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Nextbite exec explains how carriers can make virtual brands successful

CHICAGO— At the height of the pandemic, some restaurants began seeking virtual brand partnerships or developing their own digital-only concepts as a band-aid for lost revenue. But virtual brands have a lot more potential — and require a lot more thoughtful precision — than the bolt-on side hustle some operators think these concepts are, Nextbite chief growth officer Geoff Madding told Restaurant Dive at The National. Restaurant Association Show.

“[Virtual brands were] definitely a lifesaver, and that’s great. We were happy to help with this. But we really believe the industry is moving in that direction,” Madding said.

Nextbite, which is powered by online ordering platform Ordermark, creates turnkey digital brands that can be applied to a wide range of restaurants based on their latent capacity and headcount. Many of the company’s concepts are built around celebrity ambassadors, including chef Tom Colicchio’s “Wichcraft” sandwich concept and Wiz Khalifa’s Packed Bowls, which were announced last week.

Nextbite can easily scale virtual brand innovation with enterprise chains like IHOP, which launched Thrilled Cheese and Super Mega Dilla in March, thanks to available funding, supply chain and marketing capabilities, Madding said. . But half of the company’s customer base are small operators, and independents also have the ability to grow virtual brands on their own, he said.

To get started, operators need to answer a few key questions.

“Is there unmet demand in the market by the consumers you are trying to satisfy? Will this be an operational adjustment, so not disruptive to your kitchen? Madding said. “Then, if you take it as seriously as your physical business, you will succeed. If you don’t, you probably won’t,” Madding said.

Forty-one percent of independent restaurants already operate virtual brands, according to a January report commissioned by Grubhub and executed by Technomic, and 68% of those respondents say their concepts are permanent additions. Looking ahead, 46% of independents plan to open three or more virtual brands in the next year.

For restaurants looking to embark on virtual operations, Madding explains what to consider before investing and what opportunities the future may present.

This interview has been edited for clarity and conciseness.

RESTAURANT DIVE: I see a lot of virtual brands that are very focused on current trends. Do these concepts become LTOs?

Geoff Madding: It might look like this operationally – you have a new product, you need to do some new marketing, maybe you’re trying to capture a specific trend or season. At its core, it always starts with consumer expectations, meeting or exceeding them, plus food of a certain quality, plus an experience that is delivered one way or another. It’s not a small amount of work to do. Do you understand the math behind this? Will it be profitable for you? Do you use virtual branding to generate excitement around your own brand?

I like to think virtual marks can be more of an extended LTO, where as opposed to a few months you might have a few years of success with it. The good thing about this approach is that trends change. If you build a virtual brand that works great for three to five years and then you change the name, there’s not a lot of sunk cost and it’s pretty easy to pivot.

To deliver a compelling experience, do virtual brands need a hook like a celebrity partnership?

BAIT: I think in a way you’re going to have to stand out because it’s become a very crowded market. So the question is How? ‘Or’ What do you stand out? It can be done by associating with celebrities, which we have done, by associating with celebrity chefs, which we have done. Existing brand equity can help. And you can stand out by pitching interestingly, marketing interestingly, and finding pockets of unmet demand.

For example, some of our breakfast concepts are our best-selling brands, and not too long ago it was thought that breakfast delivery wouldn’t work. But we’ve seen a ton of demand, and there’s not enough supply for that. So what you can do is be the first to market in those areas and start building a consumer base, so when it’s busy – if you’ve done a good job – consumers will always come to you because they trust you.

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