The owner of Bella Italia, Cafe Rouge and Las Iguanas plans to lean on its existing kitchen infrastructure to service explosive home delivery growth rather than pursue the ‘dark kitchens’ route, its CEO has said.
The Casual Dining Group runs nearly 300 restaurants around the UK and believes it makes operational sense to create dedicate delivery-only brands that leverage the huge kitchen estate it already has in place.
CEO Steve Richards, who will be leaving the business in June to join leisure operator Parkdean, said: “We listened to all the conversations about dark kitchens and we thought that seems a lot of capex and expense when we have got 280 kitchens, so we launched some brands online – Mac Shack, Stack & Grill – and you will see these on Deliveroo, Uber Eats and all the various apps.
“They are virtual brands and they are cooked in an existing kitchen, so you may find that a Stack & Grill burger comes from a Cafe Rouge kitchen, but the brands themselves have their own identity, their own marketing and their own feel – it’s a different product. We have had a lot of success with that.”
Last year, Las Iguanas also launched a delivery-only brand called Blazing Bird, utilising the existing Las Iguanas kitchen operation.
Speaking at the Casual Dining Show last week, Mr Richards said that the virtual brand delivery model it has adopted makes perfect sense from a menu perspective.
“If you think logically from the customer, you would not order a steak and chips on Deliveroo – why would you? And that’s the number one seller of Cafe Rouge, so Cafe Rouge is not a deliverable brand but a burger is. So it is about being logical and sensible, and then also you’d have to be able to deliver it and launch it because of course you need national coverage to launch these things so hence we have used our scale.”
Mr Richards said the business is “working very hard” on improving its delivery, digital and partnering capabilities to supplement its traditional restaurant walk-in sales. “It is about diversifying the income streams, making sure that you have got a great brand that is relevant but trying to think beyond the person that is walking in the door, and for us that is our biggest attention,” he said.
Asked how the Casual Dining Group is getting on with third party delivery aggregators, Mr Richards said the relationship was still relatively new and evolving all the time.
“We work closely with them and we take feedback, they give us great insight on how we are delivering and the KPIs. I think if you embrace the change you can make it work for yourself and you have to think around the box a bit and the guys we have got are fortunately able to do that.
“Delivery is not going to go away, digital is not going to away, so you have got to embrace things but it is, of course, a real challenge for the business because you are sort of re-tuning the engine as you drive along – you are trying to think about new ways of income and how can we utilise our brands rather than just bricks and mortar and footfall. And that is challenge. Anybody using these channels will know they are lower margin than walk-in – so you are having to think about that as well. It is not plain sailing – these are business challenges that we are all going to face.”