Nextbite splits itself in two

Are online-only brands over? Sam Nazarian’s virtual brand portfolio just got a little fatter.

Nextbite, the virtual restaurant company behind brands like ‘wichcraft by Tom Colicchio, TenderFix by Noah Schnapp, and Super Mega Dilla, has a new owner: Sam Nazarian. Nazarian is known for his work developing virtual restaurant brands through his company C3, and, before that, physical restaurants and nightclubs including Katsuya and Hyde through parent company SBE. 

During an interview with Nazarian for Insider in 2021, the hotel and nightclub magnate told me that the right collection of restaurants “really unlocked the value of the real estate of our hotels and resorts around the world.” 

Now he’s adding a number of brands to its collection. Nazarian is reportedly turning Nextbite into a separate company, Nextbite by SBE. Nazarian said that he’d be working alongside Nextbite CEO Alex Canter to plan for the future; Canter described Nazarian as the right person to take Nextbite’s brands to the next level. 

The news comes just days after Nextbite announced it would sell its Ordermark software business, which aggregates restaurant orders from multiple channels, to an Indian tech company called UrbanPiper. 

All of this was not entirely unexpected. In recent weeks, Nextbite conducted yet another round of layoffs. Former employees on LinkedIn speculated that the company would be sold, restructured, or even cease to exist completely. Denny Post, a respected and accomplished industry executive who joined Nextbite as an advisor and then co-president of the company, left weeks ago. 

When we spoke last winter, Post framed her role at Nextbite as a sort of a go-between between the established restaurant business, where she is a true expert, and its younger iterations, virtual brands included. “I do bring credibility; people know me from the industry. They know that I understand. I’ve walked in their shoes, I know how challenging this is,” she told me at the time. 

Nextbite, originally named Ordermark, took a significant amount of funding to grow its business — a reported $150 million including a monster $120 million round led by Softbank, the investment giant known for huge bets (and a few high-profile failures). Its virtual brand business relied on celebrity concepts like one from Wiz Khalifa, but also on concepts built around trendy menu items like grilled cheese and quesadillas, and, more recently, established brands like Nathan’s Famous. In our past conversations — we’ve had a few — Canter assured me he and the team worked only with partners committed to supporting their digital restaurant brands for the long haul.

In one interview following the announcement, an early Nextbite employee told industry site NRN that  they “always knew the company would fail,” in part due to “pie-in-the-sky type of thinking.” (Ouch.) In this telling, the virtual brands weren’t strong enough to create consistent demand from diners nor from the restaurants that partnered with Nextbite to sell their food. 

Are virtual brands over?