Businesses across the United States have been forced to adjust to stay financially viable during the COVID-19 pandemic, and mall landlords are no exception. Shopping mall giants Brookfield and Simon Property Group are both investing in Creating Culinary Communities (C3), which combines the traditional dine-in model with delivery-only “ghost kitchens”, The Wall Street Journal reports. Former hotelier Sam Nazarian created C3 to help address the revenue issues that retail and food spaces have been facing amid the pandemic.
Nazarian hopes to have 1,000 ghost kitchens running by the end of year. The company plans to announce $80 million in Series B funding, co-led by Brookfield and REEF Technology, a SoftBank Group-backed food-delivery kitchen operator and hub for goods and services. Working with C3 will hopefully bring new life to food courts, given the rise in ghost kitchens’ popularity when restaurants were closed and people relied on food delivery services during the pandemic. Nazarian will lease space in Brookfield and Simon malls across the U.S.; his belief is that hosting dine-in and as many as 10 delivery-only kitchens in a single location like a mall or hotel, will maximize profits and efficiency.
“(We are) making sure these restaurants (and) food halls are operating almost at a 24-hour perspective,” Nazarian told The Wall Street Journal. “You may walk into a Krispy Rice in Chicago or New York or Austin, but in the back, we have seven to 10 of our other brands being cooked there for delivery.”
C3’s initial food hall will open in New York City at Manhattan West in September. The 40,000-square-foot space will include some of C3’s more than 40 brands, among them Umami Burger and Krispy Rice, a delivery-only sushi-restaurant concept.
How landlords benefit from the C3 concept
C3 brings hospitality experience and ownership of multiple brands to every property it partners with. For landlords, working with C3 allows them to inject new experiences to their mall, restaurant or hotel and gives their tenants an opportunity to enhance their revenues.
“We want to bring the right experiences to our properties,” Kevin McCrain, Brookfield’s managing director and global head of retail told The Wall Street Journal. McCrain also noted that there is no “one-size-fits-all approach” to a food hall. Some might have rooftop entertainment options, while others have a few full-service restaurants.
No new venture is without risk, however. Food halls are expensive to build and operate and brands that have trouble drawing foot traffic and sales might need to replace in a matter of weeks, according to restaurant consultants. Meanwhile operators will have to manage the flow of human traffic so the dine-in part of the kitchen isn’t affected by the portion dedicated to online orders and pickup.
“Most full-service restaurants weren’t designed to do a lot of takeout, so their physical infrastructure generally is not set up to do so,” Aaron Noveshen, founder and CEO of the Culinary Edge, a restaurant consulting firm told The Wall Street Journal.
C3 and its investors are confident that even as more kitchens reopen for dine-in service that their service will still be needed. REEF President of Kitchens Michael Beacham also said that sales in markets that reopened might drop briefly, but then, “we seem to go right back to full steam ahead.”
“They’re continuing to use this, because it’s an easy alternative to get the best restaurant food that they’re looking (for) brought conveniently to them,” Beacham said.
Joe Dyton can be reached at firstname.lastname@example.org.