PYMNTS - Voice Technology - September 2023

Digital Restaurant Firm C3 Parlays Virtual Brands Into Food Service Empire

Tech Firm C3 Parlays Virtual Brands Into Food Service Empire

Digital restaurant company C3 is expanding well beyond its ghost kitchen origins to brick-and-mortar locations, private jet food service, and most recently, an in-airport food hall.

The food service company — founded and led by hospitality mogul Sam Nazarian, CEO of nightclub and restaurant group SBE — announced Thursday (Oct. 12) that it will open a Citizens Food Hall multi-brand eatery location in the Hartsfield-Jackson Atlanta International Airport in partnership with travel hospitality company Areas USA.

Citizens’ existing food halls include a 12-brand location in New York City and an eight-brand eatery in Atlanta at Phipps Plaza, all of which are fast-casual concepts.

“Over the past two years, with the successful openings of Citizens in Atlanta and New York, C3 has been able to bring its diverse culinary offerings from ghost kitchens into immersive, in-person dining experiences … in a casual environment that builds community,” Nazarian said in a statement. “With the launch of Citizens at Atlanta International Airport, we are able to provide the same experience to travelers on the go.”

The location will open in early 2025, and it will include several of C3’s restaurant brands in addition to a bar, leveraging the company’s Citizens GO online ordering platform to power digital transactions.

The move comes as part of C3’s broader push to expand beyond its digital origins. Private jet company XO announced Wednesday (Oct. 11) an exclusive partnership with the C3 to serve its meals onboard, enabling multi-brand ordering for passengers with C3 technology. The partnership, starting this month, will be in effect for certain flights from New York to South Florida.

“We are so thrilled and humbled to disrupt the most coveted world of aviation with the world of C3’s culinary brands and technology as we partner with the exceptional, best-in-class team at XO,” Nazarian said in a separate statement.

The expansion of the company beyond the ghost kitchen space suggests that the virtual model can serve as a valuable jumping-off point, enabling restaurant brands to establish proof of concept and build an audience before entering higher-investment channels such as brick-and-mortar food service.

The pure-play virtual brand space can be difficult, given the tricky unit economics of delivery. For instance, casual dining group Brinker International, the parent company of Chili’s Grill & Bar and Maggiano’s Little Italy, shared on an earnings call in August that it is turning its focus away from its “unprofitable” virtual brands, per CEO Kevin Hochman’s comments.

Consumers, for their part, have mixed feelings about virtual brands.

Research from PYMNTS’ Intelligence’s study “Connected Dining: The Robot Will Take Your Order Now” revealed that about 48% said they are interested in virtual kitchens.

Still, Nazarian, for his part, continues to invest in the ghost kitchen space in addition to these physical world expansions. In June, he acquired ghost kitchen platform Nextbite.

“Food brands are beginning to realize … that current dining spaces are being severely underutilized and can generate a staggering amount of additional revenue through the ghost kitchen model,” Nazarian told PYMNTS in a 2021 interview. “As we move into a post-pandemic era, we’re going to see many more brick-and-mortar concepts operating eight to 10 additional delivery-only brands via ghost or digital kitchens.”