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How to Start A Virtual Restaurant

How to Start A Virtual Restaurant: Complete Guide

Last Updated on March 19, 2024 by Shari Mason

In today’s society, where convenience is highly valued, there has been a sharp increase in the desire for food delivery services. Surprisingly, some restaurants operate solely on a delivery-based model.

A delivery-only restaurant, often called a “virtual kitchen,” operates as a virtual restaurant with an exciting concept.

This business model accepts online orders and exclusively prepares food for customers through various online ordering platforms.

To assist you in launching your own food space, we’ve compiled a comprehensive guide on how to start a virtual restaurant and everything you need to know.

10 Easy Steps To Start A Virtual Restaurant 

1. Develop A Concept & Choose Your Niche

Infographics of Developing A Restaurant Concept

Developing an impactful restaurant concept is crucial for establishing a notable online presence.

Numerous restaurant owners and virtual restaurants opt for a unique food concept, ranging from a single-brand cloud kitchen to operator-managed virtual kitchens.

Deliberate on the specific factor you want your restaurant to embody.

When conceptualizing your virtual kitchen, contemplate the menu items and design, operating hours, logo, and so on, all tailored to resonate with your target audience.

Read: What Are The Types Of Restaurants?

2. Identify Your Target Customers

When the concept of your virtual restaurant diverges notably from your established brand or existing kitchen, it becomes necessary to identify your specific target market for your virtual restaurant services and new offerings.

Once you have a clear overview, you can now start planning the following:

  • Develop your virtual menu
  • Choose an ideal location
  • Improve your marketing strategies

To attract customers, it’s crucial to understand their preferences. Know your audience!

3. Identify Your Competition

Take note – understanding your competition is crucial to surpass them. It’s vital to be aware of the offerings your direct competition provides as you establish as you start a virtual restaurant and develop your menu.

Treat your competitors as valuable research resources; discover their suppliers, the technology platforms they use, the factors contributing to their success, and most importantly, their challenges.

This knowledge enables you to identify what’s ineffective in the industry and optimize what works best.

4. Register Your Business

Infographic of a Virtual Restaurant Registration

As per the law and local regulations, registering your business is very important. Acquaint yourself with the legal requirements for launching and running a virtual restaurant.

Typically, ghost kitchens are subject to regulation by the local health department and planning department.

All standard business health regulations and codes also apply to the operations of a ghost kitchen. Aside from registering your business, this entails tasks such as:

  • Obtaining a ServSafe Food Handler Certification
  • Procuring liability insurance
  • Arranging any essential inspections

5. Build Your Brand

Effective branding is essential for a virtual restaurant, even online. We suggest establishing a solid digital marketing presence across social media links or channels.

Having a graphic or web designer on your team can assist in creating a virtual brand that aligns with your vision and provides a user-friendly experience for your existing and new customers.

Collaborating with a copywriter is also beneficial to ensure a consistent brand voice that resonates with your target audience across all digital platforms.

6. Create Your Menu 

Most probably, the market you aim to enter already has numerous virtual kitchens providing the same services.

To outperform the competition, creating an exceptional menu and offering something unique that sets you apart is essential.

Besides, having a well-integrated menu that aligns with your brand identity is equally important.

Take advantage of the menu descriptions to appeal to your target audience, making the food sound irresistibly enticing. Consider giving your menu items catchy names that capture attention.

7. Secure A Commercial Kitchen Space

Infographics of Securing A Commercial Kitchen Space

If you already have an existing restaurant (or are already operating an established restaurant), this shouldn’t be a problem for you.

But for those who want to start a virtual restaurant, securing a commercial kitchen space or physical location is imperative. This will be your off-premise support kitchen, where all work will be done.

Many virtual restaurants implement delivery-only concepts. If you opt for the same restaurant concept, you don’t need large spaces. A small commercial kitchen space will do to cater to all kitchen operations.

8. Obtain Permits & Necessary Equipment

Even when operating a virtual kitchen or existing restaurant, obtaining all the required permits to ensure legal operation remains essential.

Additionally, create a comprehensive list of the equipment necessary for executing your menu, and consider renting or purchasing any equipment you do not already possess.

9. Hire Employees

Once the orders start flowing in, you must hire employees or collaborate with a business partner to handle fulfillment.

The payroll of traditional restaurants is significantly reduced to approximately 4-7 individuals when launching a virtual kitchen.

When considering the staffing needs for your virtual restaurant, you must factor in both food preparation and food delivery aspects.

10. Choose Your Delivery Service Partner

Infographics of a Delivery Service Partner

When choosing your food delivery service partner, you must consider inlining the technology for your virtual restaurant.

“A virtual restaurant is not just a restaurant without seats. It requires a different mindset and set up to be efficient.”

– Stephan Leuschner, Key Accountant Director at Rational AG

It includes determining the number of POS systems to handle online orders efficiently. Additionally, finding a reliable and exceptional online food delivery provider is vital.

We recommend choosing first-party delivery options instead of relying solely on third-party delivery services (or delivery apps) like GrubHub, Uber Eats, or Doordash.

This approach offers advantages such as higher profit margins (low expenses and overhead costs) and access to valuable customer data, which can significantly contribute to a successful virtual restaurant.

More Tips To Note Before Launching A Virtual Restaurant 

1. Always Be Creative

Infographics of a Vurtual Restaurant

Know that ghost kitchens or virtual restaurant business model is becoming increasingly saturated, with new restaurant spaces emerging every week and building a customer base.

To ensure the success of your idea in this competitive space, you should incorporate creativity into your business plan.

Also, you should prepare innovative solutions to stand out and thrive in the restaurant industry [1].

2. Price Your Items Reasonably 

Your revenue strategy dramatically relies on whether you opt for in-house or third-party food deliveries.

If you heavily rely on delivery apps, you must know that they may deduct up to 30% of your profits through charges for food delivery services.

3. Value Customer Feedback

Infographics of a Customer Feedback

Customer feedback is crucial in shaping and improving your virtual restaurant business.

Customer base insights and opinions provide valuable information about their experiences, preferences, and areas for improvement.

By actively listening to and valuing customer feedback [2], you can better understand their expectations and needs, allowing you to make informed decisions and implement necessary changes to enhance their satisfaction.

4. Learn To Market Your Brand Via Social Media

To generate awareness about your virtual restaurant (or virtual kitchen), we suggest establishing a solid social media presence across platforms like Facebook, Instagram, Twitter, and LinkedIn, aside from offline marketing.

If you want your virtual restaurant to be a global trend, enhance your online visibility by creating a captivating landing page and blog.

Also, conduct keyword research to identify optimal restaurant-related keywords and optimize your website’s SEO accordingly.

This may add up to your overhead expenses a bit. Still, we suggest hiring a digital or social media marketing expert (even temporarily) to leverage their expertise in maximizing the presence of your virtual restaurant.

5. Buy Insurance

Infographics of a Virtual Restaurant Insurance

Acquiring insurance is a prudent step to protect your virtual restaurant from potential risks and liabilities.

Research and select the right insurance with comprehensive coverage that suits your business needs.

Seek advice from food entrepreneurs and reach out to insurance providers specializing in restaurant or small business insurance to explore options, such as:

  • general liability insurance
  • property insurance
  • workers’ compensation insurance

Evaluate your specific requirements, and consult with insurance professionals to ensure you secure appropriate coverage for your virtual restaurant.

FAQs 

u003cstrongu003eHow does a virtual restaurant work?u003c/strongu003e

Virtual restaurants work exclusively online, without a physical dine-in space, unlike a traditional restaurant. u003cbru003eu003cbru003eCustomers place orders through a website or app, and the food is prepared in a kitchen. Delivery or pickup options are provided, focusing on efficient delivery and maintaining quality.

u003cstrongu003eAreu003c/strongu003e u003cstrongu003emost virtual restaurants profitable?u003c/strongu003e

Yes. Most virtual restaurants are profitable, typically generating sales ranging from 25-50% of what a traditional brick-and-mortar restaurant earns while benefiting from a considerably low capital investment [u003ca href=u0022https://www.investopedia.com/terms/c/capital-investment.aspu0022 target=u0022_blanku0022 rel=u0022noreferrer noopeneru0022u003e3u003c/au003e] and fewer resources. u003cbru003eu003cbru003eAs a benchmark, aiming for a profit margin of around 25-30% is generally considered favorable in the virtual restaurant space.

u003cstrongu003eIs a virtual restaurant the same as a ghost kitchen?u003c/strongu003e

No. A virtual restaurant isn’t the same as a ghost kitchen. u003cbru003eu003cbru003eA virtual restaurant refers to an establishment that operates exclusively through online channels, without a physical dine-in space, while a ghost kitchen [u003ca href=u0022https://theconversation.com/whats-a-ghost-kitchen-a-food-industry-expert-explains-163151u0022 target=u0022_blanku0022 rel=u0022noreferrer noopeneru0022u003e4u003c/au003e], also known as a dark kitchen, is a physical space where multiple virtual restaurant concepts operate, like Kitchen United. 

Final Say

Armed with comprehensive knowledge of how to start a virtual restaurant, you are now prepared to embark on your journey to success.

With these skills at your disposal, you’ll be running a thriving virtual restaurant in no time. Remember to showcase your brand proudly and continue delighting customers with delicious food offerings.

References:

  1. https://www.forbes.com/sites/garyocchiogrosso/2022/03/16/trends-affecting-the-restaurant-industry-in-2022/
  2. https://www.helpscout.com/blog/customer-feedback/
  3. https://www.investopedia.com/terms/c/capital-investment.asp
  4. https://theconversation.com/whats-a-ghost-kitchen-a-food-industry-expert-explains-163151
Shari Mason

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