Question:
Do you think a delivery-only restaurant can be viable for a new restaurant?
– Chef, Philadelphia
Answer:
Recently, delivery-only or virtual restaurants have increased in popularity, especially in major cities like New York, Chicago, and the Bay Area. With the rise in social media; a variety of high-quality, reliable third-party delivery services with app-based ordering; and rising prices for prime real estate, a virtual restaurant can be an attractive option.
There are a number of advantages to starting this way:
- Low rent. Delivery-only releases you from the obligation of having a high-visibility restaurant in a busy retail area. Industrial areas, basements, incubators/shared-use kitchens, and out-of-the-way locations (though central enough for delivery) can work.
- Less build-out. While you will still need an approved, inspected commercial kitchen in coordination with your local health department, losing the square footage and furnishing of a dining room can be a big savings.
- Scale up. With a brick-and-mortar restaurant, you need a certain amount of inventory, menu variety, and staffing to open for business. Especially if using a third-party delivery service with diverse options, you can start small with a virtual restaurant, even trying out just a few signature items to build brand, buzz and supporters.
That said, the virtual restaurant is still an urban phenomenon for the most part, though I think it could be well positioned in markets like college towns. Because you are delivery-only, the most important piece to consider is your relationship with your delivery company. Make sure the fees are reasonable enough to keep you competitive and, where passed on to the consumer, do not price you out of range. Since you don’t have the benefit of managing your own service, be sure you partner with someone who is reliable, service-oriented, and comfortable with the food safety and quality aspects of keeping your food hot, attractive and safe. Be sure, too, that your menu items and packaging are designed to travel well. Because you will not be spinning off a delivery-only restaurant from an existing brand, think carefully about how you will brand your concept.
For some, virtual restaurants can be a way to test the marketplace, gather investors and loyal guests, and get your menu and system down in preparation for a brick-and-mortar. For others, it will be an entirely different type of restaurant. More on virtual restaurants here.