These restaurant chains have created derivative virtual brands

A few years ago, established catering companies created new restaurants to attract younger consumers. This trend has not slowed down, but now these derived brands only exist in cyberspace.

Virtual brands are restaurants available only in third-party delivery applications. Its creators use existing restaurant kitchens to serve orders from a menu designed for off-premises customers. Pizza, chicken wings and burgers are popular choices because they all travel well and don’t usually need extra equipment to make.

While virtual brands were increasingly popular before the pandemic, the boom in delivery orders and delivery during the health crisis has led many more catering companies to take the plunge. For many companies, virtual brands were one of the few bright spots for companies during closures. During the twelve months ended March 2021, digital orders for American restaurants grew 124%, according to the NPD group.

However, some industry experts think the field is concentrating too much. Many virtual brands have similar menu concepts and offerings, and marketing can be difficult if you don’t have a basic location to help you build a reputation. Delivery sales are also expected to moderate as consumers eat at home again.

Here are the catering companies that have launched virtual derivative brands:

Bloomin ‘Brands, father of Outback Steakhouse, premiered Tender Shack in Tampa Bay, Florida, a year ago, cooking chicken shops and sandwiches at Carrabba’s Italian Grill headquarters. By February, it had launched nationwide with more than 750 restaurants manufacturing its food.

In April, Bloomin CEO David Deno told analysts that Tender Shack sales had softened some as Bloomin ‘Brands’ dining halls opened. The company wants to increase virtual brand marketing to regain customers.

“We believe the $ 75 million annualized sales goal can be achieved, but we have some work to do in that regard,” Deno said.

Brinker International, owner of Little Italy by Chili’s and Maggiano, launched It’s Just Wings in June 2020. A year later, when the company closed the fiscal year, its sales in the United States exceeded $ 170 million. More than 1,000 Brinker restaurants cook the brand’s chicken wings and some international franchisees have even started operating It’s Just Wings.

Following the success of It’s Just Wings, Brinker has also created a spin-off of Maggiano, Maggiano’s Italian Classics. More than 250 restaurants place virtual brand orders, approximately five times the number of flagship locations. Brinker expects his footprint to reach 900 locations by the end of June.

“This will be a slower process for a couple of reasons,” CEO Wyman Roberts said in the August earnings call. “It’s a little more complex. And as we return to fully operational dining rooms, we’re being very intentional about the experience of our operators and our guests.”

Dine Brands restaurant partnered with Uber Eats in February to introduce Cosmic Wings, a concept based on chicken wing bread with crushed Cheetos. The launch was made nationwide, with nearly 1,300 Applebee restaurants cooking their Cheetos fried cheese bites. Ten weeks after launch, restaurants were averaging $ 330 per location each week in Cosmic Wings sales.

The brand is also expected to be extended to the DoorDash delivery app. However, the scarcity of chicken wings, due in part to the increase in food-focused virtual brands, has caused an indefinite delay in these plans.

“We anticipate significant incremental demand with this expansion and want to secure enough supply to adequately meet that demand,” John Cywinski, CEO of Dine Brands, said at the company’s latest earnings call. “In the meantime, I’ll stop commenting more on Cosmic Wings’ results until we pull that lever with DoorDash, hopefully, at the end of the fourth quarter.”

The scarcity of chicken wings and higher prices pushed another restaurant chain to get creative: Wingstop. This June, the company spun from chicken wings to thighs with its new virtual brand Thighstop. Customers can place their delivery or shipping orders in 1,400 locations nationwide through DoorDash or Thighstop.com.

But Wingstop has bigger 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 of ​​launching Thighstop as a virtual brand was intended to introduce consumers to eating more chicken than just wings.

“Right now, it’s about maximizing volume and using it to really unleash the opportunity to get much better long-term chicken prices,” Morrison told analysts.

Pasqually’s Pizza and Wings was launched in March 2020 when the blockades closed Chuck E. Cheese’s galleries and pizzerias. Named after a member of the chain’s animatronics band, Pasqually’s pizza has thicker crust, more sauce, and different cheese blends than a Chuck E. Cheese pizza.

Pasqually’s did not help Chuck E. Cheese’s parent company, CEC Entertainment, escape Chapter 11 bankruptcy in late June 2020, but provided a revenue stream for the business as its others sales dried up. Sherri Landry, CEC’s head of marketing, told QSR magazine in July 2020 that the virtual brand accounted for 10% of sales. Because CEC is a private company, it does not report its financial results.

For Hooters, virtual brands are an easy solution to their not-so-familiar reputation. The privately owned restaurant company Nord Bay Capital and its adviser TriArtisan Capital Advisors opened three different virtual brands during the pandemic: Hootie’s Burger Bar, Hootie’s Bait and Tackle and Hootie’s Chicken Tenders. While the names are close, more modest consumers probably wouldn’t link virtual brands with Hooters.

Hooters does not report financial results because it is privately owned.

Denny’s launched two virtual brands, Melt Down and Burger Den, earlier this year. The Melt Down specializes in handmade sandwiches with a menu that uses approximately 70% of Denny’s pantry items, while the Burger Den menu focuses on Denny’s classics and the firm’s new items. Burger Den orders are served at 1,100 restaurants across the country, while Melt Down is available in approximately 700 locations, and more are on the way.

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

BJ’s Restaurants began testing a virtual brand called Slo Roast during the fourth quarter as its off-premises digital sales increased during the pandemic. By the end of July, about 30 of its California and Texas restaurants are fulfilling Slo Roast orders.

The brand’s meat-focused menu includes BJ’s slow roast and baby’s back ribs, though chief financial officer Gregory Levin said in the company’s latest earnings call that the next step for in the tests it will involve modifying the menu. The company is also looking for its restaurants to be fully equipped before accelerating Slo Roast. The lack of manpower has meant that many bars and restaurants have a small staff.

Jack in the Box teamed up with TikTok musician and star Jason Derulo for a limited-time derivative brand, One in a Milli, after gaining a million followers on the social media app. Meals could only be delivered at Uber Eats in Los Angeles for two weeks in June.

The menu contained some existing Jack in the Box items, such as their Tiny Tacos and the new Triple Bacon Cheesy Jack, as well as new ones inspired by Derulo’s TikTok meals, such as the Bacon Churro Milli Shake.