Analysis: Are “Virtual Brands” at Death’s Door?

| June 22, 2023

| June 22, 2023

mr. beast burger, virtual brands, ghost kitchens, virtual kitchens

The recent struggles of MrBeast Burger – currently available at more than 2,000 restaurants – could be an ominous sign for all virtual brands.

Ubiquitous YouTuber MrBeast, aka Jimmy Donaldson, wrote multiple statements in frustration late last week, claiming he is “moving on” from MrBeast Burger, the delivery-only restaurant brand he created with Virtual Dining Concepts.

“The problem with virtual brands, and ghost kitchens specifically, is that it’s harder to keep a level of consistency with the quality of the product across multiple sites,” Kay Gowrinath, CEO at Xquisite Productions, told The Food Institute.

Donaldson posted on Twitter that he’d prefer to focus more on his snack brand, Feastables, as noted by Restaurant Business. The statements appear to leave MrBeast Burger with a rather murky outlook. The virtual brand launched in 2020, promptly went viral thanks to MrBeast’s millions of online followers, and made $100 million in revenue from its inception in December 2020 through July 2022. Yet, MrBeast Burger often suffered from negative reviews that complained of salty, overcooked, or soggy food, reported nrn.com.

Last week Donaldson said he’d like to shut down MrBeast Burger “but the company I partnered with won’t let me stop even though it’s terrible for my brand.”

“Ghost kitchens like MrBeast Burger have caused significant disruptions in the traditional restaurant industry by leveraging technology and delivery platforms to create virtual-only brands operating out of shared commercial kitchen spaces,” Gowrinath noted. “Virtual brands cater to evolving [consumer] demands by providing a wide variety of food options, affordable pricing, and quick delivery.”

MrBeast Burger is distributed by several different restaurants that are licensed to cook and sell its food for delivery or pickup only. The concept allows those restaurants to use the additional online storefront to generate extra revenue, as noted by Restaurant Business.

But quality control (along with waning consumer demand for delivery) has become worrisome for virtual brands. Nextbite, one of the leaders of delivery-only concepts, sold itself earlier this month, shortly after laying off many of its staff, according to multiple reports.

“The biggest downfall of virtual-only brands,” Gowrinath said, “is logistical difficulties – and for virtual brands that rely on physical product delivery, logistics can pose a significant challenge.

“Managing online platforms, logistics, order fulfillment, and customer service in the digital realm requires efficient systems and processes,” the branding and marketing expert added, “meaning virtual brands need to invest in robust technology infrastructure, customer support capabilities, and effective supply chain management to ensure smooth operations.”