What Are Virtual Restaurants?

Without an actual dining area, virtual restaurants have much lower overhead costs than traditional eateries do. (Photo: GaudiLab/Shutterstock)

Restaurant interiors have gone through several changes over the past few years. These changes seem to be coming at a quicker pace than even five years ago. The first wave was redesigning the dining area, adding communal dining tables and outlets for charging electronic devices to satisfy modern diners. Then it was removing some of the tables to make room for takeout space. Now, more and more startup restaurants are losing the dining area altogether and becoming a virtual restaurant, also known as a ghost restaurant.

In a virtual restaurant, there is no dining room. You can't walk into most of these places and pick up your order; instead, you order from your smartphone or computer. Your order goes to the virtual restaurant's kitchen where the food is cooked, boxed up and put in bags, usually for a third-party delivery driver from Uber Eats, Door Dash, Grubhub or a similar service to pick up.

Fast Casual reports that since 2015, third-party delivery app downloads have increased 380%. Hundreds of thousands of restaurants from McDonald's to fast-casual chains to independent, local dine-in restaurants now have partnerships with these platforms.

Leading the pack for this service is the millennial generation. One study found that during a three-month period in 2018, 77% of millennials ordered food delivery, while overall 51% of U.S. diners used a food delivery service. And while delivery is offered by calling the restaurant directly, using a restaurant's website or through a third-party delivery platform, millennials choose the third-party delivery platform more often than the general population.

The generation behind the millennials, Gen Z, is starting to have their own buying power. They're following in the millennials' footsteps, perhaps even accelerating the growth of food delivery. Gen Z Insights reports that one study found that after tuition and rent, 78% of American students spend the majority of their money on food, and they're spending 20% more of their money on food than millennial students did in 2003.

Based on personal observations of my 19-year-old college son and his friends, this comes as no surprise. Despite my fully stocked kitchen, which they are welcome to raid, they choose to spend their hard-earned money on food delivery, often getting food delivered to the house after midnight. This Gen X mom is confused why they like to throw away their money like this, but it's somewhat comforting to know there are probably hundreds of thousands of other parents scratching their heads over the same thing.

Virtual restaurants add one more food option

a food truck with hot dogs and burgers; virtual or ghost restaurants
A virtual or ghost restaurant takes the concept of a food truck one step further: Because there is no walk-up service in many cases, the restaurant can be located in a wider number of places. (Photo: KIRAYONAK YULIYA/Shutterstock)

Of course, not all food delivery comes from a virtual restaurant. My son delivers pizzas from a traditional pizza parlor. Anyone can walk in and eat at the restaurant, call ahead to pick up food or request delivery.

What makes a virtual restaurant different from a traditional restaurant that offers takeout and/or delivery is the fact that there's no dining room and no takeout. There are some other differences, too.

Virtual kitchens can be more cost-efficient than a traditional restaurant. Without the need for a dining area, a waitstaff, a liquor license or other expenses that are common with dine-in restaurants, overhead is much less expensive. In fact, these restaurants sometimes have shipping container-size kitchens that are mobile and can be located just about anywhere, The Packer reports.

These virtual or ghost restaurants can also house more than one restaurant concept at a time, each catering to different tastes. In Georgia, a recently opened virtual restaurant in Sandy Springs focuses on three concepts: Fatbacks offers a meat-and-sides menu, Top Bun offers burgers and dogs, and Salad Hippie offers bowls filled with greens and grains. In effect, this virtual restaurant offers something for nearly all tastes. This ghost restaurant is also bypassing third-party delivery services and offering its own delivery — which is probably the next shoe to drop in the quick-changing world of virtual restaurants.

Third-party delivery services take a chunk of the money a restaurant makes on delivered food, no matter if the restaurant is a traditional or virtual one. The restaurants that have enjoyed the delivery boom that Uber Eats and their competitors helped create may start to push those services out, offering their own delivery drivers and keeping more of the profits for themselves.