Dive Brief:

• Sam Nazarian, CEO and founder of SBE Hospitality Group and virtual restaurant platform C3, has acquired Nextbite and its suite of virtual brands, multiple media outlets reported on Wednesday. Nextbite will be renamed Nextbite by SBE, and will operate separately from C3’s virtual restaurant brands. 
• Nazarian will replace Nextbite CEO Alex Canter as head of the company. Operations will move to C3’s Miami headquarters, according to Nation’s Restaurant News.
• Nextbite issued at least three rounds of layoffs within the last 14 months amid a difficult landscape for growing restaurant tech startups. The company also announced the sale of its Ordermark business to India-based UrbanPiper Saturday.

Dive Insight:

Nextbite’s decline reflects broader turbulence in the virtual restaurant sector, though C3’s bet on the beleaguered platform shows some companies still have faith in the model. Even still, C3 has experienced its own strategy pivots, launching physical food halls and parting ways with its chief strategy officer after just seven months in 2022. 

Nextbite works with over 20 virtual brands, according to a press release emailed to Restaurant Dive. These include Packed Bowls by Wiz Khalifa, Wichcraft by Tom Colicchio and an integration with Nathan’s Famous. Three of Nextbite’s virtual brands — TenderFix, Super Mega Dilla and Thrilled Cheese —  were created in partnership with IHOP. 

“We built the Nextbite business and our brand portfolio over several years to include many popular consumer favorites," Alex Canter, co-founder and former CEO of Nextbite, said in a statement. "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."

SBE Hospitality’s acquisition also includes Nextbite’s “existing fulfillment partners,” according to Food On Demand. Nextbite currently operates over 1,100 locations, from independent restaurants to large chains, and raised over $150 million in funding, according to a press release.

Nazarian told Food on Demand that Nextbite’s most valuable asset includes its enterprise partnerships with big chains like IHOP and the 410-plus small and medium-size businesses that fulfill Nextbite’s brands. Nextbite also has up to 10 enterprise pilots that haven’t yet been announced, per the publication. Nazarian also told Food on Demand that within the next few weeks, he and Canter would discuss a strategic plan for Nextbite’s future. 

“Nextbite by sbe will be the leader of the digital only space — a global platform inspired to reimagine dining and push the boundaries of the culinary space,” Nazarian said in a statement. “Through the acquisition of Nextbite, we will further establish those brands that Nextbite has built and support them in their next exciting chapter while reinforcing the amazing pipeline we have created.”

C3 has had success in fundraising, raising at least $90 million across two funding rounds, according to Crunchbase. It also raised an undisclosed amount of capital last year from Abu Dhabi Capital Group, Arden Digital Ventures and Clearlake Capital Group. This funding went toward growth in the U.S. and United Arab Emirates markets, including within hotels and sports stadiums in America. TGI Fridays’ owner TriArtisan Capital is among its investors, contributing $10 million in 2021. The restaurant chain has offered C3 brands, including Stonie Bowls, Krispy Rice and Kumi, through its kitchens in the past.