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Online Food Ordering Gives Rise to ‘Virtual’ Restaurants
When it comes to eating, more Americans are ordering in instead of eating out. In some restaurants, cooks make food for other online restaurants at the same time.
Like at Frato's Pizza, a family restaurant in Chicago. In the kitchen, the cooks make pizza. But they also make chicken, salmon and even frozen milk drinks—all of which can only be ordered online.
Frato's owner, Michael Kudrna, launched the online-only businesses earlier this year to keep up with new eating trends. He says one third of his sales come from people using third-party apps on their cell phones. But those sales also cost him. Third-party apps can charge as much as 30 percent to manage the ordering and delivering of the food.
David Portalatin is a food industry adviser for the NPD group.
He says the $26.8 billion online ordering market is the fastest-growing source of restaurant sales in the U.S.
Online orders are only 5% of all restaurants orders, but they are growing about 20% each year. The number of restaurant visits remain unchanged.
One kitchen, many restaurants
The increase in online ordering in the U.S. has created openings for new kinds of businesses.
One is called Kitchen United. It builds kitchens for restaurants that want to enter delivery or take-out markets. Chick-Fil-A, The Halal Guys and Dog Haus all have opened kitchens through them.
Another company, DoorDash, delivers food to customers who order online. Fuad Hannon is the head of new business at DoorDash. He told the Associated Press that the industry is still young. It may be too soon to know how it will grow, he said, "but what we know is that people love to get their favorite restaurants delivered."
Two other businesses, Grubhub and Uber Eats, say their virtual restaurant programs help small businesses compete. Both reach out to restaurant owners with suggestions for online restaurants based on data from customer searches. This information helps owners think about everything from how people get their food to what should go on the menu.
Kristen Adamowski heads Uber Eats. She says they have helped launch 4,000 virtual restaurants worldwide, about half of them in the U.S. and Canada.
The good and the bad
Virtual restaurants have the benefit of testing new ideas without taking on expensive leases or employing more workers, said Rick Carmac, with the Institute of Culinary Education in New York.
But he said small restaurants should look at the risks before starting an online restaurant suggested by third-party app businesses. Those businesses offer no training for kitchen staff to get used to making new foods.
Other things to consider: whether their delivery containers are right for new dishes, or whether they want to increase their dependence on outside delivery drivers.
Those are not small or easy things, said Carmac, who has worked with Uber Eats. He expressed concerns about the company's method, saying, "They give you the data, and then they leave."
I'm Anne Ball.
