Report: 41% of independent restaurants operate virtual brands

Dive Brief:

  • Forty-one percent of independent restaurants currently operate virtual brands to leverage persistent consumer delivery demand, according to a report commissioned by Grubhub and executed by Technomic, which surveyed 350 independent operators from Jan. 20-28, 2022.
  • Sixty-eight percent of survey respondents report their virtual restaurants are permanent additions, and 46% plan to open three or more virtual concepts in the next 12 months. On average, restaurants that offer virtual brands offer five unique virtual concepts, the companies said.
  • Virtual brands could support respondents’ desire for customizable direct ordering channels, as 97% of independents such channels are important. Ninety-one percent of independent restaurants cited access to customer data as important, along with commission-free ordering (88%) and branded experiences (92%).

Dive Insight:

About one-third of survey respondents already own direct delivery channels, and the report’s findings indicate operators have an increased reliance on digital marketing and ordering, Grubhub’s VP of Restaurant Services Kate Green said. 

“Operations have significantly changed for independent operators. They’re not just relying on their brick-and-mortar presence,” Green said. “The digital footprint for brands becomes more and more important.”

Virtual brands could help strengthen restaurants’ digital revenue streams. Green cited the low capital costs of operating virtual brands outside of extant kitchen space as one reason why independents may be attracted to them. 

Aggregators are also rolling out new platforms to help partner restaurants flex their digital muscles. Grubhub Direct, for example, allows Grubhub’s partner restaurants to build their own branded sites, Green said. Grubhub still charges order fees on orders placed through Grubhub Direct sites, though Green described these charges as “pass through” costs and said the service is not focused on increasing Grubhub’s revenue. 

Direct online ordering channels can also help operators capture valuable consumer data, which survey respondents indicated is important to long-term planning and can help determine “changes to their business or operations or or menu they may want to make tomorrow and in the future,” Green said.

Control of restaurant websites and customer data has become a legal issue. Some cities are suing delivery firms over allegations that delivery companies used restaurant branding without consent, and sometimes set up websites designed to appear as operator owned websites.

Grubhub and Google have both faced suits this year alleging they used deceptively branded restaurants to capture orders. Chicago sued Grubhub and DoorDash in 2021, alleging those companies advertised for restaurants without their consent. Grubhub sued New York City in December after city council passed laws mandating delivery aggregators share customer data with restaurants that request it, and established a licensing scheme for delivery companies.

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