Dive Brief:

• Chick-fil-A will debut its Little Blue Menu delivery kitchen concept at a pilot location in Nashville this fall, and an Atlanta location will open in 2022, according to a company blog post. Guests ordering from Little Blue Menu will have access to three virtual restaurants: Flock & Farm, Garden Day and Outfox Wings, as well as menu items from Chick-fil-A. 
• The company will use the pilot locations to gather customer feedback. Guests, who can create one order with these four different menus, will receive a link via text message to participate in a customer survey. The feedback will help the company evolve its menu before it launches Little Blue Menu on a larger scale. 
• Chick-fil-A's delivery-only Nashville facility, which opened in 2018 to service catering, delivery and mobile orders, will serve as the pilot location for its virtual brands.

Dive Insight:

Chick-fil-A will use its virtual brand portfolio to create a self-delivery channel, offering delivery within 10 minutes of its Nashville facility. The company is currently hiring Little Blue Menu drivers, who will deliver orders in hybrid electric cars. Unlike third-party delivery drivers that earn money based on the order amount, Little Blue Menu drivers will earn an hourly wage of $11 plus 100% tips. Full-time drivers will also receive health benefits. Given the ongoing driver shortage, this could attract drivers who want steady paycheck. 

Creating a self-delivery channel could become expensive in the long run, especially if Little Blue Menu expands beyond two locations. Some restaurant chains have recently pivoted away from their self-delivery offerings. Papa John's has been partnering with third-party delivery providers to supplement its existing delivery drivers, and Panera shuttered its self-delivery channel in April. Even Jimmy John's partnered with DoorDash in December to use reach new customers on DoorDash's marketplace, despite previously vowing to never partner with a third-party delivery provider.

But Chick-fil-A appears interested in self-delivery channels, and has tested different models in the last few years. In April, it partnered with Kiwibot to deliver from three locations in Santa Monica, California, using roving robots. The company also tested delivery with a Chick-fil-A branded car in Norcross, Georgia, in 2019. 

The offsite Nashville facility will allow Chick-fil-A to test recipes without disrupting daily operations in its brick-and-mortar restaurants. Many other large brands, including Chili's, Applebee's and Bloomin' Brands, have been using their existing restaurants to facilitate their virtual chicken brands. 

Chick-fil-A is launching these brands into an already crowded virtual restaurant sphere, which could pose challenges. Its success will depend largely on marketing and boosting customer awareness, since loyal Chick-fil-A customers may not be as familiar with Little Blue Menu, or know it is attached to Chick-fil-A. 

While some virtual brands have proven to be wildly successful — Brinker International's It's Just Wings brought in over $170 million in sales during its first year — the level of sales and marketing spend needed to maintain these brands long term can be a tall order, experts said. 

"When you do a virtual brand, you hear a whole bunch about it and you see this spike in sales for the first couple of months, and then you have to go find the next thing to replace it," Rishi Nigam, CEO of host kitchen facilitator Franklin Junction, said. Many virtual brands that were big six months ago burned out quickly, he said.

But if Chick-fil-A can accue as big of a brand following for Little Blue Menu as it has for its core concept, this concept could have staying power.