Nazarian’s Beverly Hills hospitality and restaurant company saw the opportunity to add an innovative twist to the concept, which has seen strong growth during the Covid-19 pandemic.
The kitchens, also known as virtual or cloud kitchens, are used by businesses to make food for delivery. Some have a small dining area, but most of the kitchens are used for customers ordering through food delivery apps.
“We see more restaurant groups finding new methods to adapt,” said Jake Radeski of Beta Agency Inc. of the concept’s growing popularity.
Nazarian’s SBE teamed with shopping mall operator Simon Property Group Inc. and hospitality brand Accor in 2019 to launch C3, the group’s own ghost kitchen concept.
Instead of building out kitchens from scratch, C3 takes over old restaurant, hotel and nightclub kitchens that were previously occupied by one brand. It then brings in a handful of SBE brands to occupy the space.
Nazarian said that approach allows many of SBE’s food brands to expand their delivery presence quickly. Employees are cross-trained to cook for more than one brand.
The concept has been so successful, he added, that C3 has hired 1,250 people this year.
“The growth has been a lot more comprehensive than we could have even imagined,” Nazarian said.
Radeski said most ghost kitchens use the more traditional model with spaces built for different brands, but he is seeing more follow the C3 model where companies use existing restaurants as ghost kitchens.
He added that taking a dark kitchen, or closed restaurant, and converting it for use as a ghost kitchen is much simpler than building one from the ground up.
Other food brands seem to be noticing C3’s success. Nazarian said that in the next few months, the company is likely to enter into seven to eight joint ventures with existing non-SBE brands.
Today, C3 has 200 ghost kitchens in the United States, which Nazarian said makes it “one of the largest virtual kitchen companies.”
These locations are spread across nine cities and seven states. By the end of the year, C3 expects to be in 11 states.
Beyond traditional kitchens, the company is in 75 hotel locations, which allows C3 to provide in-room dining from multiple SBE food brands, growth that has been accelerated by access to Accor’s hotel group.
“We think the hotel vertical is endless,” Nazarian said.
He added that C3 has worked with hotel groups like Hilton and Marriott as well.
Nazarian said he expects C3’s rapid growth to continue. He expects the group to have 2,500 to 2,800 ghost kitchens by the end of 2022.
“We’re growing both domestically with our partners here in the U.S. and internationally now with the idea of unlocking the value of the real estate that has been dormant for the last year, utilizing the kitchens that we have secured in hotels, in campuses, in the food halls that we have announced. It is really looking at the restaurant of the future,” Nazarian said.
On the horizon for the company is an app that Nazarian said would allow families to order from multiple brands working out of the same ghost kitchen and still have their orders come at once.
Beta Agency’s Radeski said he expects ghost kitchens to continue to be popular.
“There will be continuation of what we are seeing,” he said. “Concepts that have been around a long time will adopt some of these principles and practices and will continue to find new ways to adopt and to increase their efficiency and increase delivery speed.”
A pandemic-free future would not change that, he said.
“In a post-Covid world, it’s really still about service and convenience and creating a more efficient space,” he added.
Headquarters: Beverly Hills
Business: Ghost kitchens
Locations: C3 has 200 ghost kitchens spread across nine cities in seven states.
Notable: C3 is a joint venture created by SBE, Simon Property Group and Accor.