Kirk Mauriello is the President and Co-founder of Virturant, a company that establishes delivery-only restaurant brands that can be run out of existing kitchens. He started the virtual restaurant business in 2019, and it has since pioneered a new business model for eateries and experienced huge growth in a short timespan. Before this, Kirk spent almost a decade leading successful restaurant brands and franchises in the Chicago area.
Here’s a Glimpse of What You’ll Hear:
- Kirk Mauriello explains how virtual restaurants function day-to-day
- Kirk’s revolutionary business model for virtual restaurant brands
- Why breakfast takeout is so profitable
- Kirk talks about the flexibility of virtual restaurants
- How the pandemic forced the restaurant industry “about five years ahead”
In this episode…
In this episode of the SpotOn Series, Chad Franzen picks the brain of Virturant President and Co-founder Kirk Mauriello to learn the ins and outs of virtual restaurants, a burgeoning business model in the eatery industry. Kirk explains how the flexible day-to-day operations of virtual restaurants maximize the productivity and profits of existing kitchens. He also details how the pandemic forced the industry years ahead of where it would be otherwise.
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Chad Franzen 0:20
Chad Franzen here, the co host for this show where we feature top restaurant tours, investors and business leaders. This is part of our SpotOn Series. SpotOn has the best in class payment platform for retail and they have a flagship solution called SpotOn restaurant, where they combine marketing software and payments all in one. They’ve served everyone from large chains like Dairy Queen and Subway to small mom and pop restaurants. To learn more, go to SpotOn.com This episode is brought to you by Rise25. We help b2b businesses to get ROI clients referrals and strategic partnerships through done for you podcast. If you have a b2b business and want to build great relationships with clients, referral partners and thought leaders in your space, there is no better way to do it than through podcasts and content marketing. To learn more, go to Rise25Media.com or email us at support@Rise25Media.com. Kirk Mauriello is the president and co founder of Virturant, which helps establish chef-created delivery-only Restaurant Brands that can be run out of existing restaurant kitchens. Kirk was the CEO of a top 50 pizza chain in the Chicago area, and a top breakfast and lunch brand. He started in the virtual restaurant business in 2019, and has helped pioneer a new business model for existing restaurants. Kirk, thanks so much for joining me today. How are you?
Kirk Mauriello 1:34
I’m good. Thanks for having me, Chad.
Chad Franzen 1:37
So what is a virtual restaurant?
Kirk Mauriello 1:41
Well, a virtual restaurant, from a standpoint of a definition, is a restaurant that is designed from a menu standpoint, but it doesn’t have any brick and mortar locations that actually for the brand. So the brands strictly live on in the in the social social media world, the online ordering world, and such.
Chad Franzen 2:07
So explain to me a little bit more if you don’t mind about what Virturant does. Okay, so it’s
Kirk Mauriello 2:13
very trite, well we do is we have our own brands that we have created based on culinary type of food. We right now we have 22 brands that we market, throughout the country, through third party delivery apps. And then we bring on fulfillment partners, which would be brick and mortar restaurants, or kitchens, or any type of kitchen that’s, that’s commercially available to fulfill those orders as we market them in the marketplace. And then the orders flow directly to those kitchens. Whether again, whether it be a an existing restaurant, a ghost kitchen, or just a commercial kitchen of some sort, and then they fulfill the orders and hand them off to the drivers to deliver to the consumer.
Chad Franzen 2:59
So when you say you have 22 brands, those are like clients.
Kirk Mauriello 3:04
No, the brands are actually virtual restaurants that we’ve created. Okay, so each one has its own brand. So for instance, we have a brand called French Toasters. And that brand is all French toast, sides drinks, things like that. So it’s very easy for the consumer to order from the it’s limited menu based around the food type.
Chad Franzen 3:24
And where would the locations be, they would be in like a brick and mortar kitchen or any kitchen.
Kirk Mauriello 3:30
It could be any kitchen, that that that brand would be associated with. So what we would do is we might find a local diner, right in a market that makes breakfast and lunch and dinner items. And then we ask them, would you like to support and fulfill the orders for our company, also, and we pay them to fulfill those orders. So we’re marketing it and then we drive the order to their kitchen. Their kitchen then performs the making of our menu items for our brands, and then the delivery drivers pick it up and deliver it to the consumer.
Chad Franzen 4:04
How did you come up with this idea?
Kirk Mauriello 4:07
It was an idea that was done out there. GrubHub had come up with an idea of having companies put virtual brands out there. And we decided to take it to a different level they were they were bringing it to restaurants to create their own virtual brands, we decided that there was a whole business model for this. So we developed the business model, we figured out how to market it properly, how to get the proper SEO for search engines and things like that for the brands, and then partnered with the big third party delivery companies to put our brands there and then find those restaurants that were looking for more business. Now we decided to do that in 2019. And then in 2020, the pandemic and all of a sudden the business model that we were trying to show comes to show the restaurants and the restaurant owners, which was had a little bit of pushback because they were so busy, right everybody was too busy. All of a sudden, they weren’t so busy anymore. So they were looking for help. So by bringing this to them, now, we created a whole new business model that actually fits within the restaurant model. So you can have more than one brand, because you have all this asset of kitchen, kitchen employees cooks, staffing, brick and mortar that you’re paying for, and that you can get more productivity out of the space that you’re already invested in.
Chad Franzen 5:26
So when you started Virturant, you weren’t originally having, you know, partnering with existing restaurants, you were just starting their own brands.
Kirk Mauriello 5:34
No, actually, the whole idea was to partner with existing restaurants, okay. But it was it was to build to show them a new business model that they could do very well with. But restaurants the way they were, because they had never really seen this type of business model. It was new. So you had to find people that were more business oriented, they were looking at saying, Okay, wait a second. So if there’s more orders that come in, how do I make money at it, right, because the old way of doing things was the third party delivery companies take too much. But we designed this differently. So when the third party delivery companies first came out, and they went to restaurants, the whole idea was we’re going to charge you 30%. But we’re going to bring you more orders. We took it from a different standpoint, we said we’re going to build the model, with the third party delivery companies being a function of it. So they they provide the delivery service on it. But we’re going to, we’re going to match we’re going to make the brand work. And then we’re going to say the third party delivery company does this additional workforce, whether it’s marketing, driving, all of those things. So there’s a cost to that. So that’s built into the cost model now. So it’s a little bit different than taking a menu and putting it online. It’s taking a menu pricing it properly putting it online, and making it a profitable proposition for everybody that’s involved in the process.
Chad Franzen 6:49
How important is it to be flexible enough to be able to do that in this kind of new era?
Kirk Mauriello 6:55
Well, you know, the restaurants, one of the one of the issues restaurants have is that they aren’t flexible, right? So you have a lot of brands out there now in the virtual world that are being done a little bit differently than the way we do it. So they create a brand, they put a name behind it, like let’s say, a celebrity of some sort, great. And then they have this menu. It’s a very strict menu. It’s very like It’s like franchising from the strictness of the menus, what we decided to do, because I was from the restaurant industry, as I said, No, we got to make it easier than that we’re going to, we’re going to create brands, we’re not going to worry about celebrities, we’re going to utilize ingredients. So we’re going to utilize partnerships with Kraft Heinz, and we’re going to get the rights to use their trademarks and use their product within our ingredient lists. So that people know they’re getting a good product and a high quality product. And then what we’re going to do is we’re going to market that only within the third party delivery apps so that we can drive this, but we’re going to make it so simple that we have we have a saying our brands work within the operations, your operations don’t have to work on brands.
Chad Franzen 8:02
So what’s an example of like the simplicity that you guys would have, versus, you know, the other way of doing it?
Kirk Mauriello 8:09
Okay, so the simplicity might be let’s take French toast, for example, right? French toast would be a hollow bread. So from an ingredient standpoint, there’s no specific ingredients, except for the type of food, right or the type of ingredients. There’s no specifics unless we have an agreement with Kraft which we have a Kraft Heinz on certain flavors that we’re using. But we keep it very, very simple in that standpoint. So it’s very much like what the restaurants already doing. But they’re all designed that if any restaurant, if you’re if you’re an Italian restaurant, if you have a flattop grill, you can make French toast. If you have a fryer, you can make items. If you have a flattop grill, you can make eggs. So there’s all kinds of things that are built within this so that we can expand our business models. So we have a lot of bars, you know, Bar and Grill places that are open from 11 till two in the morning. Well, they’ve come to us now after taking our brands on in those hours, which are typically the brands that are breakfast, right? Because they’re 11 o’clock to two o’clock in the morning. And they’ve said, Well, we have staffing that’s, we have. I’m sorry about that. That’s okay, we have we have staffing that’s already here in the morning prepping. So can we try french toast and pancakes in the morning for those three hours and drive revenue during the time that we get our revenue? And I said absolutely. So you know, they might take it on. And they might do three or $400 a day in sales for those particular brands utilizing their prep staff, because they’re so easy to functionally be able to be made. Also that helps keep the cost the cost structure down. Right if you have to buy specific type of items that are specific to a brand or pathogen that’s specific to the brand, the Costco hire also space within the kitchen. So being a restaurant tour, I understood that and that you’re not dealing with one type of restaurant. You’re dealing with so many different facets of so many different restaurants. So places downtown Chicago might have their storage in the basement, but a place in Florida might have their storage in upstairs. It could you never know where it’s going to be. So you have to work within. Also the size of the kitchens and how they can produce food is different. Where do you keep all this extra packaging, because now you’re doing delivering, so everything’s packaged, so your packaging business just went up. So you have to keep that to a limited number of packages. So we also, we use three different size packages, and we design every brand to fit within one of those three packages. And there’s, there’s no, there’s no labeling, because you’re bringing the consumer is receiving it at home or at work, they’ve already ordered the brand. So you don’t need this brand recognition and the labeling as much as you did if you had a brick and mortar location, where people are walking in and walking out.
Chad Franzen 10:49
As I’m sure a lot of restaurants are attempting to do this. What are some things maybe that are often overlooked? When people you know, first, you know, we’ve we’ve done it this way we’ve served customers who come in, they leave. And that’s pretty much it. Now, it’s a whole new thing. What are some things that are often overlooked as people are transitioning into this new model?
Kirk Mauriello 11:06
Well, you know, it’s actually the easier transition of the two. If you were if you were just a delivery only plays and then you went to a customer service situation, it becomes much more difficult. And most restaurants already have some sort of a carry out business within their model. Right? I mean, even Chili’s, and the big companies have, they even market it that way. Right. So the transition isn’t isn’t very difficult. What they run into is that now, which it isn’t, this isn’t a problem, it’s actually a good thing is that online orders tend to come in at off times compared to the time that people dine in. Because when you dine in and you prepare it, you plan for that, right, you plan to go out to dinner, and there’s certain hours that you plan to go out to dinner, you plan about the breakfast, certain hours you plan it, when you’re ordering online and online ordering customer is someone who’s getting hungry at a specific time and is looking for an on demand product. So they want to order and get it fast and things like that. So usually, that’ll happen just after the peak hours. So now all of a sudden, that kitchen ends up being much more productive during time that they wouldn’t be doing anything, they might have three, four or 510 orders. Right? So owners love it. So that was a little bit of a of a transition for them. And you might need somebody there to tack orders during those times that you normally didn’t have to have somebody right, or they were doing something else. The staff was always there. But now they’re productive and creating revenue. Right? And it’s not, it stops at two o’clock. And now we stand around for three hours. And then we clean some stuff. None of that we’re gonna clean this stuff, but we’re still gonna make orders, right? So it becomes a much more productive situation for the restaurants.
Chad Franzen 12:39
Virturant is still a relatively young, what are some of the other brands that you’ve that you guys have started.
Kirk Mauriello 12:46
So we have, we have French Toastery, we have Sunrise Sandwich Company, we have a group of seven breakfast brands that that work the whole gamut. And then what happened was, on the third party delivery companies, you can only order one restaurant at a time. Right? So we created a catch all brand. So we have The Royal Breakfast. So each of the other brands like Wild Skillets, Excellent Omelets that are specific to food. Now you can order all of those in one brand if you look for Royal Breakfast. So it just created more restaurants. And the whole idea is to create more. When a restaurant goes out and puts their brand out there, they’re fishing with a fishing pole. Right? They put they put their brand out there a time maybe for delivery services. So they’ve got four restaurants, well, we take our 20 restaurants and we put it into our into one diamond, one fulfillment partner, then now all of a sudden they’ve got 88 restaurants that people can order from that come to their restaurant. So it’s just economies of scale, right. And the stores that do extremely well a 24 hour restaurants, because they they usually have most of the inventory already in stock. We also take a standpoint of making it easy for the restaurant. So we allow a lot of customization and we work with each restaurant individually. And that way not only on the menu side, and the ingredients that maybe they don’t have a certain ingredient. And we look at and say Well, let’s not bring that in because we don’t want to waste it. And we’ll take that item off the menu. Or we also work with them on the pricing schedules to so instead of saying to them that every burger has to be sold at $12.50. But wait a second in downtown Chicago, the price might be different than in a suburb of Chicago, or it might be different in Florida and might be different in California. So you have to work with those restaurants to make sure that their profitability is there on selling the items. And that’s something that takes more time and energy. But when you do it that the it’s all about the restaurants profitability, right? It’s making them want to continue to do this.
Chad Franzen 14:42
How popular is breakfast delivery, you know, for middle aged people, I’m sure when we were kids like pizza was what you got delivered. And then you know as adulthood for all some of us it was maybe even difficult to accept that you can keep your burgers delivered and things like that. And now breakfast. How popular is breakfast
Kirk Mauriello 14:59
oh Yeah, so you know, in the overall scheme, breakfast is almost as popular as the dinner times in the, in the sales in across the country. And I think that’s mainly because a lot of like Subway and Taco Bell, and all those companies now during the breakfast service. So they realized that breakfast was a bigger thing. What we’re finding is that our breakfast brands do just as well as our nighttime brands. But it’s a little bit different because there’s less competition in the morning than there is in the evening. So, in other words, when you look at when you look at breakfast, it’s a catch, all right, where when you go to dinner, there’s Italian, there’s Chinese, there’s Japanese, there’s Korean, there’s Steakhouse, there’s, there’s all these different types of dinner places where at breakfast, you go to the breakfast place, like, right, is that you don’t go to the French toast place, you don’t go to the pancake place, you go to the breakfast place. So it’s a little bit different from that standpoint, which creates more of a creates less competition, because the restaurants are all the same. You know, they’re not It’s not choose, I’m going to choose today to buy Chinese food. Well, you would you wouldn’t buy that from Italian restaurant that might be online. But breakfast, you might get eggs, and you might get pancakes, and you might get skillets. And you might get everything all from one, one type of restaurant.
Chad Franzen 16:20
What were some things that you did to help Virturant get started, you know, like, what were some steps that you took to establish the company?
Kirk Mauriello 16:29
Well, you know, early on, one of the things that we had was that there were no companies like, right. So what we were trying to do was, and working with the third party delivery companies was a challenge because they had never done this. So every time everything that we’re doing today, and we did from someone we started to today and even ongoing now is that it’s all pioneering, it’s all the first time it’s ever been done. So even down to reporting systems, there’s no reporting systems that they didn’t have reporting systems. And we have 2000 brand storefronts available for consumers to order from around the country right now. And that’s going to grow to 10,000 over the next six, eight months. So you have to have that reporting systems, you have to be able to track things. And these systems weren’t the third party delivery systems were not designed for this, they were designed for the individual restaurant to do his sales, and that was fine. And now we need aggregated data and things like that. So we had to work with them to show them what’s needed, we have to work with them on what’s needed, but for the restaurants. But they like our business model because we bring so much more volume for them than an individual restaurant does. And we spend money on marketing and we buy the marketing spots. And we do things within their apps that create more value for them. As opposed to an individual restaurant that doesn’t understand how to do the marketing or doesn’t understand that it’s, it’s it’s a complex thing when you’re trying to run a restaurant. And now this technology things their restaurant tours don’t work that way, you know, they’re more about running their restaurants than they are about the technology. So we kind of bring this technology piece to them and make it simplistic, right. So from a virtual fulfillment partner truly has received the order make the order can be ordered through driver. That’s it. They don’t have to market they don’t have to build it. They don’t have to manage it. In order to do anything. We do all of that on our end, and then we pay them for fulfilling those orders for us.
Chad Franzen 18:31
How has your experience operating like a pizza franchise or multiple pizza franchises help you in this endeavor?
Kirk Mauriello 18:39
Yeah, that’s a great question. Because we were I was doing something with someone the other day, and I was telling them how different the model is and how exciting this model is compared to franchise. And he was like, What do you mean? I said, Well, when I was in franchising, you know, we had 45 restaurants in their franchises I was with. And it was a 50 year old franchise. So they didn’t have a lot of major growth, like other franchises have, but but it was a very good company. We, if we opened five new restaurants in a year, it was like craziness, right? So I’m in the Chicago market, and I’ve got 30 restaurants in the Chicago market, but the Chicago market, even the 30 restaurants, I only reached the south suburbs, so I only reached about 1/3 of the market in the Chicagoland area. Well, with this I was able to build out and cover 70% of the Chicagoland market in six months. Wow. So yeah, because we didn’t have to build the brick and mortar. We didn’t have to do all that we had to find the fulfillment partner and affiliate brands. So all of a sudden, we like in Chicago, we reached 6.9 million customers with our brands. So that’s a lot of consumers that have the ability to buy our buy one of our brands, you know that are being fulfilled in that market. So it’s a different model. You can grow really, really fast. And it’s a race right now. It’s a race, every company, you know, all the all the competitors, that we’re all racing to get that market share. And that market share is really the distribution point, which would be considered the kitchens that are making food. Right. So we’re racing to that to that end goal.
Chad Franzen 20:13
So you expect, I mean, you expect major growth for your company, do you see the restaurant industry really going more and more virtual?
Kirk Mauriello 20:23
I don’t know, if I see it going more and more virtual overall, there will be a saturation point that it gets to, but virtual brands are so are different, because you can turn them on and off. There’s a lot of flexibility with it. You can create new ones, and get them up and running fairly, fairly quickly. You know, for instance, I can have if I create a brand tomorrow, right, which I’m working on a new brand right now, a fried rice, fried rice bowl brand. I’ll have that in 100 stores in a week. Oh, wow. So you know, and I’ll be reaching, you know, 9 million or 10 million consumers in those 100 stores within. And we could do that in a week. So and once we get to the point where we have 1000 locations that are fulfilling orders, you can get a brand out there so fast, right? So you think about the celebrities that are out there the strip’s that are out there that want to create something unique, they have that ability to come to us and say, Hey, I’d love to get my brand out there. How can you help me do that? And I can say, well, we’ve got these restaurants that fit that profile, these restaurants have the ability to make these foods, you know, we can go out there. And we can say and let’s go, let’s go and try to bring it out to all those restaurants and put it into the market very, very quickly. Where we take somebody years and years and years just to build a few stores.
Chad Franzen 21:42
Do you feel like you were I don’t know? I mean, if you started this in 2019, and then COVID, hitting 2020? Do you feel like you were like a visionary or you hit the lottery or something like that? In some ways? You know?
Kirk Mauriello 21:53
Yeah, it was it was it was very, what’s the word to use? It was incredible. When COVID had to see what was happening, and no one knew we didn’t know. I mean, the first thing was, restaurants gonna be shut down for two weeks, right? Let’s talk let’s flatten the curve, flatten the curve, and then all of a sudden restaurants are shut down. And owners were looking for something new to go to. And you remember at that point in time, we only have a few brands, we don’t have 23 brands at that time, we only have five or six. Right and and technology wise, the technology wasn’t fully there yet for what the vision was. So because of the technology piece, having consolidated tablets, in the store in the restaurants like you’ve gone into restaurants seeing they have a tablet for GrubHub there with Uber and they have all these tablets sitting there and their orders are coming in right? Well, we have a solution that puts all those orders into one tablet. So we only have to have a tablet and a printer, or a tablet and a KDA screen within the restaurants that take in every order from every platform, every social area that we’re pulling orders from all going one place. So that technology wasn’t fully built out. You know, it was there to a degree but there were things that were missing, that needed to be integrated. And because of virtual brands and us coming we got to sit with one of the companies that we use and really go over this is what we need, this is what’s going to be needed to make this grow further. And they were able to take that that knowledge and go out there and make those things happen for us. So that’s helping us expand much faster. Even though COVID hit, you know, it took a little bit of work to figure it out fast. Sure. Right. I would say that because of COVID, we probably it probably forced the the the industry about five years ahead of where it would have been.
Chad Franzen 23:47
So it may have caught up to where it is now over time. But it just really accelerated the process.
Kirk Mauriello 23:54
And accelerated it made it easier to get a restaurant interested in it. Like my sales pitch to a restaurant changed with COVID. And it changed as the restaurants asked us different questions, right, as they were saying, well, these are our needs. And here’s how we do it. We got it down now, like I know and you want to be able to cover as many restaurants as possible, you want to have any type of Restaurant Brands. Right. And and some some competitors have gone to the what they call the dark edge. Right? So they have their one brand and they bring that to restaurants as their single brand. We like to bring the basket of brands. Because we feel that there’s more there’s more touch points for the consumer to find you. Right, that they’re not looking for a particular brand. They might be looking for a particular type of food.
Chad Franzen 24:43
Who are some? If there are any who are someone like maybe your mentors or people in the restaurant industry, who have been particularly beneficial in terms of offering you advice as you move forward in this endeavor?
Kirk Mauriello 24:55
Yeah, well, it’s interesting. I, my first endeavor into the into the business was in the pizza business and the company I worked for was a really us pizza out of Chicago and it was a family owned business. I was worked very well with the CEO of the company, Joel really Oh, and helped him take the company from a family style company to something a little more corporate, you know, adding some different technologies in there and things like that. I learned a lot about the technology side and how, how it can make it work. So we were able to do about 55 million a year in sales and have a have a corporate staff of five people, which was the leanest in their whole franchise industry. Okay, nobody $10 million in sales per corporate employee, not even close. But we outsource a lot of things. So but we learned the right things to do with that. Then we had, then when I left a really owes, I went and we had bought what some investors brand called honey jam cafe. And that was owned by the Portillo Restaurant Group out of Chicago and Portillo’s, as you might know, just went public, on the NASDAQ and they’re going to be opening up about 500 stores over the next five years, I think is what their goal is. So I had I had the pleasure of getting to sit with Dick Portillo a few times when we were going through a lot of things, because we were still renting our buildings from him, and got to sit down with him. And there’s nothing like sitting down with a billionaire restaurant tour, and hearing how he did it, what it took just the little nuances and the things and he started in a little hotdog stack and built into a billion dollar empire selling hotdogs and hamburgers. So it was it was interesting to get the insight from him on, on how things went and how how much trial there was and how many little failures there were to get to where it needed to be. And, and he said the main thing is just stay focused. You know, stay focused, don’t if you if you know it’s the right thing to do stay focused with it the whole time.
Chad Franzen 27:02
Hey, Kirk, I really appreciate your time today. Congratulations on your success with Virturant. You’re kind of you’re kind of a pioneer in a much needed industry. How can people find out more about it?
Kirk Mauriello 27:14
They can go right to our website at Virturant.com. And that’s V I R T U R A N T .com. You can find us there. You can find us on LinkedIn. You can find us on Facebook on different areas. But we’re looking for restaurants around the country to fulfill orders. We haven’t even scratched the surface overall, we’re very successful, but we’ve we can probably grow 100 times the size that we are because the market is so large overall.
Chad Franzen 27:42
Okay, well, best of luck in the future. And I really appreciate your time today, Kirk. Thank you so much.
Kirk Mauriello 27:48
Thanks, Chad. Appreciate it.
Chad Franzen 27:50
So long, everybody.
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