Sam Nazarian, founder and CEO of the sbe hospitality group and virtual restaurant platform C3, announced the sole acquisition of Nextbite, one of the leading virtual brand providers created by Ordermark founder Alex Canter.
Nextbite’s brand name will live on as Nextbite by sbe, further cementing the ongoing evolution that’s merging entertainment, hospitality, food halls, brick-and-mortar restaurants and direct-to-consumer meal delivery.
When LA- and Denver-based Ordermark launched Nextbite in 2020, Canter said the new company would offer restaurant operators virtual restaurant brands they could implement in a flash, with no financial risk beyond food costs. As with other virtual restaurant providers, the original concept was based on bringing additional, delivery-only brands into existing restaurant kitchens to monetize excess capacity and existing staff without impacting existing dine-in operations.
In recent years, Nextbite and other virtual brand providers like C3 and Virtual Dining Concepts pivoted to allowing dine-in customers to order virtual brands from inside the dining rooms of established chain restaurants like IHOP and TGI Fridays.
Under Nazarian’s ownership, the totality of assets will collectively form the launch of the new brand, Nextbite by sbe, which will be an independently operated subsidiary of the hospitality company that seeks to “revolutionize the restaurant industry pipeline.”
Operating independently from both C3 and sbe, Nextbite by sbe will be solely owned by Nazarian while retaining a “suite” of former Nextbite executives. Operations will be relocated to Miami, and the new parent company said it will work to ensure a smooth transition for Nextbite’s existing fulfillment partners.
Nextbite was co-founded by Alex Canter—a fourth-generation restaurateur whose family owns Canter’s Deli in Los Angeles. Nextbite operates in over 1,700 locations ranging from mom-and-pop restaurants to large national chains. The company raised more than $150 million in funding, its most recent round led by SoftBank.
After going through two rounds of layoffs in recent months, Canter announced the sale of his Ordermark delivery integration business to India-based UrbanPiper earlier on the same day, Monday, June 12.
UrbanPiper is a delivery integration software provider based in Bengaluru, Karnataka, India. According to Crunchbase, UrbanPiper is privately held with approximately 250 employees.
“We built the Nextbite business and our brand portfolio over several years to include many popular consumer favorites,” said Canter. “We’ve gotten to know Sam Nazarian and his team very well and, simply put, there’s no other organization in the virtual restaurant space that’s better qualified to take these brands to the next level in a big way.”
Known for cultivating its own brands such as Krispy Rice and Umami Burger, supported by the C3 technology platform, Nazarian and team work with a group of international chefs including Masaharu Morimoto, Dario Cecchini, Katsuya Uechi and Dani Garcia developing fast-casual brands built with a culinary focus.
At its core, the mission of C3 has been described as making premium culinary experiences accessible to diners around the globe. SBE describes itself as “the largest nightlife company in the history of Los Angeles” with brands including Hyde and Kat-suya, and a forthcoming partnership with Zouk Group anticipated to open in 2024.
C3 has also opened six food halls populated by its virtual brands in recent years, and Nazarian says the company is on track to have 15 GO by Citizens food halls open across the world by the end of 2024. Its most recent food hall location is a 25,000 square-foot Citizens-branded center that opened in Atlanta earlier this year.
Citing big-name C3 investors like AccorHotels, Brookfield Properties and Simon Property Group, Nazarian told Food On Demand he continues to see in-person, customer-facing experiences as the key to his virtual restaurant strategy. That vision, he said, includes additional food halls, locations in airports and transit stations, and even private aviation, all categories he said that are ripe for higher-end, more exciting food and beverage offerings. He’s exploring franchising a handful of C3’s proprietary concepts.
Asked about Nextbite’s most valuable assets, Nazarian pointed to “over 410” small- and medium-sized businesses that currently fulfill Nextbite brands, and its enterprise partnerships with brands like IHOP.
“Obviously the last six to 12 months…has really kind of shaken out a lot of players [in food tech], a lot of people that just haven’t made the next cut. It was important for me to make sure that Nextbite not only stays around as an industry leader, as I think C3 and I am, and that we continue to build on the momentum and the goodwill they’ve built with a lot of enterprise partners,” he said.
He also said Nextbite has 7-10 enterprise pilot projects that have yet to be announced.
“That’s why we’ve put it with the sbe moniker, really focusing on the quality of the brands, the quality of the food, the quality of the story both digitally and, obviously, with what the customer ends up getting when they order a Nextbite brand,” Nazarian added.
He said it’s too early to tell which Nextbite concepts could be most valuable going forward, but added that he and Canter would be sitting down in person in the coming weeks to dive into deeper strategic planning for the recast company.
“As somebody who’s sold businesses before with your name on the door, it’s not an easy process, emotionally, so I want to make sure he has enough time to go through that and…my anticipation is that he’ll play a very meaningful part in this new Nextbite by sbe company,” Nazarian said. “By having control of both Nextbite and C3, I don’t think there’s a company out there in the industry today that has more scale, more IP, and a really clear direction and a healthy business model.”