Quick service lunch franchise Pita Pit has begun experimenting with 'virtual restaurants' and has developed a concept that it plans to launch as a retail brand in coming months.
The business, with more than 90 locations across the country, has launched one of the concepts - Bowl'd - on UberEats after it came up with the idea in November, but it hopes to roll out another in a physical form before Christmas.
Duane Dalton, co-founder and business director of Pita Pit's Bowl'd concept, said the company began experimenting with virtual restaurant concepts as a way to diversify its offering and optimise the use of its existing kitchen space, equipment and staff.
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About 28 of the chain's 80 franchisees are operating the Bowl'd concept in their kitchens as a way of earning additional revenue without typical overheads.
It had proven so popular in some areas of the country that UberEats sales of Bowl'd product had surpassed those of Pita Pit.
Some stores had doubled their sales as a result, he said.
Pita Pit has four concepts under development in its virtual kitchens, including a breakfast it is trialling in three of its Auckland stores, and a dinner dining option.
Dalton said trialling a concept with the consumer via a digital means in the first instance meant the business was able to invest "tens of thousands of dollars" into new brands versus setting up a store in the "hundreds of thousands" of dollars range.
"The good thing about a [virtual restaurant] is the feedback is almost instantaneous and when you start looking at your monthly trends and what's moving and what's not you can adapt and evolve really quickly without huge capital outlay," Dalton told the Herald.
"Initially we used it to play around with new concepts that we could then take into the market through a retail strategy. However, with the year 2020 has been it has really turned it into a bit of a [way] of drawing people to our new concepts.
"It has been a great addition to Pita Pit stores in terms of incremental revenue at times where stores aren't necessarily at their busiest."
Pita Pit was also looking to evolve Bowl'd into a retail store network. One way of doing this it was exploring was to split Pita Pit stores into two, utilising the same kitchen, Dalton said.
It is currently in talks with a couple of landlords over stores.
"The target is moving so quickly these days that the old analogy of having a three-year business plan is somewhat redundant. It's more like let's move as quickly as we can on the key things we need, test and learn, and move on."
Pita Pit is finalising a deal with DeliverEasy and also hopes to roll the Bowl'd concept out to Menulog. The business is looking at ways it can increase its sales at all hours of the day, particularly outside of the peak lunchtime hours of 11am to 2pm, through evolving both breakfast and dinner offerings.
The unnamed retail brand the company will launch later this year via a physical retail presence will focus on a dinner dining option.
Pita Pit has eight people working on its virtual restaurant concepts at any given time.
Group sales had almost returned to pre-Covid levels prior to Auckland moving back into alert level 3, but due to the recent impact it was unable to grow the team at present.
Investment into virtual restaurant concepts largely went into external consultants, brand design and menu creation, Dalton said.
"The market is changing in terms of landlords are now a lot more open to discussions around concepts around potentially investing some seed capital to get them going and fit-out contributions within their stores.
"The world really has been flipped on its head, certainly from the early days where when we started where you paid key money to even get a lease - there are so many more retail vacancies and people have learnt to do business without it which is exactly why we're talking about the strength of virtual restaurants in New Zealand - people are looking to do it without the highly expensive high street rental costs."
Global trends coming out of Europe and the United States had proven that virtual restaurants were now crucial for many businesses' survival," he said.
"[We're looking at] how can we fulfil day-parts so that we're not just making our money in three hours a day or combined six hours a day and how we can actually have a footprint earning money 14-18 hours a day.
"We've even got one franchisee we're currently in talks with who is open to looking at the concept of open 24 hours a day."
One in four orders in the last two weeks have been through online - the highest the company had seen since its launch in 2007.
Elisa Janic, head of Uber Eats in the New Zealand market, said virtual restaurants allowed businesses with extra capacity to test new brands and concepts with consumers.
She said the food delivery platform now had hundreds of virtual restaurants live on its platform since it launched the concept in 2018.
Since February, UberEats had seen the number of virtual restaurants in New Zealand grow by more than 60 per cent and orders from virtual restaurants had grown by over 40 per cent in the last six months since the onset of the coronavirus pandemic.