retail news in context, analysis with attitude

The Wall Street Journal has a story about how fast casual restaurant Applebee's is selling hundreds of thousands of dollars worth of wings each week - bit it is doing so not under its only brand, but as Cosmic Wings, which is only available for online sale,. delivered by Uber Eats.

"The wings, developed with PepsiCo Inc.’s Frito-Lay division, are aimed at younger consumers who want late-night food that sounds cool," chain executives tell the Journal.

The story goes on:

"So-called virtual brands have mushroomed on food-delivery apps during the Covid-19 pandemic. Uber Technologies Inc.’s Eats division said it has more than 10,000 brands on its U.S. platform, up from more than 3,000 at the start of 2019 - most of them run by existing restaurants. DoorDash Inc. said it has added many online-only brands in the past year. Casual-dining chains have used them to try to attract new customers less interested in their vintage parent brands."

Indeed, the Journal writes, "Local sandwich shops, major chains and Michelin-starred chefs are cooking up online-only brands from their kitchens, tapping existing staff, equipment and food to broaden delivery options as the health crisis brought a year of restrictions to their dining rooms. The virtual brands also provide a low-cost way for restaurants to try to boost sales without building new spaces."

KC's View:

One of the things that this trend reflects is how easy - and maybe easy is the wrong word - it is for nascent brands to compete with and nibble away at the market shares of legacy brands.  A lot of folks are less interested in brands with a pedigree than they are with brands with an innate relevance to how they live their lives.

If this can happen in the fast casual segment, there's no reason to think that it cannot happen to the traditional food retail business.  In a lot of ways, the business models of companies like Instacart and Door D ash are structured to allow this to happen ... they come in under cover of night as service providers designed to help retailer clients, establish their bona fides as being relevant to the customer, eventually supplant the retailer's brand's dominance, and then are positioned to compete with their clients for the customers' loyalty.

The battleground may be virtual, but the battle itself is anything but.