Dive Brief:

• TGI Fridays rolled out Krispy Rice, a virtual brand from C3 (Creating Culinary Communities), to locations in Orange County, California, and Maryland in September. Sales at these units have nearly doubled from the first week and continue to grow, according to a press release.
• Because of these initial results, the companies plan to launch additional C3 concepts to TGI Fridays locations across the country. TGI Fridays did not respond to a request for comment about this growth plan before press time. 
• This move comes two months after TGI Fridays owner TriArtisan Capital Advisors made a $10 million investment in C3, which was part of an $80 million funding round secured by C3.

Dive Insight:

This partnership builds on TGI Fridays aggressive digital and off-premise investments. The chain recently partnered with Reef Technology to launch 300 ghost kitchens across North America and international markets, giving the restaurant greater access to diners order for delivery. 

But the C3 deal offers a unique opportunity for the chain to bolster sales at existing restaurants for a presumably low cost, since host kitchens typically select virtual brands that don't require additional kitchen buildouts or new equipment. Hosting virtual brands could also be more cost effective than teaming with a ghost kitchen provider in some cases, since linking up with a platform's shared kitchen space typically requires rent payments and sometimes commission fees. 

This expansion strategy could help TGI Fridays boost its financials even as the labor shortage and diner concerns about COVID-19 squeeze the casual dining segment. C3's digital brands each generate an estimated $1 million per outlet, according to the press release. Revenue opportunities like this are a major drive of restaurant interest behind virtual brands. Still, challenges could exist. Adding a second concept to a kitchen could put further pressure on restaurant labor, especially if volumes are high.  

The deal brings big benefits to C3, too. C3 founder and CEO Sam Nazarian called the partnership C3's "utmost priority" in the press release, and said there is significant opportunity for both brands. C3 has more than 40 virtual brands that could be spread across TGI Fridays' nearly 385 U.S. locations, which could extend those brands to new customers and markets in a cost-effective way.

The plan to expand its partnership with TGI Fridays should also support C3's ambitious goal to reach 12,000 locations by 2023.