Casey Lewis was browsing Seamless for a bacon, egg and cheese sandwich when it occurred to him, “What are all these random breakfast deals?” Lewis has lived in Williamsburg for years and describes herself as a regular Seamless user, but on April 6, she noticed a slew of new businesses listed on the delivery app: All Day Breakfast, the Best Breakfast Company, Anytime Breakfast Sandwiches and others. “The names were so generic,” she says. “Something seemed off.”
It turns out that all three companies — and more than a dozen others — are tied to the same Williamsburg address, which is owned by Kellogg’s restaurant, which has been open 24 hours a day for decades. Lewis, who tweeted about the puzzle detail earlier this month, is not the only one confused.
At first glance, Kellogg’s-linked businesses might look like ghost kitchens, but they’re actually part of a new class of online restaurants called “virtual brands,” according to Scott Landers, founder of delivery consultancy Figure 8. , whose customers have included chain restaurants like &Pizza and Mexicue.
While shadow kitchens operate from separate commercial spaces that don’t have a physical dining room, virtual brands operate from physical restaurants that already exist. The companies offer the brands — which typically consist of a logo, name and short menu — then license them to restaurants and bars, which execute the recipes and package them for takeout and delivery.
National restaurant chains like Chili’s, TGI Friday’s and Denny’s have operated virtual brands for months, but now smaller independent operators are joining them. Take Anytime Breakfast Sandwiches, one of the businesses Lewis encountered on Seamless. The virtual brand delivers its food to several restaurants across the city, including Skylight Diner in Manhattan, Brooklyn Bagels and Cafe in Staten Island, and Kellogg’s Diner in Brooklyn.
Profit Cookers is one of many companies currently creating and licensing virtual brands to restaurants. The Florida-based company comes from founder Kirk Mauriello, a restaurateur who previously worked for virtual restaurant group Virturant before launching Profit Cookers in January. It has since licensed its portfolio of 23 brands, which make everything from burgers to breakfast burritos, to nearly 50 restaurants and bars across the country. Kellogg’s Diner is one of them.
“The best restaurant for that is a diner,” Mauriello says, “because they already do everything.” Part of the talk is that restaurants may already be preparing dishes similar to those offered by the virtual brands they adopt, and in some cases it is possible to use the same ingredients for multiple concepts.
For a restaurant like Kellogg’s, which serves hundreds of items on a menu with more words than some NDAs, signing was a no-brainer. “We were looking for ways to resume our delivery business,” says Irene Siderakis, owner of Kellogg’s. So far it works.
Siderakis partnered with Profit Cookers in February, running 18 of the company’s virtual brands from the 24-hour restaurant. Since signing, she’s already seen around $40,000 in additional sales, Mauriello says, in part because brands are operating with expanded delivery hours and radiuses. Kellogg’s stops taking orders on its personal delivery apps after midnight because the restaurant uses its own delivery drivers.
Her virtual brands accept orders around the clock, and she credits the new business as one of the reasons the restaurant has been able to stay open 24 hours a day when so many other late-night businesses have had to cut their hours. during the pandemic. “It generates income that we need to survive right now,” she says.
Companies like Profit Cookers often seek to partner with older restaurants that may not have a significant online presence, Landers says. They are betting on the idea that it is easier for restaurants to leverage another brand, which could bring name recognition to operate in other boroughs or cities, than to build their own from zero. In exchange, companies take a cut of every sale — 10%, in the case of Profit Cookers — and raise the cost of online orders to boost restaurant profits.
A bacon, egg and cheese sandwich ordered from Rise and Grind Cafe, a virtual Kellogg’s brand not associated with Profit Cookers, can cost $20, while a similar sandwich is $7.45 off the in-person menu at the restaurant. “Restaurants shouldn’t sell their food for the same price online as they do in person,” Mauriello says. “You pay for convenience.”
Brands are putting money in the pockets of restaurateurs at a time that badly needs it, Siderakis says, but they come at the cost of some transparency for consumers, who may think they’re ordering from… a physical establishment. On Uber Eats, Grubhub and Doordash, only the latter app notifies customers when ordering from a virtual restaurant. A disclaimer can be found at the top of the order page – “This is a virtual brand” – although it is located on slide three of a four-slide carousel with promotional codes for delivery to reduced price. There is no additional context on how virtual marks work.
“Traceability and accountability are real concerns,” says Landers. “Who owns this order?” Did the restaurant do it? Is it the [company] who created the brand? Did Grubhub deliver the order?
Virtual brands are required to comply with local health and safety regulations and delivery app merchant agreements, but none of the aforementioned apps limit the number of virtual brands an individual restaurant can operate or the number of dishes that each brand must serve to be listed on their platform. , as long as each concept is “unique” and “not a duplicate menu,” according to a Grubhub spokesperson.
The world of virtual brands has few rules, and third-party delivery apps have little incentive to enforce them. According to Landers, delivery companies have a vested interest in seeing these virtual businesses succeed. “Each additional virtual brand that signs up for delivery expands its digital footprint,” he says, while new orders increase delivery app results through commissions and marketing fees.
Mauriello says he’s on board. “People don’t really care where their food comes from as long as it’s a commercial kitchen,” he says, and judging by the numbers, he might be right. Less than four months later, Profit Cookers is already working with 46 restaurants in 10 states, with each business averaging $20,000 in sales from the virtual brands, claims the virtual restaurateur. “It’s only going to get more prevalent,” he says.