner of Kellogg’s. So far it works.
Siderakis partnered with Profit Cookers in February, operating 18 of the company’s virtual brands from a 24-hour open dinner. Since signing, it has already posted about $ 40,000 in additional sales, according to Morillo, in part because the brands operate with extended hours and delivery radii. Kellogg’s stops accepting orders in its personal delivery apps after midnight, as the restaurant uses its own delivery drivers.
Its virtual brands receive orders around the clock, and it attributes to the new business one of the reasons why the restaurant was able to stay open 24 hours a day, while so many other businesses late at night had to reduce their operating hours during the plague. “It’s bringing in the revenue we need to survive now,” she says.
Companies like Profit Cookers often look for partnerships with older restaurants that may not have a significant online presence, Landers says. They gamble on the idea that it is easier for restaurants to leverage another brand, which may lead to recognition of the name of activity in districts or other cities, than to build their own brand from the ground up. In return, companies take a cut from each sale – 10%, in the case of Profit Cookers – and increase the cost of online orders to increase restaurant profits.
A bacon, egg and cheese sandwich ordered from Rise and Grind Cafe, a virtual brand at Kellogg’s that is not affiliated with Profit Cookers, may cost $ 20, while a similar sandwich costs $ 7.45 on the diner’s personal menu. “Restaurants don’t have to sell their food for the same price online as in person,” Morillo says. “You pay for convenience.”
Brands put money in the pockets of restaurant owners while it is very necessary, says Sidrakis, but they come at a price of some transparency for consumers, who may think they are placing an order from a physical factory. Across Uber Eats, Grubhub and Doordash, only the latest app notifies customers when they order from a virtual restaurant. A waiver can be found at the top of the order page – “This is a virtual brand” – although it is located on slide three of a four-slide carousel with promo codes for discounted shipping. There is no further context regarding the behavior of the virtual brands.
“There are real concerns about surveillance and accountability,” Landers says. “To whom is this invitation? Is it the restaurant that created it? Is it the [company] Who created the brand? Was it Grabhub who placed the invitation? “
Virtual brands are required to comply with local health and safety regulations and shipping app dealer agreements, but none of the apps mentioned above limits the number of virtual brands an individual restaurant can run or how many servings each brand is required to serve to be listed on their platform. , As long as each concept is “unique” and “not a duplicate menu,” according to a Grubhub spokesman.
The world of virtual brands has few rules, and third-party shipping apps have little incentive to enforce them. According to Landers, shipping companies have an interest in seeing these virtual businesses succeed. “Every additional virtual brand signed up for shipping expands their digital footprint,” he says, while new orders improve the bottom line of shipping apps through commissions and marketing fees.
Maurialo says he went for a ride. “People don’t really care where their food comes from as long as it’s a commercial kitchen,” he says, and according to the numbers it might have a taste. In less than four months, Profit Cookers has been working with 46 restaurants in 10 countries, with each business posting sales of an average of $ 20,000 from the virtual brands, the virtual restaurateur claims. “It’s just going to get more common,” he says.