These restaurant chains have created spin-off virtual brands

These restaurant chains have created spin-off virtual brands

dashboard delivery man

Source: DoorDash

A few years ago, established restaurant companies were building new restaurants to attract young consumers. This trend has not slowed down, but now these derivative brands only exist in cyberspace.

Virtual brands are restaurants available only on third-party delivery apps. Their manufacturers use existing restaurant kitchens to place orders from a menu designed for offsite customers. Pizza, chicken wings, and burgers are popular choices because they all travel well and usually don’t require additional equipment.

As virtual brands grew in popularity before the pandemic, the boom in takeout and deliveries during the health crisis prompted many other restaurant businesses to take advantage. For many businesses, virtual brands have been one of the few bright spots for businesses during the lockdown. According to the NPD Group, digital orders for U.S. restaurants increased 124% in the 12 months ended March 2021.

However, some industry experts believe the area is becoming overcrowded. Many virtual brands have similar menu concepts and offerings, and marketing can be difficult without a physical location to help build a reputation. Delivery sales are also expected to slow as consumers return to the food staple.

Here are the restaurant companies that have launched spin-off virtual brands:

bloomin brands

Customers enter Bloomin ‘Brands’ Outback Steakhouse restaurant at the Queens Place Mall in New York’s Queens Borough.

Victor J. Blue | Bloomberg | Getty Images

The parent of Outback’s steakhouse, Bloomin ‘Brands, launched Tender Shack a year ago in Tampa Bay, Fla., To cook chicken fillets and sandwiches at its Italian Grill Caraba restaurants. By February, he had launched more than 750 restaurants across the country, making his own food.

In April, Bloomin CEO David Deno told analysts that sales of Tender Shack had slowed somewhat with the reopening of Bloomin ‘Brands’ dining rooms. The company seeks to accelerate the commercialization of virtual brands to bring back customers.

“We believe the annual sales target of $ 75 million is achievable, but we have work to do on this,” Deno said.

Brinker International

One customer is Brinker International Inc. in San Antonio, Texas. Chili’s Grill & Bar heads towards the entrance to the restaurant.

Callaghan O’Hare | Bloomberg | Getty Images

Brinker International, owner of Little Italy of Chillies and Maggiano, launched It’s Just Wings in June 2020. A year later, as the company closed its fiscal year, its US sales exceeded $ 170 million. Over 1,000 Brinker restaurants are brewing the virtual chicken wing brand, and some international franchises have even started operating It’s Just Wings.

In the wake of the success of It’s Just Wings, Brinker also created a spin-off of Maggiano, the Italian classics of Magiano. More than 250 restaurants place virtual brand orders, nearly five times the number of locations for the flagship brand. Brinker estimates its footprint will reach 900 locations by the end of June.

“It will be a slow turnaround for several reasons,” CEO Wyman Roberts said during the August earnings call. “It’s a bit more complicated. And since we are back in a fully operational dining room, we are very attentive to the experience felt by our operators and our customers.

Applebee’s bar and grill

Applebee’s restaurant in Times Square in New York.

Roberto Machado Noa | LightRocket | Getty Images

Restaurant Dine Brands partnered with Uber Eats in February to present Cosmic Wings, a concept created to braise chicken wings with crushed Cheetos. The launch took place nationwide, with nearly 1,300 Applebee’s restaurants making their Cheetos Fried Cheese Bites. Ten weeks after its launch, Cosmic Wings averaged $ 330 per restaurant per week of sales.

The brand was also set to expand into DoorDash’s delivery app. However, the lack of a chicken wing – due to the rise of virtual food-focused brands – delayed those plans indefinitely.

“We anticipate significant additional demand with this expansion, and we want to ensure that there is sufficient supply to properly meet that demand,” Dine Brands CEO John Cywinsky said in the latest earnings call for the society. “In the meantime, I will refrain from commenting further on Cosmic Wings results until we pull that leverage with DoorDash, hopefully at the end of the fourth quarter.”

wing stop

Thighstop launched today as a virtual brand, focusing on chicken thighs.

Source: Thigh stop

The shortage of chicken wings and high prices prompted another restaurant chain to get creative: Wingstop. Last June, the company went from chicken wings to thighs with its new virtual brand Thighstop. Customers can place their orders for delivery or delivery to 1,400 locations nationwide through DoorDash or on Thighstop.com.

But Wingstop has big plans for Thighstop. CEO Charles Morrison said in late July that the company plans to integrate the Thighstop menu into Wingstop restaurants. The initial idea to launch Thigstop as a virtual brand was to offer consumers a way to eat more chicken than just wings.

“Right now it’s just a matter of maximizing volume and using it to unlock the ability for chicken to get better long-term value,” Morrison told analysts.

chuck and cheese

A sign is erected outside of Chuck E. Cheese’s restaurant on June 25, 2020 in Pinole, California.

Justin Sullivan | Getty Images

Pasqually’s Pizza and Wings launched in March 2020 as the lockdown closed the Chuck E. Cheese arcade and pizzeria. Named after a member of the chain’s animatronic group, Pasqually’s pizza has a thicker crust, more sauce, and different cheese mixes than Chuck E Cheese’s pizza.

Pasqually played Chuck E. It didn’t help Cheese’s parent company CEC Entertainment avoid Chapter 11 bankruptcy in late June 2020, but it did provide a source of income for the company as its others sales were drying up. CEC Marketing Director Sherry Landry told QSR magazine in July 2020 that virtual brands accounted for 10% of sales. As CEC is a private company, it does not report its financial results.

mermaids

The Hooters Casino Hotel seen on January 30, 2006 in Las Vegas, Nevada.

Ethan Miller | Getty Images News | Getty Images

For Hooters, the virtual brand is an easy solution to its non-family reputation. The catering company, which is privately owned by Nord Bay Capital and its advisor TriArtisan Capital Advisors, opened three different virtual brands during the pandemic: Hootie’s Burger Bar, Hootie’s Bat and Tackle and Hootie’s Chicken Tenders. While the names are close, most gullible consumers are unlikely to link virtual brands to Hooters.

Hooters does not publish financial results because it is a private company.

Denny’s

Denny’s waitress serves breakfast to customers.

Justin Sullivan | Getty Images

Denny’s launched two virtual brands earlier this year, Melt Down and Burger Den. Melt Down specializes in artisanal sandwiches with a menu that uses around 70% of Denny’s pantry items, while Burger Den’s menu focuses on classics and new Denny’s signature items. Burger Den orders are being fulfilled at 1,100 restaurants nationwide, while Melt Down is available in nearly 700 locations, and more are on the way.

CEO John Miller told analysts in early August that the company is seeing average incremental sales growth of 3% every week thanks to Burger Den and Melt Down. Melt Down generates average weekly sales per restaurant of $ 1,200, while Burger Den locations have an average of $ 600 per week.

BJ Restaurant

BJ’s restaurant and brasserie

Scott Varley | MediaNews Group | Register via Orange County Getty Images

BJ’s Restaurants began testing a virtual brand called Slow Roast in the fourth quarter as its off-site digital sales increased during the pandemic. At the end of July, about 30 of its restaurants in California and Texas were filling orders for Slow Roast.

The new brand’s meat-focused menu includes BJ’s slow roast and baby back ribs, although CFO Gregory Levine said on the company’s latest earnings call that the next phase of testing will include changing the menu. The company is also looking to complete its restaurants before launching Slow Roast. The reduction in the workforce means that there is a shortage of staff in many bars and restaurants.

Jack in the box

A selection of dishes from the Jack in the Box menu on Campus Drive in Irvine, California.

Glenn Koenig | Los-Angeles | Getty Images

After garnering another million subscribers on the social media app, Jack in the Box has teamed up with musician and TikTok star Jason Derulo for a limited-time spinoff brand, One in a Milly. Food was only available for delivery by Uber Eats in Los Angeles over a two-week period in June.

The menu includes some existing Jack in the Box items, such as his Tiny Tacos and the new Triple Bacon Cheese Jack, as well as new ones inspired by Derulo’s over-the-top TikTok food, like the Bacon Churro Milli Shake.

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