Source: Grubhub
What will Applebee’s and Boston Market learn from their virtual restaurants?
Applebee’s, Boston Market and Chuck E. Cheese are all facing a backlash for creating separate online-only restaurants and being vague about their connection.
All three chains created their “virtual restaurants” using delivery apps such as Grubhub, Seamless and Uber Eats.
As described on a “Creating a Virtual Restaurant” microsite by UberEats, a restaurant can have two online restaurants — one with a name and menu of the physical restaurant and another with a different name and menu. The two share the same kitchen. Uber Eats said, “This program allows you to create new brands and deliver new cuisines to customers, without the risk and expense of opening another physical location.”
For Chuck E. Cheese, Applebee’s and Boston Market, the separate online restaurants allow the companies to test new items for their core banners in addition to new concepts.
Some consumers appear confused, however. One told CNN she was looking to support a local restaurant and was disappointed to find she ordered from Chuck E. Cheese. Another said on social media, “Why are you lying to me about where my food comes from?”
The app for the online-only restaurant links back to the physical, parent restaurant.
Chuck E. Cheese, Applebee’s and Boston Market say they are not intentionally hiding their relation to their side online businesses. The chains also stress that the online-only concepts are distinct:
- Rotisserie Roast, which includes “Crafted by Boston Market” in small lettering on the logo, is being tested online in Miami and Philadelphia. The concept promises “new and modern takes” on Boston Market, including quinoa rice and a roasted zucchini and tomato sandwich.
- Neighborhood Wings, which similarly features “By Applebee’s” in the logo, was rolled out to over nearly 750 restaurants nationwide over the last four months. The menu features a new Honey Pepper Sauce wing flavor as well as different ordering options than Applebee’s.
- Pasqually’s Pizza & Wings, named after one of Chuck E. Cheese’s characters, was recently rolled out nationwide as an online-only restaurant but makes no mention of Chuck E. Cheese in its marketing. The pizza features a thicker crust, extra sauce, and new blends of cheese and seasoning than those on the parent brand’s menu.
- Creating a Virtual Restaurant – Uber
- Some chain restaurants have turned to food delivery apps but they’re hidden behind different names – CNN
- Chuck E. Cheese Creates New Brand for Third-Party Platform – QSR Magazine
- Chuck E. Cheese and Applebee’s are delivering food under different restaurant names – Today
- Chuck E. Cheese And Applebee’s Have Launched Delivery-Only Spin-Off Restaurants Under Different Names – Delish
Discussion Questions
DISCUSSION QUESTIONS: Are Chuck E. Cheese, Applebee’s and Boston Market being transparent enough about their involvement with online-only restaurants? What do you think of the potential of virtual restaurants as secondary online restaurants for independents or larger chains?
Poll
BrainTrust
Jason Goldberg
Chief Commerce Strategy Officer, Publicis
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
This seems to be poorly thought out in terms of marketing execution. If the intent is to test new items, then branding has to be prominent. When restaurants do open up, customers will come back for the new items. But this almost has a feel of blind testing. This is not going to help and, as seen here, invites needless backlash.
If the intent is indeed to do blind testing, then complete dissociation from the parent brand is in order.
I must disagree. This is everything I learned in Marketing 103, with a little help from Finance 102 and Accounting 101. Build multiple brands without increasing the basic costs. Do the automobile companies make multiple brands in the same factory? Are Dawn, Joy, Gain and Ivory dish soap made in unique locations or all made on the very same production lines?
The brand extension play is clear. The question is what the brands are gaining by underplaying the association.
I believe they would gain more by not mentioning the association at all. As strong as Tide is, is there any gain by Joy saying crafted by Tide?
Joy and Tide are independent brands. But if Tide wants to do pouches then Pouches by Tide would make sense. A closer example is Via Instant By Starbucks. The packaging of Via would not leave any doubt about the Starbucks association.
In case of Applebee’s the association is not strong enough, is what I am saying. It may be by design, but in my opinion it doesn’t make much sense if the intent is to extend the brand to a new channel.
I guess that is where we see this differently. I don’t see this as a line extension. I see this as a move to an alternative brand.
Why would you de-emphasize/hide your name and logo on the packaging? It kind of smacks of there being a corporate belief that there is a loss of both brand equity and position in the customer’s mind. Or perhaps it is a trial run on new branded items?
I would separate out the Applebee’s and Boston Market approach from the Chuck E. Cheese approach. The former are at least telling you their association. I’d look at Neighborhood Wings and think, “hey, it’s Applebee’s wings – don’t care what you call it.” If I like Applebee’s wings I’m in, otherwise I’m out. Chuck E. Cheese was sleazy – it’s been 50-odd years since I’ve been to a kid’s party there – I don’t remember the characters. To not say there’s a relationship is misleading a customer.
At least in the case of Pasqually’s this points directly at negative brand connotations. If you’re trying to win over consumers with better food, there is a much better way to do this than to hide behind a new name. Years ago Domino’s admitted its food quality was sub-par, totally revamped its food offer and was big and bold about it. It worked.
I guess I’m not entirely sure I understand why people are frustrated by this branding, except perhaps the Chuck E. Cheese example, which only discreetly exposes the affiliation between the two brands via a character name. But even then, I am not sure why this is an issue. These chains are by no mean the first restaurants to prepare meals for multiple brands from the same kitchen, and while some may question the marketing efficacy of the branding decision, I do not see why people take issue otherwise. What does it matter whose kitchen prepared the meal? Either you like the product or you don’t. Am I missing something?
Precisely!
I am not sure why transparency is an issue. These restaurants are going farther than I would with “Crafted by Boston Market.” Does it really matter?
The way I see it, they open another channel to sell their products. They target a different consumer. If I want to order from Applebee’s, I will. If I don’t like Applebee’s but the name Neighborhood Wings sounds like something that would interest me, why not? “Ah, they specialize in wings.”
CPG companies do this type of multiple branding all the time. I don’t know where the ideas for these restaurant came from, but I surely would not be surprised if they were generated either internally or by third-party delivery companies whose marketing is being run by a P&G, Kraft or Unilever veteran.
This is already a common practice, and these “virtual restaurant” concepts are likely to be a more important part of the future so all three companies are smart to be testing. Although they need to be careful how they execute to avoid appearing deceptive.
HelloSalted, a recent Shark Tank contestant, is essentially a house of brands that offer delivery-only restaurant concepts through marketplaces (DoorDash, UberEats). Their restaurants are Cauliflower Pizza, Moon Bowl, and $5 Salad Company. The basic idea (pre-COVID-19) is that a higher percentage of restaurant orders are consumed off-premises and purchased via a marketplace, but the margins are very challenging. So why not have a delivery-only restaurant that avoids a lot of the overhead costs of on-premises to focus on unit economics for delivery? Instead of having one consumer-facing brand, they make different brands for every concept to improve SEO on the marketplace. It’s really no different than VF Corporation being one of the largest apparel companies in the world but selling under brands like Vans, The North Face, and Timberland. No one says The North Face is trying to trick them by not using the VF Corporation brand. Or that Swiffer is being dishonest by not calling themselves P&G. The key is that the consumer resonate with the B2C brands vs. the house of brands. This is trickier when the parent brand is also consumer-facing like Applebee’s. Ironically Applebee’s is a consumer brand owned by a house of brands (Dine Entertainment which also owns IHOP). It may have been smarter to launch Neighborhood Wings as a Dine Entertainment concept rather than an Applebee’s concept.
With the rapid shift to at-home consumption, the idea is almost certainly here to stay. Why open a new on-premises restaurant concept when most of your customers are going to want to-go food for the next few years? Former Uber CEO Travis Kalanick has a well funded startup called CloudKitchen providing entrepreneurs with the infrastructure to execute delivery only restaurants. It’s very likely that we’ll see the marketplaces themselves launch cloud-only restaurant concepts in the same way that Amazon sells its own brands on Amazon.
The key is that you need to earn and keep the consumers trust. This is totally possible for “houses of brands” to do as VF Corporation, P&G, and Gap have proven.
It seems that speed-to-market won out over market research. It’s always a good idea to check in with consumers before making moves like this. Beyond this, other restaurants are winning in this new space. Some, like Chili’s, are gathering more momentum. I cite Chili’s because they showed consumers how to bring the Cinco de Mayo home with them. Next, they laid out a clear step-wise plan to transition back to the dining room, while assuring diners that contactless takeout is still available.
I have no problem with this concept. However the key is to neither dilute the brand nor confuse the customer. One of the downsides of third-party delivery is the loss of brand recognition. However, unless these foodservice operations, chains and independents are willing and able to make the investment in in-house distribution, third-party vendors will be their primary option.
So often the small details in execution are where brands misstep. There is nothing fundamentally wrong with what these restaurant brands are doing. CPG companies have done this longer than anyone can remember – how else do you explain companies like P&G? I am sure the majority of consumers have no idea how many of the brands they buy are owned and manufactured by P&G, for example. These three examples really consist of two different approaches. Applebee’s and Boston Market are not hiding their brand, it’s in the logo. Sure it’s small, but it’s there. Why should they make the parent brand more prominent than the new brand? Since their intent is to create a new, delivery-only brand, why wouldn’t they want to separate the menu from the parent brand? Chuck E. Cheese, on the other hand, is being a bit more elusive and using a character name that unless you’re a very loyal and frequent customer you probably won’t recognize the association. I suspect this is a test of new menu items more than it is establishing a new brand. However, they should have made a choice – either associate directly with the parent brand or don’t. They’ve taken a middle ground position that invites consumer questions and backlash needlessly by drawing unintended attention to the situation. As we continue through this re-opening period and to the next with COVID-19 I expect we will see more of these concepts as well as unique “dark kitchens” offering delivery of menu items. And why not? Consumers want restaurant-quality food and many will still be reluctant to dine-in at the restaurant. Restaurants opening at partial capacity in many cases will not earn enough revenue at that reduced capacity to survive long-term so why not implement a new brand via delivery-only marketplaces to supplement that revenue?
The creation of new brands, virtual, or otherwise, might be a good or bad idea from a marketing and business perspective, depending on specifics. Many restaurant companies have multiple brands. I cannot find fault with virtual brands that play off names or characters associated with parent brands. Pasqually is apparently a trademarked character associated with Chuck E. Cheese and, therefore, transparency is inherent to Chuck E.Cheese’s loyal customers. Ethically, however, there probably should be some text or logos on menus, apps, and ads, that identify an association between Chuck and Pasqually.
This is a smart move by all three chains. They are taking advantage of the opportunity presented by the increase in in-home deliveries to test new concepts and new menu items while protecting their core market.
This strikes me as a tempest in a teapot (to use a culinary metaphor): if people want to support a “local” restaurant, then why would they turn to something they had never heard of? Of course that’s the very reason why this doesn’t make much sense to me. The whole point of brand equity is that people think of your name first (or at least early on). Why lose that advantage to “experiment”?