‘Best of both worlds’: This Singaporean F&B group is meeting post-COVID expectations by franchising their virtual brands
GD Group’s Randall Ang expounds on the value of their virtual brand portfolio.
The past years have seen virtual brands or delivery-only concepts borne out of restaurant chains’ kitchens, hoping to maximise ingredients or meet a particular demand in their markets.
Eventually, the trend extended to celebrity partnerships and even tech companies solely dedicated to creating these concepts for restaurants to adopt.
In Singapore, a company seemingly meets somewhere in the middle — integrating invented concepts in their own restaurants but saw an opportunity to franchise it to local eateries and hawkers.
“With the further easing and removal of Covid-19 measures, we expect Singaporeans to go out and gather with their social groups and dine in, while others would prefer the convenience of food delivery when hosting friends and family at home. Virtual brands are a cost-effective way for us to enjoy the best of both worlds - capturing footfall in our physical outlets while continuing to satisfy the cravings of those at home,” Randall Ang, deputy managing director of GD Group, told QSR Media.
GD Group, which owns and operates the Penang Culture chain of restaurants, launched Tree Side Nasi Lemak in mid-2021, which he says is a response to demand for affordable, quick and easy dishes such as nasi lemak on delivery platforms that travel well.
November 2021, meanwhile, saw the birth of their Ah Nod Thai Fried Chicken concept, saying the category has “always been a popular choice among consumers for food delivery and is a trend that keeps growing.”
“From our experiences, the virtual brand business model has allowed us to test the market for these dishes without incurring the significant upfront expenses of a traditional brick-and-mortar store,” Ang said. “When it was time to expand the two brands, we adapted our business model to a franchise concept on food delivery platforms, partnering with local eateries and hawkers to fulfil food orders using our ingredients, branding and recipes.”
Confident that ordering food online is here to stay, Ang says the future of food delivery lies in the virtual brands and ruled out creating traditional brick-and-mortar stores for their two concepts.
“Physical stores mainly cater to dine-in customers, with delivery being complementary,” he said. “Virtual brands or ghost kitchens therefore fill the gap perfectly with a delivery-only model. Our network of physical stores from Penang Culture and our F&B partners serve as the kitchens wherein we produce food for the virtual brands. Hence, we will continue to keep our virtual brands online, and we wouldn’t be looking to open physical stores for them.”
Aside from maximizing store space and ingredients, Ang argues that virtual brands are a viable option as Singaporeans will be on the lookout for new and interesting food concepts.
“Virtual brands are a fairly new concept, and we have seen a lot of them spring up amidst Covid-19 because of the increase in demand for food delivery. The few trends we have seen are an increase in mostly fast food concepts, such as fried chicken or burgers, as they can be easily replicated and prepared from any kitchen,” he added.
Ang also credits its partnership with Deliveroo, which handles the deliveries for their two virtual brands, for sharing insights from ideation and launch to scaling the food concepts and allowed them to make data-driven decisions.
“The [Deliveroo] team has not only helped us make critical decisions informed by data from their platform but also provided ongoing support as we onboarded and optimised our marketing activities and operations to build brand awareness and attract new customers,” he said.
Since onboarding on the food delivery platform, Tree Side Nasi Lemak orders and gross merchandise volume increased by up to 40% quarter on quarter. The group started with four outlets and have since expanded to nine. Ah Nod Thai Fried Chicken, meanwhile, has seen a 25% increase in sales quarter on quarter since its launch.
“Since our business model is a modified franchise concept, onboarding new partners can be time-consuming and teething issues are to be expected. As we continued to expand, we’ve streamlined this process to minimise downtime while providing a thorough understanding of the virtual brand and its offerings,” Ang said. “We look forward to further expanding on this business model in 2022.”