In many ways, C3 is something of a variation on a theme for Sam Nazarian.
The businessman is known primarily as the head of SBE Entertainment, the group of hotels, restaurants, night clubs and film productions he founded in 2002 as a kind self-contained entertainment universe. A 2005 W Magazine profile of the young entrepreneur put it this way: “Picture celebs like [Edward] Norton and Leonardo DiCaprio starring in SBE movies, sleeping in SBE hotels and partying in SBE nightclubs—and the moneyed masses dutifully following along.”
With his latest project, C3 (short for Creating Culinary Communities), Nazarian has applied a similar formula, swapping out the swanky hotels and sit-down restaurants for something a bit more accessible: fast food. The company currently owns 45 limited-service restaurant brands that are distributed across a growing network of brick-and-mortar restaurants, food halls, ghost kitchens, hotels, airports and more.
“We’re a brand IP company. And that’s really what differentiates us.”
The idea for C3 began to percolate around 2017, Nazarian said, when he started seeing a market for what he called premium QSR brands, a la Chipotle. At the same time, consumers’ dining behavior was changing, shifting toward more delivery and less eating out. C3 was built for this new era of convenience: In an early press release, Nazarian described the company as Netflix for food.
And just as Netflix needed movies, C3 needed restaurant brands. It began amassing a collection of concepts, either by acquiring them or developing them in-house, often in tandem with culinarians like Masaharu Morimoto and Dani Garcia.
“We’re a brand IP company. And that’s really what differentiates us,” Nazarian said. “Our initial philosophy was, let’s partner with serious culinary talent that generally would never do a QSR expression.”
Its portfolio includes so-called tentpoles like Umami Burger, Krispy Rice and Sam’s Crispy Chicken, as well as more niche brands aimed at specific audiences—particularly millennials and Gen Z.
To scale the brands, it has used both traditional channels, like physical restaurants and food halls, and novel ones, like ghost kitchens and the kitchens of existing restaurants, all with an emphasis on delivery.
Today, its brands are in more than 1,000 locations, or roughly as many as Carl’s Jr., with another 3,000 or 4,000 in the pipeline for this year, Nazarian said. Their distribution is split evenly between locations owned and operated by C3; partner restaurants; and ghost kitchens operated by Reef in the U.S. and Kitopi in the Middle East.
“We really provide real brands that have a brick-and-mortar presence.”
C3’s dedication to physical locations distinguishes it from rivals like Nextbite and Virtual Dining Concepts, which at this point are solely focused on licensing their brands as add-ons to existing operators.
“We’re not just a digital-only burger brand company like some of the competition in our space,” Nazarian said, perhaps referencing Virtual Dining Concepts’ fast-growing MrBeast Burger. “We really provide real brands that have a brick-and-mortar presence.”
Its physical footprint includes two Citizens food halls, in Manhattan and Miami, that are populated entirely by C3 and SBE concepts. Meanwhile, some of its individual brands are plotting new locations as well. The EllaMia bakery concept, for instance, has 40 storefronts in the works, Nazarian said.
A rendering shows C3's Citizens food hall in Manhattan. / Image courtesy of C3
He believes that even in the increasingly digital restaurant world, brick-and-mortar helps drive brand awareness and prove that C3’s concepts can generate ROI on their own.
“Just like when you go to the Apple Store and see the product … you can look at the new iPad, the MacBook, the new wearable, and in some cases you go home and order it,” he said.
That’s where the other, digital side of C3’s business comes in. Its dine-in restaurants often double as delivery hubs for multiple C3 brands. Meanwhile, it’s working with ghost kitchens and some large chains to offer its brands for delivery-only.
Ghost kitchen operator Reef led an $80 million investment in C3 last July with plans to bring its concepts to 500 new locations via its parking lot-based food trailers. And in August, TriArtisan Capital Partners, the parent of TGI Fridays and Hooters, took a $10 million stake in the company. Fridays later estimated that adding brands like Umami Burger and Krispy Rice could generate an additional $1 million in revenue per restaurant, and announced plans to bring them to 170 locations.
“There really isn’t any e-commerce thinking in the world of food.”
Another element unique to C3 is its Go By Citizens mobile app, a marketplace of more than a dozen C3 brands where customers can order from multiple concepts in a single transaction, and with no delivery fee. It’s currently available in Los Angeles, San Francisco, Portland, Austin and New York.
“There really isn’t any e-commerce thinking in the world of food,” Nazarian said. Go By Citizens is C3’s attempt to create an Amazon-like experience for customers in a way that also benefits the company. The mix-and-match option has helped bump check averages into the $40 to $50 range, Nazarian said, and the app also provides C3 with better data than a traditional third-party partner would.
Though it was reportedly testing using its own delivery drivers, Nazarian said C3 has no plans to be in the last-mile business.
And as for its stable of brands: It is poised to continue growing. Nazarian said C3 is now looking to work with chains on co-developing virtual brands.
“They come and say we have 2,000 restaurants, we know we need a digital brand, but we’d like to partner with C3 so we can create a brand together,” he said. “They’ll put it in their 2,000 restaurants and we’ll license it as well.
“Ultimately, you want to have as much cuisine coverage, you want to have as much demographical coverage as possible.”