Report: 41% of independent restaurants operate virtual brands

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Diving Brief:

  • Forty-one percent of independent restaurants are currently operating virtual brands to capitalize on persistent consumer demand for delivery, according to a report commissioned by Grubhub and executed by Technomic, which surveyed 350 independent operators from January 20-28, 2022.
  • Sixty-eight percent of survey respondents say their virtual restaurants are permanent additions, and 46% plan to open three or more virtual concepts in the next 12 months. On average, restaurants that offer virtual brands offer five unique virtual concepts, the companies said.
  • Virtual brands could support respondents’ desire for customizable direct ordering channels, as 97% of freelancers are important to these channels. Ninety-one percent of independent restaurants cited access to customer data as important, along with commission-free ordering (88%) and brand experiences (92%).

Overview of the dive:

About a third of survey respondents already have drop-shipping channels, and the report’s findings indicate that operators are increasingly reliant on digital marketing and ordering, said Kate Green, vice president of restaurant services. by Grubhub.

“Operations have changed dramatically for independent operators. They don’t just rely on their physical presence,” Green said. “The fingerprint of brands is becoming more and more important.”

Virtual brands could help bolster restaurants’ digital revenue streams. Green cited the low capital costs of operating virtual brands outside of the existing kitchen space as one of the reasons freelancers may be attracted to them.

Aggregators are also rolling out new platforms to help restaurant partners build their digital muscles. Grubhub Direct, for example, allows Grubhub partner restaurants to create their own branded sites, Green said. Grubhub still charges order fees on orders placed through Grubhub Direct sites, though Green described those fees as “pass-through” costs and said the service isn’t focused on increasing Grubhub’s revenue.

Online direct ordering channels can also help operators collect valuable consumer data, which survey respondents say is important for long-term planning and can help determine “changes to their business.” or their operations or the menu they might want to bring tomorrow and in the future”. said Green.

Controlling restaurant websites and customer data has become a legal issue. Some cities are suing delivery companies over allegations that delivery companies used restaurant branding without consent and sometimes created websites designed to appear as operator-owned websites.

Grubhub and Google have both faced lawsuits this year alleging they used deceptively branded restaurants to capture orders. Chicago sued Grubhub and DoorDash in 2021, alleging the companies advertised restaurants without their consent. Grubhub sued New York in December after the City Council passed laws requiring delivery aggregators to share customer data with restaurants that request it and established a licensing system for delivery companies.

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