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

25 people like this
Posted by resident
a resident of Downtown North
on Nov 7, 2019 at 3:00 pm

Meal delivery companies are ruining the restaurant 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.


14 people like this
Posted by I just lost my appetite
a resident of Downtown North
on Nov 7, 2019 at 3:24 pm

Sounds like a big fraud/scam/tax dodge scheme. What problem is operating multiple "virtual restaurants" out of one kitchen solving? Is each virtual restaurant licensed by the City, County Health, etc? Or just the one that operates the actual "non-virtual" kitchen? Is it the exact same food they just put it in a different box/bag?


9 people like this
Posted by Johhny 5 Alive!
a resident of Crescent Park
on Nov 8, 2019 at 10:41 am

If only the food in the virtual kitchens could be cooked by virtual cooks (machine boils your pasta noodles, dumps them in whichever color/brand box you prefer and squirts sauce onto them) and delivered by driverless cars then we will have really acheived a new milestone in human evolution. Technological innovation knows no bounds I can hardly wait to hear what new breakthrough is in store for humanity.


8 people like this
Posted by Transparency/Accountability?
a resident of Mayfield
on Nov 8, 2019 at 11:55 am

Who do I sue if I get the squirts from eating this crud?


7 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Nov 8, 2019 at 1:08 pm

Posted by Transparency/Accountability?, a resident of Mayfield

>> Who do I sue [?]

As long as the food is prepared in an actual kitchen in a known location, then, that is who you sue. OTOH, I resent companies like Zume Pizza parking their "Mobile Kitchens" on public property for years without paying rent.


8 people like this
Posted by MP Resident
a resident of Menlo Park
on Nov 8, 2019 at 1:16 pm

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

Ok Boomer


10 people like this
Posted by Evan
a resident of Crescent Park
on Nov 8, 2019 at 3:10 pm

"As long as the food is prepared in an actual kitchen in a known location, then, that is who you sue. OTOH, I resent companies like Zume Pizza parking their "Mobile Kitchens" on public property for years without paying rent."

They're just taking advantage of horrible the public policy we have to subsidize car storage. I can park my car there for free for the same time. Why is using the same space to cook pizzas for other people a worse use then me (or you) parking our cars there?

Instead of whining about which use is noble or not in your book, how about we stop massively subsidizing (and paving land for) car storage?


Like this comment
Posted by Anon
a resident of Another Palo Alto neighborhood
on Nov 8, 2019 at 3:35 pm

Posted by Evan, a resident of Crescent Park

>> Instead of whining about which use is noble or not in your book

I don't recall saying that your parking your car in front of your house was "noble"?!?! But, as a resident, you are paying to maintain city streets, so, some level of usage could be considered to be "included". Or not. Up to the PACC to decide.

>> how about we stop massively subsidizing (and paving land for) car storage?

Works for me. I would be happy if the city charged everyone, residents included, including me, for parking on city streets.


7 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Nov 8, 2019 at 4:21 pm

Personally speaking, I have no objection to a chef or similar starting a business doing delivery without a dining room. Pick up or delivery is not a bad idea v running a dining room.

What I really object to is when a phone delivery or online delivery comes in just as it is my turn to order at a counter service restaurant and that order gets priority over mine. My patronage is just as important as any phone or delivery order even if that order is much larger than mine.

I could choose to phone in my order while outside and skip to the front of the line, but is that fair to those in line in front of me?


4 people like this
Posted by Snacking Drivers tasting your food
a resident of Adobe-Meadow
on Nov 8, 2019 at 5:31 pm

I know one that even carries repackaging tools (tape, stapler, crimper)
Of all my friends who deliver, every single one says they'll give it a taste.
It's generally cold as well, all for a big premium.
I guess if I was far too baked to drive or care it would maybe look appealing.


2 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Nov 8, 2019 at 8:28 pm

I read about this several weeks ago - happening in Chicago. It’s successful there. Big restaurant city, of every type of variety including now these ghost kitchens.


6 people like this
Posted by Mary Ruth Leen
a resident of Midtown
on Nov 8, 2019 at 10:28 pm

Mary Ruth Leen is a registered user.

Ok, millennials; first world problem!
Commit to something that matters!


Like this comment
Posted by Kenny
a resident of University South
on Nov 9, 2019 at 3:59 pm

"I resent companies like Zume Pizza parking their "Mobile Kitchens" on public property for years without paying rent."

Have you ever tried Zume's pizza? It is really good. Of course they use mobile kitchens. It allows them to move to wherever the demand is highest at at a particular time. That decreases the driving distance for the delivery drivers.

"I know one that even carries repackaging tools (tape, stapler, crimper)
Of all my friends who deliver, every single one says they'll give it a taste.
It's generally cold as well, all for a big premium.
I guess if I was far too baked to drive or care it would maybe look appealing."

The mobile kitchens are starting to put packaging measures in place to prevent that.


4 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Nov 10, 2019 at 10:47 am

Posted by Kenny, a resident of University South

>> Have you ever tried Zume's pizza? It is really good.

Have you ever tried Pizza Chicago? It is really good.

>> Of course they use mobile kitchens.

Of course, it costs twice as much as Zume, since Pizza Chicago has to pay rent, while Zume can park on the bicycle boulevard (forcing bicycles out into the auto part of the street).


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