Youtuber MrBeast’s Virtual Restaurant Brand Could Be the Future of Franchising

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MrBeast Burger, a virtual concept created by YouTube star Jimmy Donaldson (aka MrBeast) and restaurateur Robert Earl, launched 300 locations across 35 states in late December. With Donaldson’s staggering 54 million subscribers eager for the launch, locations quickly sold out of his “Beast Style” burgers and fries and the MrBeast Burger app skyrocketed to No. 1 in the App Store. This successful launch suggests MrBeast Burger may be blazing a new path in the restaurant industry. 

What Is a Virtual Brand?

A virtual brand operates as a ghost-kitchen — physical locations designed to serve delivery-only concepts or serve as mobile order-only restaurants, with no brick-and-mortar storefronts or on-premise dining. These virtual brands completely avoid build-out costs and allow operators to rapidly expand into new territories, usually by partnering with third-party delivery providers.

The ghost kitchen phenomenon is nothing new, but as the COVID-19 pandemic shuttered dining rooms all over the country and the demand for food delivery and take-out boomed, virtual brands became one of the biggest trends of 2020.

In 2020 alone, Brinker International rolled out its virtual wing concept, It's Just Wings, Applebee's announced a similar concept called Neighborhood Wings and Bloomin' Brands' announced chicken-tender concept Tender Shack. Most recently, Denny's also announced two virtual brands to help grow market share — The Burger Den and Melt Down. 

The Value of a Celebrity Endorsement 

While many of these major foodservice brands have been leveraging their existing infrastructure to diversify into the virtual kitchen world, MrBeast Burger’s rapidly-growing popularity is an example of how virtual concepts can thrive without the benefit of a proven restaurant brand.

Instead of partnering with a big brand, Earl teamed up with the social media mega-star to leverage his online platform. Recently, Earl’s company Virtual Dining Concepts has leaned heavily into this celebrity-driven strategy, including collaborations with Guy Fieri, Mariah Carey and the rapper Tyga. 

These celebrity endorsements help the concepts build brand awareness, a common barrier of entry for up-and-coming virtual brands without the backing of a big name behind them.

How This Could Impact the Franchising Industry

All of Earl’s Virtual Dining Concepts are available for licensing, which means they offer existing restaurant owners a way to diversify their portfolio and increase revenue. This emerging franchising model leverages the unused capacity of restaurant kitchens that have been hindered by the pandemic. This strategy is increasingly attractive to mom-and-pop business owners in need of supplementary revenue streams. 

Since brick-and-mortar operators can operate these restaurants out of their existing kitchens, the only additional operational costs that they need to pay are for the food, packaging and platform fees. With Virtual Dining Concepts, there are also no additional franchising fees beyond the commission paid to the third-party marketplace, which means the overhead cost and overall risk of licensing a virtual brand is much lower than traditional franchising. Lastly, independent restaurant owners don’t have to worry about marketing and benefit from the celebrity-endorsed and social media-fueled brand recognition, as well as the third-party delivery audiences. 

On the other hand, these concepts are only capable of offering off-premise services, which still only accounts for a small fraction of the restaurant industry as a whole. In regards to the longevity of these virtual brands, it remains to be seen if pent-up consumer demand will drive higher on-premise dining sales when the pandemic ends.

The MrBeast Burger concept currently operates 300 virtual locations, but has the potential to scale much quicker than a traditional brick-and-mortar franchise. If MrBeast Burger proves restaurant brands can dominate the industry without ever needing a traditional brick-and-mortar location, it could change the entire restaurant franchising model and bring an in-flux of investors into the virtual brand space.