The Age of Virtual Restaurants

It’s another late night in the office, and the team has ordered dinner from its favorite Italian chain again. None of the members have ever stepped foot into the local eatery, but they know that the chicken parmigiana is the best in town.

What they don’t know, though, is that the location doesn’t actually exist. Instead, it’s one of several virtual restaurants operated by the same owner.

Thanks to a surge in online ordering, more and more restaurant chains—from Chick-fil-A to The Halal Guys—are partnering with food-service start-ups to launch delivery-only spin-offs. These virtual restaurants, experts say, give established brands another way to capitalize on a multibillion-dollar market, as well as address an issue that’s facing leaders across industries: how to deliver a better consumer experience. “This is all about serving the customer and meeting customer expectations of ease and convenience,” says Sheila O’Grady, a Korn Ferry senior client partner.

With over 80% of Americans ordering delivery or takeout a few times per month, according to one Gallup poll, the benefits of virtual restaurants are twofold, experts say. Not only do they allow quick-service brands a way to fulfill online orders more effectively and efficiently, but they also help chains capture new markets not served by brick-and-mortar locations.

But virtual spin-offs have their downsides, too. Although some restaurant chains have built out their own ghost kitchens to satisfy online orders, others are working with third-party food delivery start-ups that operate shared kitchens, serving multiple brands at once. “That is an additional wrinkle for restaurants,” says Rui Di, a principal in Korn Ferry’s Global Consumer practice.

In other words, start-up leaders who are overseeing shared-kitchen models would need to reassure quick-service chains that they can produce the same quality the brand is known for, experts say. “You don’t want people to have an unrealistic expectation of the order they’re getting,” Di says.

And not just the quality of food, but the quality of delivery, too. To be sure, some third-party food delivery apps that are running shared kitchens are also struggling to offer seamless service in an increasingly competitive market. So, while virtual restaurants may be a great way for established brands to expand their businesses, issues with delivery operations could possibly undermine those efforts in the long run.

These challenges have significant implications for talent working in the emerging market. Both the leaders who run the shared kitchens and the staff who work in them would need to have considerable experience in order for virtual restaurants to succeed, experts say. After all, the team would be working across multiple menus every day and have to execute online orders to different standards for each one. “It’s a blend of serious operating expertise and really understanding the delivery systems,” O’Grady says.

In the end, even with the right talent, whether or not the virtual restaurant market is viable has yet to be determined, experts say. “It could be a novelty. It could be sustainable,” Di says. “But without a storefront, it makes the market more uncertain.”

Authors

  • Sheila O’Grady

    Senior Client Partner

    Bio >
  • Rui Di

    Principal

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