For Craig Barber, virtual brands have been a source of something that’s been in short supply for many restaurant operators recently: fun.
The O’Charley’s CEO has relished the job of developing the chain’s delivery-only concepts, like Dockside Charley’s and Underground Chuck’s, and then figuring out when and where they will get the best returns.
“The fun parts of having those brands is that you have the ability to optimize,” he said. “It’s unique and candidly a new frontier.”
Virtual brands have taken off during the pandemic, especially among full-service chains. They’re seen as a way to generate incremental sales via delivery, and were particularly helpful when dining rooms were closed or limited.
And while they may be fun, the brands have become a serious business at O’Charley’s. They are generating sales equivalent to five additional restaurants for the 148-unit casual-dining chain.
“You’re accomplishing that with no capital investment,” Barber said.
O’Charley’s started trying out the brands early in the pandemic, when 100% of its business shifted to off-premise. It’s gone on to add four of them, and its sister concept, Ninety Nine Restaurants, has two, with a third on the way this month. All are available on DoorDash and Uber Eats.
O’Charley’s brands are based around existing menu items that the chain does well. It spun off its chicken fingers, for instance, as Coop & Run, adding a wide range of dipping sauces for an extra twist.
Each brand is intended to stand on its own, Barber said, and their connection to O’Charley’s is not obvious.
“A few consumers have figured that out, but most haven’t,” he said.
The brands are seen as a way to drive incremental sales to restaurants, but only when they can handle the extra volume.
“If we’re not 100% at capacity of our throughput, then let’s add on something,” Barber said.
The beauty of the brands, from his perspective, is that once they’ve been introduced, O’Charley’s can toggle them on and off depending on when they’re most popular and how busy the brick-and-mortar is. Coop & Run does well at both lunch and dinner all week long, Barber said, while Dockside Charlie’s tends to work best at night.
A brand may be available one day and turned off the next. On Mother’s Day, all of O’Charley’s virtual brands were dark as it anticipated a lot of regular traffic.
“That’s a unique, kind of weird new thing for us to consider,” Barber said.
There are concerns that delivery could start slowing down as more people return to restaurants and prices rise. In that scenario, delivery-only brands could be acutely affected.
At O’Charley’s, off-premise volumes are still 2.5 times bigger than they were before the pandemic, Barber said, and the virtual brands continue to do well within their various niches.
“It’s like any restaurant we have. Some of our restaurants do great during the week. Some of them do better during the weekend. Some of them do great at lunch, some do better at dinner,” Barber said. “The virtual brands are really no different.”
O’Charley’s on-premise sales, however, are still below where they were before the pandemic. It’s working on dialing those up, too.
“We wish it were better,” Barber said. “It’s not where it was pre-COVID. But we’re working hard to make sure that we give our guests a reason to come in.”
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