As restaurants grow their digital footprint, larger chains are leveraging their name recognition to expand virtually without investing in costly new physical restaurants.
Fast-casual brands Capriotti’s Sandwich Shop and its subsidiary Wing Zone, which collectively have more than 200 locations in the U.S. and 30 abroad, announced Wednesday (Aug 3) a partnership with ghost kitchen management company RaaS (Restaurant as a Service) to grow its virtual presence.
“We are eager to partner with an industry-leader to help expand our brands into even more territories across the country,” David Bloom, Chief Development and Operating Officer for Capriotti’s and Wing Zone, said in a statement. “While we believe our brick-and-mortar locations are unmatched in the fast-casual space, both Capriotti’s and Wing Zone have proven to be successful ghost kitchen operations as well and we are eager to employ both means of operations to ensure consumers nationwide are provided the opportunity to experience the difference first-hand.”
The company is taking a tip from casual dining chain TGI Fridays to grow the brand with minimal CapEx. In an interview with PYMNTS’ Karen Webster earlier this year, Andrew Robbins, CEO of Software-as-a-Service customer experience management solutions provider Paytronix, explained that the chain has been licensing its brand virtually to independent operators to capitalize on its name recognition and grow its geographic footprint.
“TGI Fridays had as something like 94% consumer awareness — consumers know the brand,” Robbins said. “But something like only 20% of people can go to a TGI Fridays. That’s 74% that they’re missing on because of physical constraints.”
On the extreme end, Chicago-based Asian-style restaurant brand Wow Bao grew its brand almost entirely via digital channels, reaching hundreds of virtual locations compared to just a handful of brick-and-mortar stores.
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Virtual locations of established brands benefit from consumers’ preference for known entities. Research from the March/April edition of PYMNTS’ Digital Divide series, The Digital Divide: Regional Variations In US Food Ordering Trends And Digital Adoption, found that the majority of consumers take into account familiarity with the restaurant’s name when weighing their options.
The study, created in collaboration with Paytronix, which drew from a survey of more than 2,500 U.S. adults conducted in February, found that 54% of consumers consider this factor when choosing a full-service restaurant (FSR), and 51% do so when choosing a quick-service restaurant (QSR).
Additionally, for larger brands, ghost kitchens can be a key way to expand in a CapEx-light manner, given the large portion of their total sales that come in via digital channels, according to data from the 2022 edition of the Restaurant Readiness Index, another PYMNTS and Paytronix collaboration.
The study, which drew from a survey of more than 500 managers of FSRs and QSRs across the country, found that nearly six in 10 restaurant companies whose annual revenue exceeded $1 million generated at least 25% of their sales online. Additionally, 37% generated half or more of their sales this way.