UPDATE: Oct. 18, 2023: This piece has been updated with additional comment from C3.
- TGI Fridays is serving C3’s virtual brand Krispy Rice from 140 restaurants and plans to eventually offer the brand from 300 locations, according to a press release published Monday.
- Fridays estimated the virtual brand could yield $68.5 million in incremental revenue from 140 restaurants and $163 million from 300 restaurants, or over half a million per store.
- While C3 and Fridays said publicly last year that Fridays would begin serving two more C3 brands, Kumi and Stonie Bowls, neither Fridays’ 2023 franchise disclosure document nor Monday’s press release make any mention of those brands. Fridays didn’t immediately respond to a request for comment.
TGI Fridays’ CEO Brandon Coleman III, who assumed leadership of the company this summer, said the partnership with C3 was “the beginning of an innovative approach to building our brand.”
Last year, Fridays paid $120,000 in royalties to C3 for the use of its Krispy Rice brand, according to Friday’s FDD. The FDD doesn’t clarify how many restaurants served Krispy Rice in 2022 or the sales yielded by the brand, making it difficult to obtain an accurate estimate of royalties per unit, or the percentage of sales TGI Fridays pays to C3.
Fridays’ 124 franchised U.S. units, excluding nontraditional restaurants and locations that closed in 2022, had an average gross sales of about $2,746,586 last year, according to the FDD. Its 147 company-operated units average about $2,863,202 in gross sales. TGI Fridays didn’t immediately respond to a request for comment about the distribution of C3’s brands across its company-operated and franchised stores.
The restaurant chain’s owner, TriArtisan Capital Advisors, participated in an $80 million funding round for C3 in 2021. Additional investors included Brookfield Asset Management and Reef Technology, a ghost kitchen company that has now largely abandoned direct operations in the segment. At the time, C3 said it had roughly 250 digital kitchens and described itself as the fastest-growing food tech platform in the world, with plans to expand to 12,000 locations by 2023. C3 confirmed in an email to Restaurant Dive that it has over 500 digital kitchens.
In 2021, Fridays said it would open 300 ghost kitchen units with Reef Technology. The current FDD makes no mention of Reef and does not count ghost kitchens in the table of units in its FDD “because those locations are not substantially similar to Fridays Restaurants.” Neither Fridays nor Reef immediately responded to requests to confirm the number of Reef locations currently serving Fridays’ food.
Fridays’ expansion of C3 offerings on its menu follows recent investments to overhaul its value proposition. In June, Fridays launched its Grilled and Sauced menu, the biggest menu update in its history, to modernize its offerings and appeal to younger consumers.
C3 has also been hitting the gas on new offerings. In October, the company opened its fourth brick-and-mortar food hall, a 3,000-square-foot location in Atlanta’s Hartsfield-Jackson airport. Earlier this year, C3 CEO Sam Nazarian bought what was left of Nextbite after the virtual brand platform laid off a large portion of its staff and sold its Ordermark business to UrbanPiper, a firm based in India. At the time, Nazarian said Nextbite would be renamed Nextbite by SBE and operate separately from C3. To date, however, the acquisition’s website is still titled Nextbite, still lists Ordermark as part of its business, and its blog and newsroom have not been updated since January and April, respectively. The domain nextbitebysbe.com, which would follow the format of Nazarian’s other websites, like C3bysbe.com, does not host a website related to Nextbite or virtual brands.