Could your mall host dozens of ghost kitchens, making the food you want for delivery only? That’s the plan of some developers who want to maximize capacity use at America’s underutilized food courts. The Wall Street Journal reports:
As the U.S. hospitality industry rebounds from pandemic closures, former hotelier Sam Nazarian is moving into the food-hall business, marrying the traditional dine-in model with delivery-only “ghost kitchens” in hopes of solving revenue problems that have long plagued retail and food spaces.
Mr. Nazarian said his new venture, Creating Culinary Communities, which counts investors such as shopping-mall giants Brookfield Asset Management Inc. and Simon Property Group, has plans for 1,000 ghost kitchens by the end of the year. The company on Tuesday plans to announce $80 million in Series B funding co-led by Brookfield and REEF Technology, a SoftBank Group Corp. -backed operator of food-delivery kitchens and hubs for goods and services.
The move to inject new life into food courts comes as ghost kitchens gained momentum when restaurants closed and more people turned to food-delivery services during the Covid-19 pandemic.
With plans to lease space in Brookfield and Simon malls across the U.S., Mr. Nazarian, C3’s founder and chief executive, is betting that housing dine-in and as many as 10 delivery-only kitchens in a single location—such as a mall, hotel or restaurant—will maximize profits and efficiency, he said.
“[We are] making sure these restaurants [and] food halls are operating almost at a 24-hour perspective,” said Mr. Nazarian, the founder and former chief executive of SBE Entertainment Group. “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.”
The company’s first food hall will open in New York City at Manhattan West in September, as people return to work as summer ends. 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.
For landlords, having a partner like C3 with hospitality expertise and ownership of multiple brands helps fuel new experiences in their premises, as well as offer their tenants room to enhance their revenues.
“We want to bring the right experiences to our properties,” said Kevin McCrain, Brookfield’s managing director and global head of retail. Mr. McCrain added that there is no one-size-fits-all approach to a food hall. Some could include rooftop entertainment options, and others a few full-service restaurants.
Food halls are expensive to build and operate, and require close monitoring. Brands that might struggle to draw foot traffic and sales might need to be replaced in as little as weeks, restaurant consultants said. Operators need to manage the flow of human traffic well, so that the existing dine-in experience remains unaffected while other parts of the kitchen could be used for 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,” said Aaron Noveshen, founder and CEO of the Culinary Edge, a restaurant consulting firm.
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