Dive Brief:

• Chick-fil-A will launch a delivery-only concept in Nashville later this year and in Atlanta in 2022, the company announced Thursday.
• The concept, called Little Blue Menu, will serve both Chick-fil-A's classic menu as well as different cuisines such as salads, roasted chicken and wings. 
• The QSR has been testing ghost kitchens over the last few years, and opened a location inside DoorDash Kitchens in 2019, but this appears to be its first virtual brand. The innovation reflects a growing trend among chains to diversify with off-premise-only concepts that have no storefront.

Dive Insight:

This virtual brand could give Chick-fil-A a testing ground for new menu items. The chain has already been slowly rolling out new products over the past two years to diversify its menu. In 2019, the restaurant added macaroni and cheese to its permanent menu, for example. In 2020, the chain debuted a chocolate fudge brownie and a coffee blend. 

The chain provided few details on how the delivery brand will work, but operating without Chick-fil-A's branding could be a challenge — especially since Chick-fil-A continually scores high for brand intimacy. 

The virtual brand could also help the company connect with new customers. Chick-fil-A has been already been deploying innovations to increase loyalty among its patrons. In February, it added a fourth membership tier called Signature Status to its loyalty program, Chick-fil-A One, making it the program's highest tier. Signature Members have access to unique experiences and can participate in voting opportunities.

Chick-fil-A faces a highly competitive virtual brand space, however — especially in the chicken category. Several restaurant chains have added their own concepts since the start of the pandemic and have already experienced significant sales, including Brinker International's It's Just Wings, which is on track to make $150 million in sales during its first year in operation. Bloomin' Brands believes its brand Tender Shack will create $75 million in annualized sales, CEO David Deno said during the company's Q1 2021 earnings call. 

Applebee's Cosmic Wings, which launched this year, is averaging $330 per week per restaurant after about 10 weeks in the market, Applebee's President John Cywinski said during the company's Q1 2021 earnings call. The company, which rolled out the brand on Uber Eats, is also adding delivery partners Postmates and DoorDash, which will help expand this brand's distribution, he said. Red Robin, Denny's and Nathan's Famous also have virtual brands in the market.