Third-party delivery provider Hungr has launched its own suite of virtual brands for restaurants, powered by data and a partnership with a major broadliner that the company says will allow restaurants to just focus on making the food.
Hungr, which works with about 40,000 restaurants nationwide, is believed to the be the first delivery company in the U.S. to offer its own such concepts, said CMO Aaron Mortensen.
The San Diego-based company used troves of customer data to develop eight Hungr Kitchen brands, which include Orbit Pizza, Well Built Burger and Bongo BBQ, available exclusively on Hungr for delivery only. It looked at what kinds of things diners were searching for on its marketplace to shape the brands and menus, and will continue to lean on data and artificial intelligence to market them, Mortensen said.
Hungr is partnering with large distributor US Foods to source all product to ensure consistency, and will also handle delivery for Hungr Kitchen concepts. Restaurants can pick and choose which brands to offer based on their market and existing menu and equipment.
Hungr will take a cut of between 60% and 70% of each order total—much higher than its typical 12% delivery commission. Mortensen said it is needed to cover the product, marketing, delivery and support that Hungr provides.
“We’re gonna take on the risk; you’re gonna do what you do best, which is preparing the food,” he said.
The prospect of a third-party delivery company creating its own brands has been a specter for restaurateurs, who worry they would then have to compete against those privileged concepts within a provider’s marketplace. Mortensen acknowledged those hangups, but said restaurants are integral to the Hungr Kitchen model.
“Here’s what we don’t know how to do: We’re not cooks,” he said. “We can program, but you still need that depth, you still need that expertise, and in reality, it’s not cost-effective to open up a restaurant location just to open up these brands out of.”
“The idea is to support the restaurants, because on a larger scale, you need the restaurants to survive,” he said. “Otherwise you don’t have a delivery company and you don’t have virtual brands.”
In a pre-pilot canvas of restaurants, between 60% and 70% expressed interest in the idea, Mortensen said.
“Immediately we’re seeing that, hey, this is a good direction, this makes sense, restaurants like it,” he said.
Virtual brands have been a hot topic lately as many restaurants bring them aboard to make use of excess kitchen capacity during the pandemic. But the glut of new concepts has many people wondering what will happen when the dining environment returns to normal.
“The ones that are not looking at the consistency and quality, they’re going to a have a really hard time to survive long-term,” Mortensen said. “That’s probably our No. 1 focus.”
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