According to Market Watch, the virtual restaurant food delivery market is set to grow with an impressive 12.5% CAGR in the period between 2021 and 2027. By 2030, forecasts indicate that the market will reach 13.79 billion USD.
It’s a massive measure of growth from a market that – until recently – most people had never heard of. But that is characteristic of virtual restaurants as a whole: fast and disruptive, with a finger on the consumer pulse.
First, a few things to know about virtual restaurants. By definition, virtual restaurants are delivery-only food concepts that operate out of existing commercial kitchens. They have no storefront, no physical signage; they are only available online, via food ordering apps. And they are wildly popular.
But why? What’s driving the boom in virtual restaurants?
To answer that question, you need to approach from three separate vantage points: the consumer, the virtual restaurateur, and the brick-and-mortar restaurant. In this article, let’s explore the reasons behind the ascending popularity of virtual restaurants.
The digital consumer
In part, you can attribute the popularity of virtual restaurants to consumers. As smartphone use grows, consumers continue to demand smartphone-based commerce solutions. They shop on their phones, read the news on their phones, pay for parking on their phones… and they order food via mobile apps too.
The pandemic certainly catalyzed this mobile-first mentality, especially regarding restaurants. As governments and health experts imposed (or recommended) mobility restrictions, people turned to food delivery apps to order their meals. Ordering food on a mobile app was contactless, convenient and quick.
For virtual restaurant owners, the answer is ease and affordability
For their part, restaurateurs took note of the shift in consumer habits. People are ordering restaurant food with roughly the same regularity as before – only now, dining rooms are emptier. It doesn’t make as much sense to pay for the real estate of a full-service restaurant, when you can sell a product without it.
Naturally, chefs and food entrepreneurs saw virtual restaurants as an opportunity to cut expenses and, consequently, increase profits. A virtual restaurant owner just needs a commercial kitchen from which to operate; to facilitate that partnership, they can team with a virtual restaurant network. It’s an easy, affordable and barrier-free way to enter the restaurant market.
The sell for brick-and-mortar restaurant owners
You might be wondering: What’s in it for the brick-and-mortar restaurants that appear to be negatively affected by the upswing in virtual restaurants?
In fact, virtual restaurants are beneficial to brick-and-mortar restaurant owners too. All but the most crammed restaurants have off-peak hours. They still pay for staff during those hours; they still pay for the lease during those hours; and they still factor the costs of utilities, equipment, maintenance, etc., into those hours. They might as well use those off-peak hours to generate more revenue.
That’s where virtual restaurants prove advantageous. A brick-and-mortar kitchen can fulfill orders for a delivery-only virtual restaurant during its downtime, thereby increasing the overall productivity of the restaurant.
To recap, virtual restaurants appeal to consumers, food entrepreneurs and current brick-and-mortar restaurant owners. Viewing virtual restaurants through these lenses, it’s easy to see why the model is surging in popularity.
Story by Michael Adams
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