Why a Virtual Restaurant?
Over the years, my family and I have tried all kinds of side hustles. Once, we even used a family trip to a famously large flea market to try and sell water and cookies from our local grocery store. We pulled a wagon around behind us as we walked with a sign that said, “WATER $1 COOKIE $1.” Unfortunately, the weather was not as hot as we had expected. Our dream of being surrounded by thirsty customers didn’t come true. It wasn’t hot, people weren’t thirsty, and we didn’t sell much of our water. People didn’t want what we had for them. Of course, the next time we went just as shoppers, it was far hotter weather, and those who had the water were selling it like crazy.
Having an excellent side hustle means you have to understand what people want.
So what do people want these days?
What is today’s cold bottle of water on a hot summer day? One thing the research shows us is that people crave convenience. Life moves at a faster pace than it used to, and people are prioritizing things differently. Services that provide convenience at an affordable rate are easy to market and sell. A rapidly expanding industry in this sector is food delivery.
The food delivery industry was valued at $115 Billion in 2020, and it’s expected to grow to $192.16 Billion by 2025. That is about 60% growth over an entire industry in 5 years! People are paying for the convenience of food delivery more and more. What does this mean for you? How can you get a piece of the pie?
Start a virtual restaurant.
Don’t be intimidated. The term “virtual restaurant” may sound like a big undertaking to some, but you can start one, and the process is simple. They do not need to be run by professional chefs. They have next to no overhead costs, and you can make a profit even if you only work on it for as little as 4 hours per week. A company called Home Based Classes will walk you through the legal and creative process in an online class for only about $40. There is an astonishing amount of detail in this class. Plus, you get advice from those who already own a virtual restaurant.
Home Based Classes even guarantee that their class can get your business set up in one business day. They teach in great detail (much more than we could put in this article), what you need to know to be successful, as well as some things that you can skip to keep your startup costs low.
How Does a Virtual Restaurant Work?
Virtual restaurants are also known as virtual kitchens or ghost kitchens. Some entrepreneurs may choose to run gourmet or full-time virtual restaurants. That’s fine! But you don’t need a fancy full-time virtual restaurant to make money. You don’t even have to be a great cook or love cooking.
Four Steps to Start Your Virtual Restaurant
1. You, the owner, chooses one or more dishes that they can make to feed at least a family of four for generally a cost of $5 or less in ingredients. You can easily achieve this with casseroles, pasta dishes, and more. Think foods that are usually appealing, simple enough that you won’t take an hour assembling them, and broad enough to appeal to most people. Plus, if you already have ten restaurants in your area selling hamburgers, don’t be the 11th.
2. Next, rent a commercial kitchen space to cook for between $5-$15 per hour to prepare and package food safely. There is almost certainly one local restaurant, church, hotel, or another commercial kitchen in your area that will rent to you. Remember to use that time wisely to cook and package a bulk amount of food. This time could be as little as 1 hour. Or, maybe one whole day per week is spent doing this and preparing up to $1,000 in food to deliver that day or freeze or refrigerate for later sales. Trust me. You’ll have a great return on investment for just one day of work.
3. Then, use an online meal marketplace like FamilyGrab to list your meals as well as your preferred delivery or pickup times. It’s best to start your meals at about $20 each. Marketplaces advertise your business so you can grow without spending tons of money advertising.
4. Lastly, honor your delivery or pickup time, and you can generally make 60%-70% profit on food sales. You can continue to increase profits by increasing portion sizes, offering side dishes and desserts at additional costs.
These points are the business basics, and there are many more guiding principles shared on Home Based Classes.
Amazingly, virtual restaurants offer a significant profit margin for any business. Generally, in the U.S., a profit margin of 20% would be considered high. Therefore, a profit margin of 60% is a goal for more successful side-hustles. As we said above, 60% – 70% PURE PROFIT MARGIN in your pocket is possible with the virtual kitchen model taught at Homebased Classes.
Talking to an Expert and Course Creator
There are already many virtual restaurants in operation, although many of them do not operate as seamlessly as they could. According to Denise Cook, Lead Researcher at HomeBasedClasses, entrepreneurs who took Homebased Classes accomplished a lot with a simple business plan.
Denise told me, “one owner based in Washington state has been so successful and had so many weekly orders, that she decided to open a storefront to work full time. She sells goods throughout the day in the storefront and keeps her weekly meal orders. She has a timeframe once per week where her weekly order customers can come and pick up their meals. People can’t get enough of her meals, and she has a solid social media following. We both agree that this is the model of the future because it works! And we’re not the only ones profiting from it.”
The storefront business owner is an example of an owner who wanted to expand into having a brick and mortar, which is fantastic! But it is not a requirement to open a physical location.
Denise has worked with many owners who prefer to stick with the virtual kitchen model. She told me another story where another owner in Washington state runs a small business with his wife. They have their weekly regulars and take orders over the phone, text, or email. The owner’s wife cooks the meals. She is not a trained chef but has a variety of delicious recipes that she cooks. They do their cooking one day a week in the afternoon, and then they start their deliveries around 3 or 4 pm that day.
This couple has a texting process in place and texts the customer when the food is outside their home. With contactless delivery, they don’t have to wait at the door for customers.
In their process, all the freshly made food is delivered by dinnertime or by a time customers choose. They also make meals they freeze. Customers enjoy frozen meals on another day of the week whenever they have a busy night or don’t want to cook.
The number of meals cooked in a day, or even a few hours in a commercial kitchen, can be as large or as small as you allow. And it can all be profitable too.
Denise explained, “You could make five meals in an hour. That is very doable. More could be done with good planning and organization, but let’s call that our number. Then, if each one is sold for $20, that would be $100 of sales for every hour of food prep. You have to rent the kitchen and buy ingredients, but this cost could be as low as $7 a meal, sometimes less, depending on the ingredients you chose to use. Remember, you can also add larger portions, side dishes, and desserts or drinks for additional revenue.”
“Delivery takes some time too, but if you can keep your customers within the distance you choose, which is usually in the same county where you are licensed. Or [customers outside your delivery zone] still want your food, you can offer them a pickup option. The point is that the process can be completely tailored to your time and what works for you.”
What Do You Need to Launch a Virtual Restaurant?
Let’s think about what you DON’T need for a moment. Traditionally if you want to start a business in the food industry, you may find yourself paying for a building or a food truck, bulk foodservice equipment, employees, seating and decor, bulk orders of food, advertising, and more. You would be surprised how much money is lost in unsold ingredients thrown out in a traditional restaurant.
The great thing about a virtual restaurant is that there are almost NO overhead costs to start one. The essentials you’ll need are:
- A business license.
- Food handler’s permit.
- A place to cook.
- Your first meal recipe.
If you have purchased the online course from Home Based Classes, they will coach you through the details of these things and much more.
You also must have a willingness to try something new. As with most side hustles, this will be something you have not attempted before. There may be some hesitation because of this. However, this particular side hustle comes with almost no financial risk. It also does not require you to be an expert in the industry. Use the tools available to you to educate yourself, and please do remember to have someone taste test your recipe before you sell it!
Who Can Do This Side Hustle?
Virtual restaurants are a universal side hustle. Every community has a commercial kitchen, whether it is a restaurant, school, retirement home, church, hotel, or another establishment. There should be space for this in every community. Every community also has people who want good meals that they don’t have to make themselves.
Stay-at-home parents, college students, retirees, full-time workers with a few spare hours a week, and more could all be profitable doing this. If you live near a beach, amusement park, or other tourist attraction, your target customers could be individuals and families returning from a long day of play who don’t want to go to a restaurant. Getting on the local guide list of the Air BNBs in your area would go a long way for your sales.
The low startup cost of this side hustle means a virtual restaurant can be a short or long-term business.
Do you need some extra money to tide you over? Start a virtual kitchen! Are you looking for a long-term source of income? Here it is! The overarching theme of a virtual restaurant is flexibility. You can tailor this venture to exactly your preferences.
Looking to the Future
Virtual restaurants are a fast-growing industry. They are a real competitor for traditional restaurants. For example, a traditional restaurant with a storefront has far too many overhead costs. Traditional restaurants cannot compete with the low prices offered by a virtual restaurant. And lower prices are not the only selling point! More and more people are looking to buy online and have their food delivered to their homes. It is a convenience many people are beginning to expect, not only want.
The New York Times had an article recently about the high profitability of virtual restaurants and how large companies like Uber Eats are encouraging virtual restaurant development. Even large chains like Chili’s, Chuck E. Cheese, Applebee’s, have found success opening virtual restaurants. They use their virtual restaurants to compete with online brands. Many of these run as full-time restaurants, but you can run your virtual kitchen part-time with only a few hours a week.
Virtual kitchens are the future of the food industry. So, hop on board! Get creative and imagine yourself running a flexible side hustle and earning extra income for you and your family.
Moving Forward From the Author
I hope this was insightful and gave you some ideas on your next side hustle. Ever since I found out about virtual restaurants, I knew they would be huge. All the research and months of preparing and compiling information for our online course only proved this more and more to me.
Check out Home Based Classes to see for yourself. Whether you decide to use our resources or move ahead on your own, I am excited for you! I know that this market will continue doing great things.
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