What are virtual restaurants?

Virtual restaurants, which are also sometimes called ghost restaurants, are restaurants that only really exist on delivery apps and platforms.

What’s a virtual restaurant?

• Virtual restaurants, which are also sometimes called ghost restaurants, are restaurants that only really exist on delivery apps and platforms.

• But that doesn’t mean that these companies don’t have an actual storefront. Many of them do, but they run other restaurants that only exist virtually from their kitchen as well.

• For example, let’s say there’s an Italian restaurant called Mario’s that serves all your traditional Italian food, like pasta, lasagna and meatballs.

• The thing is, a lot of those same ingredients work great for a pizza too. So the kitchen for Mario’s might also make pizzas that they only sell through delivery apps like UberEats or Grubhub under the name of “Pizza Palace” on these tech companies’ platforms.

• If you went into Mario’s, you’d probably never know they sold pizza for delivery. And if you ordered a pizza from Pizza Palace, you’d probably never know it came from Mario’s.

Why are restaurants doing this?

• To put it simply, many restaurants are really just doing it to make a little more money in a time when physical restaurants are having a hard time.

• One good example of this is Chuck E. Cheese, an American pizza restaurant geared toward kids for its arcade and gaming areas in its restaurants.

• When the pandemic hit, though, people suddenly weren’t bringing their kids to go and touch the same games that everyone else had touched that day, much less throw pizza parties or group hangouts.

• The company’s revenue went downhill, and it actually went into bankruptcy from June to December of 2020, reemerging after US$705 million worth of debt had been paid off by new the new company that took over – CEC Entertainment.

• As part of the solution, the company launched Pasqually’s Pizza and Wings, a virtual restaurant whose menu of “a variety of handcrafted pizzas,” and “delicious twice baked wings,” are cooked inside the Chuck E. Cheese kitchens.

• “What I know is that Pasqually’s Pizza and Wings is not a short-term business for us or a stunt for us,” said Sherri Landry, the chief marketing officer for CEC Entertainment to Franchise Times.

• “We created the extension on purpose and that purpose was to deliver another at-home option for delicious food,” she said. “Even as things reopen, we see sales continue to grow. We think that there is promise for our virtual kitchen.”

Are virtual restaurants the same as ghost kitchens?

• Not really, but some people use the terms interchangeably.

• Ghost kitchens are similar, except instead of being secondary restaurants running out of a storefront, ghost kitchens don’t actually have a storefront or dining area. They only cook for delivery.

• Some of these ghost kitchens have been opened directly by the food delivery companies themselves, like when Deliveroo opened a set of shared ghost kitchens in major cities like London and Paris a few years ago.

• But other ghost kitchen companies are independent and thriving. This includes Panda Selected, a Beijing-based ghost kitchen company that received US$70 million in investments as of 2019 and is backed by large investors, such as Tiger Global Management LLC.

• Panda Selected operates 120 locations within China, and the company says that its kitchens are typically 5,000-square-feet in size and can accommodate up to 20 restaurants in each space, with many only existing in the online world just to deliver food.

What do consumers think of this?

• The truth is that most people don’t notice it, so it’s difficult to say what everyone truly thinks about it.

• But, some have said that it’s frustrating to find out that the seemingly local brand you thought you were supporting was actually a big chain.

• For example, one Reddit user said she was trying to buy from a local restaurant and said she was tricked into buying from Chuck E. Cheese.

What’s next?

• Well, many people seem to think that this business model for restaurants isn’t going away anytime soon.

• According to Erik Cheah, the owner and chef at a Wok Wok Southeast Asian Kitchen in New York, which runs 15 different virtual restaurants from its physical restaurant, this is the way their team plan on going in the future.

• Cheah said that Wok Wok plans on opening even more virtual restaurants from its storefront, with the main benefit being that it brings more and more people to the door for the food it serves in-house.

• “I don’t see any major drawback,” said Cheah in an interview with Vice. “Another order that comes in is another sale.”

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