A&E

Your food is here. It's from a restaurant that doesn't exist.

Delivery apps spur surge in virtual restaurants on the Peninsula

Local diners can order delivery from Manzo's Artisan Pastas in Menlo Park, with a few taps on a smartphone app sending fettuccine alfredo and linguine with meatballs straight to their doorstep.

This is despite the fact that the restaurant doesn't actually exist.

Manzo's Artisan Pastas is a virtual restaurant. Virtual restaurants live on mobile delivery apps and operate out of the kitchens of brick-and-mortar restaurants -- in this case, Amici's East Coast Pizzeria, which runs two delivery-only concepts in addition to its traditional restaurants in Menlo Park, San Mateo, Mountain View and elsewhere in the Bay Area. Manzo's is simply Amici's pastas and other select dishes repackaged to look like a local Italian restaurant (one that happens to have the same address as your local Amici's).

Virtual restaurants are a growing phenomenon in the Bay Area, and the Peninsula is no exception. As local owners search for creative ways to survive in the face of rising labor costs, costly real estate and an industry-wide push toward delivery, these delivery-only concepts offer an undeniable appeal. They allow restaurants to generate additional sales without the trouble of hiring additional staff, creating a new menu or renting more space.

"From a restaurant point of view, the world is changing and we really need to adapt," said Peter Cooperstein, president of Amici's, which first opened in 1987 in San Mateo. "We can complain about it but I think we can either jump on the bandwagon or miss the boat."

A quick search on a handful of delivery apps and a cross-referencing of restaurant addresses shows there are several virtual restaurants on the Peninsula. Amici's runs Manzo's and Freddie Parker's Pasta + Salad Shop, the latter being exclusive to Uber Eats. A national virtual restaurant chain called P.Za Kitchen operates out of Buca di Beppo in Palo Alto. Dumplings from Bun Bao, which primarily does delivery and catering out of a kitchen in Fremont, have been available locally from now-closed Chilly and Munch in Mountain View, but it is working with the new owner to continue delivering out of the space. Pearl Hawaiian Musubi & Bowls on Uber Eats appears to be a delivery concept for Pearl Cafe, a family-owned Hawaiian restaurant in Mountain View.

In a sign of the times, DoorDash last month opened a 6,000-square-foot space in Redwood City exclusively for virtual restaurants. The company's first-ever shared commissary kitchen allows more restaurants to deliver on the Peninsula without the risk and cost of opening their own brick-and-mortar spaces.

Cooperstein said he's been approached by several third-party delivery apps interested in helping Amici's expand digitally. He started with Freddie Parker's on Uber Eats a few years ago (Uber's food delivery arm has reportedly helped launch 4,000 virtual restaurants worldwide) and then grew to the other big-name apps: Caviar, DoorDash, Grubhub and Postmates. For Cooperstein, the advantages were obvious.

"Simply, it's more sales," he said. "If we get an order from, say, Uber Eats for three pastas and it comes in under the name Freddie Parker's, for us operationally it's just like it's coming in under Amici's."

"Create your own concept or work with the Uber Eats team to build a menu that best utilizes your existing equipment, operations, and staff, and most importantly, makes you money!" reads a page on Uber's website dedicated to virtual restaurants.

Cooperstein declined to disclose what profit the virtual concepts have generated for his business. But delivery makes up the majority of Amici's overall business. For decades, before the advent of delivery apps, the company has run its own delivery business -- which is costly, Cooperstein said. He employs over 100 people to deliver from 10 Amici's locations. (Compared with the third-party apps, whose drivers are less expensive independent contractors.)

All of the third-party apps take a commission on deliveries, though they're tight-lipped on just how much. Cooperstein said his percentages have ranged between 20% and 30%. Chain restaurants or ones with higher volume have more leverage to negotiate a lower commission fee compared to smaller mom-and-pop places, he noted.

Robert Earl, the owner of the Buca di Beppo chain and founder of Planet Hollywood, is behind P.Za. It's one of several delivery brands owned by Virtual Dining Concepts, which provides a proprietary online delivery platform, marketing and other services to restaurateurs who want to go digital.

In an interview, Earl said he's "bullish" on delivery, a multibillion-dollar industry that is growing rapidly. According to eMarketer, 38 million Americans will use a food-delivery app this year, up 21% over 2018. Earl said he knows a restaurant owner that runs between eight and 10 brands out of a single kitchen.

"He's thinking the cumulative of all of those equals a successful business," Earl said. "It helps with the economics for the existing restaurant."

It's a win for consumers as well, who "are no longer as concerned about whether it's coming from a physical building that they are familiar with," he said.

"I've heard people in the industry say that dining in ... is the new dining out," Cooperstein said. "My generation, it was really a treat to go out to dinner. A lot of the younger people would rather stay home. It's a little bit less about quality for a lot of people and more about the convenience."

P.Za serves Roman-style pizzas, salads and desserts out of the Buca di Beppo on Emerson Street in downtown Palo Alto. The parent company provides recipes and product specifications to the local kitchens to execute. Virtual Dining Concepts also offers marketing support in the form of social media campaigns and "digital influencers," Earl said.

The company plans to open more P.Za locations in the Bay Area, but Earl declined to state where or how many.

"I'm old school and I love to go to a restaurant. But that's not where the world is going," he said.

Last week, the owners of Poki Time, a string of fast-casual poke restaurants in the Bay Area, announced that they would be converting all three of their locations into delivery-only "hubs," taking "the first step in growing multiple delivery hubs up and down the entire Bay Area." (Though they aren't changing Tuna Kahuna, a new restaurant they opened in Burlingame this spring as an option between fast-casual and full service.)

"Right now we're at a crossroads between human behavior and technology," co-owner Doug Wong said in an interview. "If our customers want delivery, then we gotta get the food to them somehow."

Moving to delivery-only will allow their business to expand to 10 new markets within a few months, which would be unheard of with brick-and-mortar restaurants.

"I think the restaurant business is no different from what brick-and-mortar retail went through with the rise of Amazon," Wong said. "It looks like restaurants are geared toward the same thing. We need to adapt."

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Comments

6 people like this
Posted by resident
a resident of Menlo Park: Downtown
on Nov 7, 2019 at 6:20 pm

Meal delivery companies are ruining the restaurant dining experience. They delivery companies play hardball with the restaurants, forcing them to cut their profit margin on delivery food and forcing them into a pickup schedule that prioritizes delivery orders over orders by customers sitting in the restaurant. This increases prices and reduces service levels to actual sit-down customers.


18 people like this
Posted by It's cold and sampled by the driver
a resident of Atherton: Lindenwood
on Nov 8, 2019 at 10:11 am

I know quite a few delivery drivers and most all have semi-embarrassingly admitted they taste the food they're delivering fairly regularly to see if the place is any good.
They described ways of going about it undetected by the customer
No thank you please.


1 person likes this
Posted by @resident
a resident of Corte Madera School
on Nov 8, 2019 at 1:09 pm

“ This increases prices and reduces service levels to actual sit-down customers.”

OK Boomer


24 people like this
Posted by Menlo Voter.
a resident of Menlo Park: other
on Nov 8, 2019 at 6:25 pm

Menlo Voter. is a registered user.

"OK Boomer"

OK millennial

stupid, dismissive thing to say.


1 person likes this
Posted by @mv
a resident of Corte Madera School
on Nov 9, 2019 at 10:34 am

Mhm. OK Boomer


12 people like this
Posted by Santa Clara Student
a resident of another community
on Nov 11, 2019 at 6:47 am

@Menlo Voter, Of course, bOKB" is the new troll tool for the msg board monkeys.
It's already past the sell by date but from an IP check on multiple boards, there's a person here who hasn't gotten all the attention he needs yet.


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