What is a Virtual Restaurant with Kirk Mauriello

Josh Wilson
 Welcome to the Deal Scout. On today's show, we're going to talk about a restaurant preneur, and we get to learn some of the lessons about restaurants and maybe good ways to do it, maybe some ways that aren't so good to do it. With that, we're inviting one of our friends, Kirk on the show to share his journey and some of the things that he's learned in the deals of restaurant businesses. So, Kirk, welcome to show. 

 Kirk Mauriello
 Thank you, Josh. Nice to be here. 

 Josh Wilson
 Yeah. All right. So, Kirk, we're hanging out in a restaurant, perhaps, and someone walks up and they go, hey, who are you? How do you typically introduce yourself in what you do? 

 Kirk Mauriello
 Well, I don't own any restaurants anymore, but what we have now is we have a virtual restaurant company that we bring brands to restaurants. A lot of times I'll be in a restaurant and someone will come up to me, an owner, someone asked me, what is it that we actually do? In a nutshell, what we do is we bring business to the restaurants. We're one of the only businesses in America that doesn't look to get business from the restaurant. We look to bring business to the restaurant and bring profitability to them. 

 Josh Wilson
 No kidding. Okay. We're going to talk all about that business model, how you came across it and discovered it. For your journey, for you to be able to do that. You probably had some experience in restaurants. Can you give us your background and what led to this new business model that you said doesn't exist or you haven't seen it? 

 Kirk Mauriello
 Yeah, so my journey in the restaurant business started in 2010, believe it or not that long ago. I was in the electrical distribution business for a long time, out of college. Did that until 2010 is when I decided to move over and become the franchise director for a company called a really? Pizza out of Chicago. I spent about five years there, learned a tremendous amount about the restaurant business. Got to work with independent restaurant owners that were our franchisees, which was very enlightening to see how they looked at the business as opposed to how we looked at it from a corporate standpoint. Built a lot of structure around that. Dealt with working within a family owned business, which was very interesting at the time because I never worked for a family owned business. I always worked for corporations, so I got a lot of experience doing that. 

 Kirk Mauriello
 When I left Orelios, I went and did some consulting for and then with some partners, bought a company called Honey Jam Cafes out of Chicago, which was a division of the Portillos Restaurant Group. It was their breakfast and lunch concept and went from pizza, which was much different afternoon and night time operation, to a breakfast and lunch operation, which the hours were so much better, closing at 230 every day and having the rest of your day was a very interesting thing. We franchise the model at the time, we had brought it one franchisee. We built the group into a pretty strong group of restaurants. Then my partners took off from there. I had left and started my own brand in Plainfield, Illinois. Just before the Pandemic, the restaurant was doing okay. It really wasn't taking off the way I thought it would. I got introduced to virtual restaurants at that point and we brought on some virtual restaurant brands for our particular location. 

 Kirk Mauriello
 We were actually the first Next Bite, which was as a competitor in the marketplace today. We brought on their brands. We were the first signed contract as a licensee in the United States and it did very well. That's when I decided I'm going to close up the restaurant because it wasn't doing as well, which just fortunately happened to be January 2020 is when I decided to close it. Just before the Pandemic hit just dumb luck and went into the virtual restaurant business. At that point in trying to show restaurants how there's a new business model, but we didn't have the Pandemic hadn't started. It was just trying to sell a new business model to restaurants that they can build their business upon. Of course, the Pandemic happens and everything accelerates about five years in time. 

 Josh Wilson
 Yeah, wow. Because the world went virtually immediately. Right. 

 Kirk Mauriello
 You know what? I was having success bringing people to the business model, understanding it. It was early on, so there were a lot of things that we had to take into account that was different than what you might have thought. The pandemic hit, and that's when everything changed, because restaurants were shut down. You couldn't have people come in. They had to have another way. They were getting inundated with online orders if they weren't an online order, and they needed to get into it. All of a sudden, our idea became, holy cow, we really need this right now. And then there was a race. Right. Well, when you place to something, you don't do it all in the best way. You go to the lowest hanging fruit and the path of least resistance at that point. The first six months was a challenge in trying to get technology where it needs to be. 

 Kirk Mauriello
 The technology companies were racing. All kinds of things were happening, but the main thing was consumers were where we wanted them, and that was online, and they wanted to place orders online, and they needed different culinary options at that point. 

 Josh Wilson
 Yeah. All right. Let's just say I've been in the I used to work at a pizza shop. I think everyone in the world, it should be, like, required in college, if you go to college or whatever, that you either serve in some type of capacity of, like, police, fire, military, or you serve in a restaurant. Right. 

 Kirk Mauriello
 You know what? It's an interesting business. I love the restaurants. I love being in the restaurants. I guess it goes back to when I was in high school. I was a delivery paper boy when I was very young. Right. That was my first job in Staten Island, New York, delivering the daily news in the Post. I graduated up to a pizza delivery guy, which was a phenomenal job in New York City when you were a teenager, because you delivered pizzas and you made a lot of cash. It was a lot of money that you were making, that your friends were making $5 an hour back then at minimum wage, and you were making 1015 delivering pizzas. It's just really funny how the whole world comes back around at some point, that we now have businesses that rely on just delivery. Right. Were the original delivery guys, the pizza guys. 

 Josh Wilson
 Super cool. It's this idea of service, though, that I think a lot of people are meeting introduced to, that I think it's so healthy for us to learn right. To serve another human being. But let me ask this question, right? Let's just say I've been an owner of a restaurant business, a pizza business, let's just say for 20 years. I don't know a lot about technology. You're coming to me talking about a virtual kitchen and I'm like, all right, tell me what the h*** this virtual kitchen thing means. Explain it to me. 

 Kirk Mauriello
 That is exactly what ended up happening when we bring it into our restaurant owners. I would say probably 5% of the restaurant owners in the country have actually heard about it. Another 10% have read about it, and the rest have no clue what we're talking about. What we do is basically, we come into that restaurant and say, okay, can you imagine? You have your own brand online, you have your restaurant, and people can order online from you anytime they want. What if you had the ability to have ten more restaurant brands online? And event name? Someone picked one of those brands, the order came to your restaurant, and you made the food, and you got paid to make that food, and you got paid at a healthy profit. All of a sudden, their eyes light up, and I said, picture for this picture. Now you have ten more brands that you can make the food out of your commercial kitchen. 

 Kirk Mauriello
 Now, it doesn't have to be the same food you currently make. It could be pastas. It could be breakfast items. It could be anything that your kitchen can actually make as a commercial kitchen. Now, we say to them, now we're going to put those brands on Uber. There's going to be ten storefronts on Uber that every time someone orders from it, the order gets routed to your store. You make the food, and you get paid to do it. Now, multiply that by four, because there's four major platforms that do delivery. There's uber postmates DoorDash and grubhub. Now you have 40 possible opportunities that someone can find online and order a food. Now, what brands do you choose? Well, the way we do it is we keep it very specific to food. If you want to order a grilled cheese, there's a brand called Grilled Cheese Mania. 

 Kirk Mauriello
 If someone searches the word grilled cheese, they see that. We bring different culinary options, and of course, they're all our recipes that we do, and we bring those to the restaurants, and we do all the marketing. We do everything for the restaurants. The restaurant gets to do what they do best that's make the food, if they make great food, and they follow our guidelines. And again, they're guidelines. This isn't a franchise. These are guidelines to make certain items, and then they have control, complete control at the restaurant to make the food, and the better they make it and better quality to put out there and better packaging that they make it look great for the consumer, the more orders they'll get. 

 Josh Wilson
 Super cool. All right, so I'm going to pretend to be the guy in business for 20 years making pizzas. He's like? Man, I don't know. That sounds difficult. I don't know technology. We're still trying to figure out how to take credit cards, and I don't know how to cook other stuff. Man, I've been doing pizzas for the last 20 something years. What did those conversations typically look like? 

 Kirk Mauriello
 Well, usually you don't get someone just say to you, I don't know how to make other things. A restaurant owner usually knows how to make a lot of things. Most restaurant owners have a lot of experience. They may be a pizza place, but they're making a lot of other items. They have the equipment, they have a grill, they have fryers, they have all these things that they can use to make food. That's really never something that really pops up. The thing that does pop up is, okay, ingredient wise, what do I need to bring in? What we try to do is we try to keep those ingredients working within the menus. Being a restaurant tour for a number of years and understanding the restaurants, we designed everything so that it works within the restaurant's current inventory. Now, not every brand works for every restaurant, and we're clear with that with our restaurant partners. 

 Kirk Mauriello
 What we call fulfillment partners, is that we want to make sure that we're not bringing more expense to you. This has to be profitable. We have a lot of different brands that we have over 30 brands that we have, and some are pizza brands, and some are breakfast brands, and some are sloppy jokes, believe it or not, and mac and cheese, things that are really simple for restaurants to make. What we found is that the simpler the food, the more it sells. The consumers really aren't interested in fancy food. They're interested in the stuff that they eat every day, and they utilize the platforms for convenience. That's what we found is the best way to bring our brands to market. 

 Josh Wilson
 As a pizza owner, right, been doing this 20 years, and I had to make really good pizza. Now you're giving me an option to essentially, if we're like in the world of retail, you're giving me other options for different SKUs. Now I have my inventory capabilities have now just multiplied? Yes. 

 Kirk Mauriello
 There's two ways of looking at that, right? One is now you brought in this inventory that now you can expand maybe your internal business, right, your current brand, your current restaurant into other things, or you can strictly stay with these items and keep an online presence. Now, can those items also be used elsewhere? So, for instance, we have three brands. Most of our brands all interchange. You look at all three of our brands, it's about 140 menu items, ingredient items total, that make up all the brands. So they're all crossover brands, right. You have hamburgers, you have grilled cheeses. Well, you can also make patty nuts. It's all the same ingredients. Those are three different brands that represent three different stores on four different platforms. 

 Josh Wilson
 Nice. All right, you're in Chicago kind of known for your pizza, right? What is your experience? You live in Florida now? How do you compare Florida pizza versus Chicago pizza? 

 Kirk Mauriello
 Well, I'm more of a New York pizza guy. 

 Josh Wilson
 Okay. 

 Kirk Mauriello
 That has been my I grew up in New York, so I'm more of a New York style pizza guy than I am a Chicago style pizza guy. I did was the COO of a pizza chain in Chicago for a number of years. I look at the pizza as two different styles, and the Chicago pizza is much more flavorful, I would say. And there's a lot of different flavors. Like, every brand in Chicago tends to have its own type of cheese and its own type of sauce, where in New York, it's a little more generic. Overall, the pizza is much different. Obviously, you pick up pizza, the dough is different. In Chicago, they cut round pizzas and squares, it's different. And then you have deep dish also. Honestly, deep dish is not the big Chicago pizza market. Like, the pizza market is really thin crust in the Chicago land market. 

 Kirk Mauriello
 Just they've done a great job of marketing deep dish in the city of Chicago. When you get to the outside, it's mostly they call it tavern style, or it's this crust, super cool. 

 Josh Wilson
 As you're building this out, you said the pandemic, what happened in covet accelerated you years in advance, right? For some people, it was a big challenge, and then some people, really, their business accelerated forward. Now, you provided a solution during a time of chaos. What kind of results have you experienced since starting to build this over the last couple of years? What are some milestones that you've hit that you're proud of? 

 Kirk Mauriello
 Well, I'd say that the business itself, when were first starting to get it going, was selling them on a business model of excess capacity. Kitchen has more time in off hours, things like that. We learned a lot through that process. A whole bunch of people, restaurants want to come on right away very fast. So we had to build things fast. The technology wasn't quite there fully. We spent a lot of time with one of our technology partners, helping them understand and helping them grow what's needed. That's really caught up in the last year. It's really accelerated and helped be able to build these brands faster and get them to restaurants faster. The technology is really good now for the restaurant owner, it's a tablet and a printer, and they're called consolidation tablets. We use a company called kubo. Believe it or not, they're out of Canada. 

 Kirk Mauriello
 I found they are the best in the business, and they adapt faster than everybody else that's in the business. What we do with their technology is everything flows through the one tablet, so everything's coming into one place. More consolidation of data, things like that, master controls, instead of having to be using things across all of the third party platforms, which are all different. Now we have more standardization within that. When we started, there was no such thing as virtual restaurants. They had virtual restaurant. The virtual restaurant was available and people did them, but there was no mass production of it. So, in other words, no companies that really did this. Now, there's a lot of them out there. Some are bigger than others. Some have big brand names, they'll have celebrity brands, things like that. Everybody goes to market a little different, which is very cool about the market. 

 Kirk Mauriello
 And it really works for any restaurant. It's because you have to find what brands work for you the best and what companies do the better job of marketing those brands. So you get more orders. 

 Josh Wilson
 Another term that I heard in this is like a ghost kitchen. Are they the same thing? Are they similar? 

 Kirk Mauriello
 Well, there's a few different terms out there. One is a virtual brands. A virtual brands is a restaurant brand that doesn't exist anywhere but online, and there's no brick and mortar locations, right? There's the ghost kitchen, which is a physical location that has multiple virtual brands within it or brands that are only online. You could have a ghost kitchen that someone is a chef and has his own ghost kitchen and just makes his brand. He could make other brands, too. That's considered a ghost kitchen where there's no real storefront of the brand, right? Then you have a dark kitchen. A dark kitchen is a single brand that will go in and have an individual restaurant make their food. There's a company called wow Bow, and they act as a dark kitchen. They hire dark kitchens to make their food. What we do is we hire local restaurants that have the ability. 

 Kirk Mauriello
 Our restaurants are kind of in all different across the gamut, really. There their kitchen side becomes kind of a ghost kitchen by terminology with our virtual brands. And you could say it's dark. It kind of falls across all the platforms. The verbiage is very there is a uniqueness to the verbiage, but virtual brands kind of cover all of them can work in any of those locations. 

 Josh Wilson
 This is so cool. Virtual brands, ghost kitchen, dark kitchen, virtual restaurants in a hole. You guys kind of taken different models, licensing it out and now help implement that into restaurants for restaurant owners to have more options, more profitability, more flexibility. There are some of the benefits. 

 Kirk Mauriello
 There's a lot of things that the restaurants benefit from. Okay? One is they get an influx of orders, right? So these orders come in. Let's say a restaurant brings in 30 more orders a day at around $30 average. So that's $900 in sales a day. It doesn't sound like a lot, but that's a lot for a restaurant when you think about a daily thing. So restaurants open every day. If they did $1,000 more a day, it's $365,000 a year in sales. That's a lot of sales for a restaurant. Now, it's all great and dandy, but it has to be profitable, too. Just doing work doesn't make you money. It has to be a profitable situation for the restaurant. The way we set it up is that we have a guarantee with our company of 30% profit on those sales dollars. We guarantee the restaurant is going to make 30% of that $365,000 if that's what they did in sales on annual basis. 

 Kirk Mauriello
 If they don't reach that, then we make up the difference. All of our stores average over 32% currently, so it's not an issue. That's our job, is to make sure the pricing is right. It's the job of the restaurant to make sure they just make the food and provide that food to the driver to bring to the consumer. All the benefits the restaurant get is that they get more movement of their inventory, current inventory. Right. All the items, if you brought in every one of our brands, a typical diner, your typical New York style diner might have 98% of the items already inventory ingredients. So it's very simple for them. Not every restaurant style or type had that, but diners tend to have that breakfast. Restaurants tend to have the ingredients because they have such a wide variety of items on their menus, as opposed to a Chinese food place or a pizza place. 

 Kirk Mauriello
 That is very limited in their scope. Right. The other benefit is that you get a lot of benefit to the labor rate of your restaurant. Picture having the same employees making the food. You don't have to add anybody to do 30 orders more a day for a restaurant is about three orders an hour. If the kitchen can't do three orders an hour more on an average, then we kind of have other things to talk about. We have a whole separate division of our company that does consulting for restaurants, so we can work on that. As long as your restaurant can do about 30 orders a day, you can be very successful with this business. It's our job to drive the sales. You're not doing any of that. The restaurant doesn't have to participate in any of the marketing. We perform all that as a company for our brands and we want that. 

 Kirk Mauriello
 You just want them to be able to service the food so the labor rate goes down. You also get a the way the curve works with orders is that typically online orders come in just after your typical peak hours of your restaurant. Your restaurant is a lunch and dinner restaurant. Your peak hours are like 1130 to 130. The online orders will come in. Just after that because it's just human nature. People that determine to go out to eat have a plan to go out to eat, and they plan to go out at these times because that's when we tend to eat online. What happens is you're sitting at home, you're at the office, whatever's going on, and you decide that you're going to eat because you're hungry. You choose the time to eat and you have the convenience of the apps to do that, right? 

 Kirk Mauriello
 Now what happens is those orders come in on that 132, 230 time. Well, those are the times that your staff was standing around doing nothing in the restaurant. Now they're producing revenue. And that's the whole idea. We have to get production of revenue. The other part happens is the stores that don't open at night, I mean in the morning, but they're there prepping in the morning. What's wrong with having a restaurant that can make egg sandwiches and pancakes and French toast at 08:00 a.m. When their staff is there prepping? Now that prep time where that labor was complete cost can now be paid for by having a few orders a day come in. If you can pick up $300 in orders, you picked up $100 in profit. Well, that pays the hourly labor. All of a sudden, your labor rates, your labor percentages on your P and L look phenomenal and your profit and loss statements look great. 

 Kirk Mauriello
 It then blends to down the road the option of what if I wanted to sell my business if I was a restaurant and I want to sell my business. Well, now I have another business model within my business. Well, it makes my company more valuable. Or I sell my restaurant and I decide I just want to be in the ghost kitchen business. I go down the street and I've already built an online business, and let's say it's a million dollars a year in business. I now can put a small kitchen with a little small staff and I can service the same market that I was already servicing because I already built the market. I've already got that business model in that market and now I just service those orders. 

 Josh Wilson
 Man, this is so cool. Super cool. Nice work. Nice work putting this all together, pulling all these different models into one. Let me ask you a question. Having this much options, availability, how do you keep the weight off? Because I would just eat mac and cheese all day long, my belly would hurt and it would get much bigger than it is already. 

 Kirk Mauriello
 Well, the number of options for the consumer is great. Now if you go online and you look at these apps, you'll see a tremendous amount of orders out there. There is a key to getting the brands in front of a consumer. So they'll order our brands first. That's the secret sauce right that's the secret to it all. And we have a very good algorithm. We work with the third party delivery companies in a different way than other people do. We spend a lot in marketing to drive those sales because they are strictly coming through those marketplaces, which the third party delivery companies are considered a marketplace, no different than Amazon is a marketplace, right? Uber is a marketplace. You want to be at the top of that marketplace. You don't want to be on page nine. You want to be on page one and two and things like that. 

 Kirk Mauriello
 You want to get in front of the computer as much as possible. We've added some salad brand recently. We've added some things that open up the culinary options more for the person's, a little more health conscious. Honestly, people eat every day, and they eat all kinds of food. And we have enough brands. The way our brands are set up, someone can literally order one of our brands every meal of the day, every day of the week, and they possibly could pick one of our brands from one of our restaurants. 

 Josh Wilson
 Super awesome, man. Super cool. All right, we talked about a lot about business, and let's go on a personal mission for you, right? Like, looking forward. Let's just say we build this thing out, and you exit one day, or build this and hand this off to your kids or whatever the case may be. What's the goal that you're reaching towards that if you hit you're like, I did it. 

 Kirk Mauriello
 I have to say, I love to do more in the communities, do things, do more for charities, do more things for people that are in need. We live in this great country, and there's so much wealthier, and there's so much opportunity to help people would love to help people start up their own thing. They want to learn how to operate virtual restaurants. We can show them that. Want to learn how to operate a restaurant? I can show you that too. You can do all kinds of things and find the thing that I want to find those things that make those people happy. That because when people are happy in the work they do it the best. 

 Josh Wilson
 Yeah, man. That's good. Let me ask this question, all right? I pick up your phone. Let's just say you've had the same iPhone for the last 30 years or whatever, and I scroll through your music. What is the number one song you've played consistently over the last 30 years? 

 Kirk Mauriello
 Oh, gosh, I'd probably have to say a Deaf Leopard Music. Maybe not the last 30 years. Probably the last ten years. I guess I got a little more into the Rock in the last ten years. 1015 years? 

 Josh Wilson
 Yeah. That the guy who's the drummer had one arm, or is that yes. Okay. That's incredible story. Awesome, man. In terms of books, resources. What would you recommend for someone who wants to get better in business or deal making? What's a resource that you can recommend to them? 

 Kirk Mauriello
 There's a great book how to market to people not like me or not like you. I think it's called It's a great book on understanding that we as people, as individuals, are very small marketing segment. So, in other words, the grocery store might have 25,000 skus'in it. When you go to the grocery store, you probably buy 50 on a regular basis. There must be a lot of people that are buying the pig feed on the bottom shelf because they're there. There might be a lot of people that are buying a certain type of taco shell that you don't even know about because it's on the shelf. It wouldn't be there if there weren't people that ate things not like you. You have to be open to those ideas and not pigeonhole yourself in your thought process. 

 Josh Wilson
 Man, that is so good. And I'm glad you brought this up. How do you market to people not like me or something to that effect? Right. I have found and this is with me and I'd love your advice on this is we have I think they call it like a cognitive bias, right? I might not be my ideal customer, but sometimes I create the value that only I can see or appreciate. When it comes to price and pricing it out, we go, if I'm serving the ultra wealthy, I can't afford that. We immediately start to negate our ability to grow and scale when it comes to serving people who might not be like us or who value things that are different than us. How have you found that book has impacted you and your business? 

 Kirk Mauriello
 Well, what we try to do is we try to look at a lot of our competitors in the business, and a lot of people in this business have used what it's called big data. All right? Big data is, okay, what are people eating? Where's the data coming from? What are they seeing? The reality is that the big data only gives you what the big data actually knows. It doesn't give you what's actually happening in the marketplace. Right? DoorDash and Uber and Grubhub will put out data and say, these are the brands that people order and stuff like that. What if there was no French toast available online? How would if people would order it or not? Right? By understanding what a restaurant sells, you can understand what will sell online. You have to take it outside of just big data. You have to start to look at things differently. 

 Kirk Mauriello
 So, for instance, we have a peanut butter and jelly sandwich brand. Everyone said to me, oh, it's got my peanut butter and jelly sandwiches. Okay, I hope they keep that idea. I hope they never think that anybody will ever eat peanut butter jelly sandwiches, right? Because our brands do very well. Do very well. 

 Josh Wilson
 So peanut butter sandwiches. Peanut butter and jelly sandwiches. There's a huge demand for that online. 

 Kirk Mauriello
 There is a demand. I would say that certain markets is a very big demand in other markets. There are, but peanut butter and jelly sandwiches are definitely sell. 

 Josh Wilson
 Yeah. So let's do this. Kirk, this has been a fun conversation. Two more questions. Number one, during this interview, is there anything I should have asked you that I didn't ask? I completely screwed up. 

 Kirk Mauriello
 No, I don't think so. 

 Josh Wilson
 All right, so cool. To end this up, to wrap this up, what's a good place for people who are interested in this kind of business model? Maybe partnering with you, doing a deal together, or just getting your advice on something. What's a good place for people to connect with you and do a deal? 

 Kirk Mauriello
 They can connect with me on LinkedIn, or they can reach me directly at Kirk@virtualprofitcooker.com, and they can also go out to our website@profitcookers.com, and they can always send us a message there, too. 

 Josh Wilson
 Super cool. Super cool. Fellow deal makers in the audience, as always, reach out to our guests, say thanks for being on the show, and find a way to do a deal with them. The purpose and mission of the show is to put deals and deal makers together. I hope this has been fun, educational, entertaining for you. Now, if you have a deal that you'd like to talk about on the show, head over to the deal scout.com, fill out a quick form, maybe get you on the show next. Till then, talk to you all on the next episode. See you guys.