- Sam Nazarian is founder of SBE, a lifestyle hospitality company.
- He launched C3 in 2019 to develop restaurant brands in both the virtual and physical space.
- The company raised $80 million and is expanding via strategic partnerships and investments.
Sam Nazarian has spent 20 years building luxe hospitality brands as chairman and CEO of SBE Entertainment, parent company of beloved hotels like Miami’s Delano and restaurant brands like Umami Burger. Now he’s using ghost kitchens and virtual brands to pack more profit into existing physical spaces like hotels, residential properties, and airports.
His newest venture, C3, which stands for “Creating Culinary Communities,” aims to create lasting restaurant brands through all available channels: restaurants, ghost kitchens, food halls, and beyond.
Nazarian described the company as intellectual property enabled by direct-to-consumer technology — that is, a collection of restaurant brands that can be easily replicated as ghost kitchens or physical locations. Combined with the sort of large real-estate deals familiar to an executive who’s spent his career developing white-hot properties around the world, he’s changing the way quick-service restaurants are built and scaled.
“We discovered very quickly through the world of SBE that having an unbelievable culinary collection really unlocked the value of the real estate of our hotels and resorts around the world,” Nazarian told Insider.
The business of ghost kitchens and virtual brands have grown exponentially during the pandemic
Celebrity-backed MrBeast Burger, a virtual concept launched in December 2020, has already grown to over 800 locations. Uber founder Travis Kalanick’s CloudKitchens has bought and converted warehouse space in cities across the country to lease to restaurant brands hoping to launch or expand their business via takeout and delivery. The ghost-kitchen segment is projected to reach $1 trillion by 2030.
C3’s plan is to use a mix of technology and real-estate deals to quickly build brands “that really resonate and have a purpose,” Nazarian said. He’s secured $80 million in Series B funding to grow the company, which is now valued at $500 million and currently has a portfolio of over 40 restaurant brands, with brick-and-mortar food halls in the works in New York, Atlanta, and Seattle. C3 has plans for international expansion, too, signing deals to bring its concepts to the UAE and Saudi Arabia this year — and, according to Nazarian, is looking at opportunities in Asia.
Using decades of brand-building experience to thrive in a young industry
“The culture of the organization that is hospitality first and tech second is really what resonates with a lot of great entrepreneurs, as they trust us with their IP, they trust us with their story, they trust us with something they’ve worked on, in some cases, decades,” Nazarian said.
Some C3 brands started offline — Umami Burger, for example, has dine-in locations around the world. In April, the company signed a deal with Los Angeles-based, fast-casual, Israeli-Mediterranean concept Soom Soom Fresh to expand across a handful of US markets via its ghost kitchens and food halls.
Other C3 restaurant concepts are launched online first, but unlike many of the other virtual concepts hitting the market, the goal is expansion into physical locations.
Customers need to make an emotional connection, Nazarian said — no one should feel like their food comes “from a kitchen in some obscure location.”
Investors give insight into its growth strategy
A fleet of distributed kitchens is part of the company’s growth strategy, however. Reef Technologies, a parking operator that installs ghost kitchens in trailers in its lots, invested $25 million in the last round of funding. It’s committed 500 of its “kitchen vessels” to C3’s efforts by 2024. C3 already works with Reef, and Nazarain said that up to five C3 brands can operate from one trailer.
Some of the round’s other investors illustrate how C3 plans to grow: Brookfield Global Asset Management, which led the round along with Reef, will open 10 locations featuring C3 brands, including the Manhattan food hall opening this year. Westfield, which manages several airport terminals in the US, invested $5 million and has committed to 19 C3 shared-kitchen and brick-and-mortar locations.
C3 is also taking advantage of underused existing restaurant kitchens through a partnership with Chowly, a company that facilitates online orders for restaurant locations. The 10,000 restaurants who use Chowly to manage their own online ordering can create their own ghost-kitchen businesses with access to 40 C3 brands.
“It really enables them — by us giving them the tools of the brand, the technology, and the logistical support — to run their kitchens 17 hours a day,” Nazarian said. In turn, he expects this will drive profitability for restaurants, offer more hours for their employees, and encourage more community involvement.
Then there’s the software. C3 has its own mobile-ordering app to support its brands called CitizensGO. Customers can use it to order from multiple C3 brands in one transaction — a digital food hall of sorts — in what’s become an important marker in the space. Larger third-party delivery companies built their products for individual restaurants and have yet to offer a universal way to order from several restaurant concepts at once.
“We convinced ourselves to not just be relevant in one vertical of the food tech space, but all of them,” Nazarian said.
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