Many foodservice operators turned to virtual brands during the pandemic to build their sales with little overhead. But while some licensed virtual concepts designed by other companies, Dog Haus developed its own portfolio of virtual concepts that franchisees could operate out of their brick-and-mortar kitchens. Cofounder André Vener shares how this strategy became a lifesaver for the company, and how its dedication to the brand’s own products will help it thrive long past the pandemic.
Join us in Denver Oct. 4-6 for CREATE: The Future of Foodservice, where Vener will share more on the Dog Haus’ strategy.
How did The Absolute Brands come to be?
It was originally created around December 2019. We were one of the first organizations to be part of ghost kitchens. We started off with Kitchen United and then also partnered up later with Cloud Kitchens, and so we knew about the space and that we were getting lost with all the different third-party delivery providers out there. When you walk into a Dog Haus, you see dogs, sausages, burgers, plant-based chicken. But when people scroll through the third-party platforms, when they search for hot dogs they aren’t thinking about a plant-based item, Impossible burger or Nashville Hot chicken sandwich. So we basically looked at our menu and created different companies based off of our different categories.
One franchisee in early 2020 was struggling out in Chicago, and he wasn’t sure he could make it. ... We said, why don’t you try some of these virtual brands out of your brick and mortar? They were originally created to roll out to ghost kitchens only, but we said let’s try it out of your location. Right at the time we were about to launch it with him, the pandemic hit. The pandemic was right around March 15, and on April 1 we rolled out The Absolute Brands to every single location systemwide in 10 states.
How much did The Absolute Brands end up supporting Dog Haus through the pandemic?
The Absolute Brands are covering 20% of sales. In March, April 2020, I think we dropped as low as 40% in sales. That’s in the first 30 days of the pandemic. But the second half of the year, Q2 and Q3, we ended up being up 13.75% in our sales systemwide, where I know a lot of brands out there were either trying to stay open or happy that they’re only down 20%.
Virtual brands have gotten a lot of attention from the industry. What do you make of the competition? Is it a bubble ready to burst?
When we started these brands, we looked at our DNA, our kitchen equipment, our franchisees, our culture, and for example with Bad Ass Breakfast Burritos, it was created with just one new SKU, a 14-inch flour tortilla. We already had the eggs. We used our tater tots. We had all of our proteins. We had our cheese. We had our sauces, our avocados. So we had everything.
For the people who are using their own DNA, their own product mix, I think it has legs, to the point where it could be a brick and mortar. If you’re an Italian restaurant and then you’re going to do burgers for a virtual brand just to get out of the pandemic, I don’t think you have any legs. You’re going to realize that all the food costs, all the training, all that new kitchen equipment, the packaging — I don’t see a profit there. I don’t see longevity. I also don’t see that passion behind it.
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