The following is a guest post from Chris Adams, vice president of strategy for Oracle Food and Beverage.
As our industry continues to evolve, restaurant owners are rethinking, reshaping and re-evaluating their revenue streams. Ghost kitchens, virtual brands and cloud kitchens represent an ongoing trend towards the diversification and digital evolution of the guest experience.
Restaurateurs, real estate developers and even grocers continue to experiment with new ways to best serve hungry consumers through virtual brands and learn how to make the most of physical spaces with less foot traffic. All inclusiveness to virtual brands certainly reduces the cost of upfront staff and food court, while giving restaurant operators the flexibility to test new concepts, reach new customers and create new sales opportunities, all while minimizing risk.
Consumer demand for delivery has soared during the COVID-19 lockdown, with 88% of U.S. consumers ordering takeout, and Oracle Food and Beverage’s research on restaurant trends shows takeout will continue to be in high demand. This poses new challenges for restaurateurs, who must strike a balance between steady demand for off-site dining and the rapid increase in consumer appetite for dining in a restaurant.
The ghost kitchen model shows value for the franchise, especially as chains use the model to make up for lost revenue from the pandemic. But while cloud kitchens offer an attractive opportunity for growth and diversification, all is not a smooth course. There are several commonalities among brands that have successfully moved beyond their traditional models, and it all depends on restaurant analytics.
Here are three ways technology can help restaurants perfect their customer-centric journeys for ghost kitchens, virtual brands and everything in between.
location, location, location
It seems counterintuitive to suggest, but location is important to the success of a ghost kitchen or virtual brand. Understanding the demand for various brand concepts is key, and it starts with consumer demographics and competition. Third-party delivery aggregators do this incredibly well, using consumer data and analytics in service areas to identify gaps in concepts.
This analysis is no different from determining where to open a new real space. The difference is that you are not bound by the physical radius or distance of your restaurant, but by the area of service you can cover and the cost of delivery. In our research, we have found that when ordering food online, it is important for consumers to understand the delivery location and time. Determining what an acceptable delivery time is for a customer is an important measure of this analysis to understand.
Smart menu development
No matter what sales channels you’re serving, it’s always best practice to use inventory analytics to evaluate your margin performance down to context. In the case of a ghost kitchen or virtual brand, this insight provides tips on where you can increase the profitability of your business. Identifying high-margin items that can be converted into a new concept is a smart approach. For example, if you run a table-serving Italian restaurant, curating items for a quick service brand that uses sauce and sides for tapas is a new spin on the existing kitchen your kitchen team has already perfected.
Measure frequently and continually improve
As with any new business venture, it’s important to define your key performance indicators (KPIs) at the start. Constantly measuring and improving your approach keeps you agile and on a path of continuous improvement. Many customers we spoke with are still developing their approach to ghost kitchens, as expected. While you’re eliminating the overhead of a dining room and front-of-house staff, you add marketing costs, delivery costs, and put your kitchen under additional pressure to balance production both in the dining hall and off-site.
One of the most important metrics is customer satisfaction. New customer relationships are fragile. Twenty-seven percent of customers stop ordering from restaurants after a bad takeout experience, and 77% think long wait times break the deal. Measuring customer satisfaction, repeat business, average check size, and profitability by channel is essential to long-term success.