c3: CLAIM Vs. FACT
CLAIM
FACT
As of July 2024, customers could order from 0 locations listed on C3's ordering platform GO by Citizens.
Are there any?
Sam Nazarian Launches C3
In February 2020, Sam Nazarian’s hospitality company, SBE Entertainment Group, announced the launch of C3, a ghost kitchen joint venture that the company said would “introduce to the world a revolutionary way to approach food halls, ghost kitchens and mobile delivery.” According to C3, the company had over 800 virtual brand locations across the US in February 2021.
In June 2021, C3 announced the creation of a joint venture with the Saudi investment company WK Holding to bring C3’s brands to Saudi Arabia. In a press release, C3 said the joint venture was valued at around $100 million, and was 49% owned by C3 and 51% owned by WK Holding.
In July 2021, C3 announced that “virtual restaurant” company Reef had committed to carrying C3 brands in 500 locations across the US. In November 2021, Reef issued a press release announcing that C3 and Reef had partnered “to open 800 virtual restaurants through 2025.” In the press release, Reef wrote that Sam Nazarian had said, “We are thrilled to expand our incredibly successful partnership with REEF which has helped our ecosystem of brands to flourish. As we expand our operations REEF continues to be our choice for technology, supply chain and operations.”
According to a press release in July 2021 C3 planned to have more than 1,000 kitchens by the end of 2021 and was on track to have 12,000 kitchens by 2023.
The LA Business Journal wrote that Nazarian said in a July 2021 interview, “If we can be the arbiter and the accelerator for turning the global restaurant business from analog to digital, then we’ve done our job.”
What’s c3 BEEN doing?
FEBRUARY 2024
As of February 28, 2024, customers could order from two locations listed on C3's ordering platform GO by Citizens.
OCTOBER 2023
A July 2021 press release stated that C3 was on track to have 12,000 kitchens by 2023.
According to trade publication, Restaurant Dive, C3 stated via email that it had "over 500 digital kitchens" in October 2023.
JANUARY 2023
In January 2023, the Miami Herald reported that the C3’s Citizens food hall had temporarily closed. According to the article: “a spokesperson for Brightline confirmed the food hall is closed but said the plan is to reopen it again when the company’s new Orlando station opens.”
SEPTEMBER 2021
In 2021, C3 took over a food hall at MiamiCentral, a development at Miami’s Brightline station.
From a September 2021 C3 press release: “Brightline and C3 are both visionaries in our respective fields and, since we share a similar forward-thinking philosophy, we found them to be the ideal partner to oversee this new modern, diverse offering of culinary experiences,” said Patrick Goddard, President of Brightline Trains.
C3 Partners with TGI Fridays
In August 2021, C3 received $10 million in funding from the private equity investing firm TriArtisan Capital Advisors. TriArtisan lists TGI Fridays, P.F. Chang’s and HOA Brands (parent of the Hooters restaurant chain) in its investment portfolio.
TriArtisan published on its company website that as part of the deal with C3, the companies planned to bring C3’s brands into TriArtisan’s restaurants as delivery-only offerings.
C3 x TGI Fridays (Continued)
In October 2021 C3 announced a partnership with TGI Fridays to carry C3’s Krispy Rice brand at TGI Fridays’ locations in certain markets.
TGI Fridays would offer C3’s Krispy Rice menu – cooked in TGI Fridays’ kitchens- on delivery platforms, TGI Fridays’ own website TGI Fridays.com, and in TGI Fridays’ dining rooms.
A press release from October 16, 2023 says that TGI Fridays currently served the C3 Krispy Rice brand in 140 TGI Fridays locations, and planned to expand to over 300 locations.
TGI Fridays closed 36 locations at the end of 2023, and currently has 233 open locations in the U.S.
XO Announces Exclusive Partnership
with C3
XO, which calls itself “the world’s premier private aviation network,” announced in October an exclusive partnership with C3 to “reimagine dining onboard private jets.”
Passengers on the private jets can now order C3 brands on their phone. The C3 ghost kitchen brands that jet passengers can now choose from include Plant Nation, Dario Cecchini’s Cicci di Carne, Soom Soom, Hecho Libre, EllaMia, and Cindy Lou’s Cookies.
In a press release, Nazarian said: “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.”
Reports about Reef Closures
In March 2023, a reporter for the Portland newsweekly Willamette Week reported that “Miami-based Reef Technology last week closed most, if not all, of its remaining ghost kitchens across the city. That’s according to two former employees, landlords of parking lots where Reef parked its trucks, records from Multnomah County health officials, and a scouring of Reef’s now-unavailable brands on food delivery apps.”
Restaurant Business reported in 2023 that Reef shut down locations in Philadelphia and Houston.
Reports about Reef Closures
In an August 2021 press release, Wendy’s said it planned to open 700 ghost kitchens with Reef across the U.S., the U.K., and Canada by 2025.
In May 2023, the Washington Post reported that Wendy’s had announced it would “permanently close the entire US ghost kitchen business it launched with Reef Technology.”
San Francisco Chronicle Reports Some Bay Area Residents Are Concerned about Ghost Kitchens
The San Francisco Chronicle reported that some Bay Area residents and businesses in Bay Area neighborhoods have expressed frustration about issues they believe are linked to ghost kitchens operating in their neighborhoods.
On one San Francisco cul-de-sac, the abundance of cars visiting a ghost kitchen run by Cloud Kitchens has raised concerns for some neighbors.
Natasha Koral, the co-founder of a dog training business that has been operating on the cul-de-sac for a decade, told The Chronicle “It’s so crowded with cars that you can’t get down our street during lunch or the evening rush…There is not enough parking, so their kitchen people park in our spots. And then all the (delivery) drivers, they block us in.”
The Chronicle reported that Koral and other neighboring business owners say they have tried working with Cloud Kitchens to address the issues but that there has been no resolution.
“Conflict” in Chicago
In June 2021, Deidra Suber, general manager at CloudKitchens Chicago, told Fox 32 Chicago that there was “conflict between [CloudKitchens] and the community” related to traffic and parking issues neighbors say began when the ghost kitchen opened in their neighborhood.
CNBC: How Ghost Kitchens Went From
$1 Trillion Hype To A Struggling Business Model
INSIDE EDITION: Is your delivery food coming from a ghost kitchen?
Channel 8 Las Vegas: Uber Eats pauses virtual kitchen applications,
only in Las Vegas valley
Virginia Mercury Reports “Local and State Officials Are Struggling to Keep Tabs” On Virginia Ghost Kitchens
Gary Coggins is an environmental health manager with the New River Health District one of 35 local health districts that makes up the Virginia Department of Health. Coggins oversees restaurant inspections in the district. Only 30 of 665 food establishments in Coggins’ district are permitted as ghost kitchens but he told the Virginia Mercury that he suspects the actual number of ghost kitchens is “way underreported.”
Olivia McCormick, director of the Division of Food and General Environmental Sciences with the Virginia Department of Health told the Virginia Mercury that as of April 2023, the exact number of ghost kitchens operating in Virginia was unknown, because “the department doesn’t track ghost kitchens as a distinct type of food establishment.”
The Virginia Mercury reported that Coggins said: “Local and state officials are struggling to keep tabs on the kitchens due to the sheer amount of them popping up across the state.” The Department of Health “usually becomes aware of ghost kitchens during inspections of existing businesses or through foodborne illness complaints.”
Concerns About Regulating Food Safety in NY, GA, FL, & MA -
In a statement to Nation’s Restaurant News, the New York City Health Department said establishments doing business as “Reef Neighborhood Kitchens” had “violated numerous New York City health and safety requirements.” Records show that the Florida Department of Business & Professional Regulation temporarily closed at least one establishment doing business under “REEF KITCHENS” after finding health code violations.
In a 2021 panel to the New Era of Smarter Food Safety Summit on E-Commerce, Galen Baxter, the Environmental Health Director at the Fulton County, Georgia Board of Health, named issues ghost kitchens pose for regulators, including: ensuring that ghost kitchen menus contain consumer advisories, that ghost kitchens provide consumers with their preparation facility’s address, so that in the event of “an outbreak of some sort, [the officials will] be able to trace it back to that facility”; and that consumers can access virtual inspection reports, in lieu of a physically posted inspection score.
In 2021, Restaurant Dive compiled Florida Department of Business & Professional Regulation records showing that one Reef Kitchen location offering sushi rolls was required to stop selling fish acquired from an “unapproved source” and that another location was temporarily closed after inspectors found “sewage/wastewater backing up through sinks.”
Timothy McDonald, the health director for Needham, Massachusetts told the Boston Globe that the city’s “regulations haven’t kept pace with how technology has changed” and that health inspectors are “trying to figure out how to regulate this in a safe and responsible manner.”
Kitchen United Closes Ghost Kitchens in Kroger Stores
The Dallas Morning News has reported that Kitchen United has closed all of its ghost kitchens in Kroger stores.
“Unfortunately, Kitchen United will no longer operate in our stores,” said Kroger spokesman John Votava, according to the Dallas Morning News. “We apologize for any inconvenience this may create and encourage customers to explore delicious ready-to-eat items in our Deli departments.”
Kitchen United and Kroger initially announced the partnership in an August 2021 press release. At that time, Dan De La Rosa, Kroger’s group vice president of fresh merchandising declared, "Our customers' appetite for fresh, on-demand meals continues to accelerate, and we remain focused on offering new and innovative products that provide anything, anytime, anywhere."
According to Nation’s Restaurant News, a spokesperson for Kitchen United confirmed with the trade publication that the company has “closed all of Kitchen United locations operating inside of Kroger” and said the company is now “looking to pivot back into a software business.”
FOR IMMEDIATE RELEASE:
Friday, July 19, 2024
Culinary Union launches “Ghost Kitchen Report” about Sam Nazarian’s C3 and ghost kitchen trends
Las Vegas, NV – The Culinary Union has launched a new website, GhostKitchenReport.org, covering C3, REEF Technology, TriArtisan Capital Advisors, and other companies involved with the ghost kitchen industry. The ghost kitchen industry boomed during the pandemic, but the business model and the industry’s rapid growth have posed regulatory challenges for state and local governments.
Sam Nazarian is the owner and founder of ghost kitchen brand C3, as well as SBE, which owns and operates Citizen’s Kitchen and Bar and other restaurants at Mandalay Bay Casino.
“Restaurant companies invested in ghost kitchens around the pandemic as smaller mom and pop brick-and-mortar restaurants struggled,” said Ted Pappageorge, Secretary-Treasurer for the Culinary Union. “The restaurant industry grew rapidly, but it’s hard to keep track of how quickly this industry is changing and what’s really happening. For example: Ghost kitchen company C3 said it would open 12,000 kitchens globally by 2023. Currently, there are no kitchens available on C3’s mobile ordering platform, Go by Citizens.”
State and local health officials have noted that the ghost kitchen model raises particular food safety concerns and concerns about finding violations or tracing illnesses back to shared facilities. Virtual restaurants are subject to applicable permitting and inspection requirements. The National Association of County and City Health Officials said in a statement to the Boston Globe: “But, the difficulty lies in identifying the operations.”
“There is uncertainty about how this business model fits into existing systems for regulating food and occupational safety in restaurants, and how ghost kitchen operations affect communities. Investors poured a ton of money into virtual ghost kitchens, locations started popping up, and just as quickly, began to close. The industry has undergone a lot of change in a very short time,” continued Pappageorge.
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