How virtual brands and omnichannel are evolving F&B | Global Franchise
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Tuesday 4th October, 2022

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How virtual brands and omnichannel are evolving F&B

Insight

How virtual brands and omnichannel are evolving F&B

Restaurant franchises are looking for 2021 to be a true return to form, so they can’t afford to neglect these key tech shifts

Restaurant franchises are looking for 2021 to be a true return to form, so they can’t afford to neglect these key tech shifts.

Interview by Kieran McLoone, deputy editor for Global Franchise

You don’t need to be involved in the franchise industry to know that the food and beverage landscape has been totally transformed as a result of the pandemic. We’ve written previously about how take-out and delivery have monopolized consumer choice in recent months, and the true frontrunners this year will be brands that can adapt to the ‘new normal’ for restaurants.

But with the dust settling and vaccinations rolling out worldwide, what will this new normal actually look like? One of the clearest directions is aggregation – but not as we know it.

Understanding omnichannel

Third-party aggregation apps have been a mainstream way for consumers to interact with restaurants for years, with the likes of Just Eat, DoorDash, and Uber Eats being the go-to choice for many brands looking to make a virtual name for themselves.

But a new kind of aggregation is happening, and it’s coming in the form of omnichannel. No, that’s not a sci-fi TV show; omnichannel simply means the bringing together of all the ways that customers can interact with a brand. Think of it like this: if single-channel is dine-in, and multi-channel is dine-in alongside take-out, then omnichannel is unifying both of those experiences into one seamless process.

“The restaurant space has come late to the digital world,” says Jerome Laredo, co-founder and CRO of Deliverect, a software provider that helps restaurant brands to unify their processes. “Omnichannel can be delivery, takeaway, dine-in, kiosks – all these systems need to talk with one another, and they need to be all connected to a hub which is the operating system of the restaurant.”

The benefits of embracing omnichannel are numerous; especially for brands that have launched first-time digital ordering systems, but still want customers to benefit from the consistency that comes with a unified brand experience.

A service like Deliverect, for example, not only connects a restaurant’s ePOS system with other third-party online ordering platforms but also allows for real-time menu and stock management – ensuring that customers are never left in the dark about what they can actually order from your dark kitchen.

“One thing that the end-user doesn’t see is how a restaurant operator is managing menus, and making sure that menus are up to date and are consistent across all delivery platforms,” says Laredo. “If you really want to participate in the delivery opportunity, you need to create menus that aren’t just replicated from your store. You want to create delivery-specific bundles and promotions. You want to create menus for different times of the day. This creates the ability for operators to go beyond just putting the menu online, and actually use it as a marketing tool to better engage with customers.”

Omnichannel also allows restaurant franchises to obtain invaluable data about their customers that third-party aggregators may not readily provide. This could mean identifying when customers are using certain third-party apps, and limiting their use in downtime to encourage users to come to your restaurant channels directly.

“In the retail world, this notion of selling your own products alongside other people’s is completely normal”

“What we see a lot is a hybrid model where restaurant operators want to be on delivery platforms, but also have their own channels,” says Laredo. “They want to have loyalty from customers and be able to send them a coupon to order directly. Having all of this managed in the same place gives you more agility.”

Virtual brands, real success

Tangentially linked to the idea of omnichannel, virtual brands are another major trend dominating the 2021 market. These have been around for a few years in the form of ghost kitchens, but we’re now seeing more brick-and-mortar operators utilizing the space that they have in their kitchens to run multiple brands via delivery and take-out.

This has led to the phrase “restaurant-as-a-service” being coined by some industry experts, who believe that physical restaurants won’t be replaced by virtual kitchens, but will instead thrive by diversifying their offerings.

“You may have a chain of burger locations, but in their kitchens, they can also produce hotdogs or vegan burgers. Instead of having all of this on one menu, a restaurant can have different brands available on those third-party aggregator apps,” says Laredo. “In the past it was one kitchen for one menu, but now you can have one kitchen and four different menus to target four different audiences.”

This is something that the retail world has been doing for decades. Shops like Walmart or 7-Eleven don’t just sell own-brand goods. They utilize their real estate to offer as many different products as possible and reap the benefits of this collaboration.

In a recent discussion at the IFA2021 Virtual Annual Convention titled Virtual Restaurants: Disruption or Distraction?, Aziz Hashim, founder of investment firm NRD Capital, touched on exactly this: “In the retail world, this notion of selling your own products alongside other people’s is completely normal. It’s not considered a detriment or cannibalization; it’s considered a choice. And we’re the last industry to adopt this thinking.”

F&B may be late to the game, but some operators are already leading the charge in this virtual space. Nathan’s Famous, for example, launched 100 virtual kitchens throughout the pandemic, with its milestone 100th store opening in independent Brooklyn restaurant The Black Iron Burger.

Wow Boa, meanwhile, launched 100 dark kitchens within six months, and has plans to open more than 300 in less than a year. Estimates currently predict that there are around 100,000 virtual restaurants in the U.S. alone.

As touched upon, virtual brands aren’t going to replace the traditional brick-and-mortar, but some brands are using them as a way to test concepts that may not have previously been viable to launch as independent, physical locations. It’s a win-win for both the consumer and a franchise, as it broadens the variety of food on offer, and limits the risk in opening an entirely new venture.

“Convenience has been redefined with COVID-19,” said Barry Thomas, global customer and commercial performance marketing leader at The Coca-Cola Company during the same IFA2021 session. “Virtual restaurants are definitely part of the growth algorithm when moving ahead.”

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