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    Nextbite exec dishes on how operators can make virtual brands successful

    CHICAGO — At the height of the pandemic, some restaurants began to seek out virtual brand partnerships or develop their own digital-only concepts as a band-aid for revenue loss. But virtual brands hold much more potential — and require much more thoughtful precision — than the bolt-on side hustle some operators believe these concepts to be, Nextbite Chief Growth Officer Geoff Madding told Restaurant Dive at the National Restaurant Association Show. 

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

    Nextbite, which is powered by online ordering platform Ordermark, creates turnkey digital brands that can be applied to a broad swath of restaurants depending on their latent capacity and staffing levels. Many of the company’s concepts are built around buzzy celebrity ambassadors, including chef Tom Colicchio’s sandwich concept ‘Wichcraft and Wiz Khalifa’s Packed Bowls, which was announced last week. 

    Nextbite can develop virtual brand innovation easily with enterprise chains like IHOP, which launched Thrilled Cheese and Super Mega Dilla in March, thanks to available financing, supply chain and marketing capabilities, Madding said. But half of the company’s client mix is made up of small operators, and independents have the ability to make virtual brands successful on their own as well, he said. 

    To start, operators need to answer a few key questions.

    “Is there unmet demand in the marketplace by consumers you are trying to meet? Is it going to be an operational fit, so not disruptive to your kitchen?” Madding said. “Then if you take it as seriously as your brick-and-mortar business, you’ll be successful. 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 these respondents say their concepts are permanent additions. Going forward, 46% of independents plan to open three or more virtual brands over the next year.

    For restaurants looking to take the leap into virtual operations, Madding lays out what to consider before investing and what opportunities the future may hold.

    This interview has been edited for clarity and brevity. 

    RESTAURANT DIVE: I’m seeing a lot of virtual brands that are very focused on current trends. Are these concepts becoming LTOs?

    GEOFF MADDING: It can feel like that operationally — you have a new product, you have to do some new marketing, maybe you’re trying to capture a specific trend or a season. At the core, it always has to start with consumer expectations, meeting or exceeding, plus food that is of a certain quality, plus an experience that is delivered in some way. It’s not a small amount of work to do that. Have you figured out the math behind that? Is it going to be profitable for you? Are you using the virtual brand to generate excitement around your own brand? 

    I like to think virtual brands can be more of an extended LTO, where as opposed to a few months you could have a few years of success with it. The nice thing about this approach is that trends change. If you build a virtual brand that does really well for three to five years and then you rebrand to something else, there’s not much sunk cost there and it’s pretty easy to pivot.

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

    MADDING: I think in some way you’re going to have to stand out because it has become a very crowded marketplace. So the question is how are you standing out? That can be done by partnering with celebrities, which we’ve done, partnering with celebrity chefs, which we’ve done. Brand equity that was there already can help. And you can stand out by launching in an interesting way, by marketing in an interesting way, and by finding pockets of unmet demand. 

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

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