Cheba Hut, a cannabis-themed sub shop founded in Tempe, Ariz., in 1998, has gone from a mellow, slow-growing concept to one of the faster-growing chains in the industry, with sales up by 29% in 2023, when it grew its unit count from 51 to 60.
It has already opened another six units in 2024, with 10-13 more slated to open this year.
“Everything we’ve been doing, especially over the last five years, has led us to this point, to be able to open 20-25 restaurants a year,” said chief relationship officer Seth Larsen. “While it does seem like rapid growth, we’ve been at this a very long time.”
The chain has brought all of its development services in-house, including construction and real estate selection, and also upgraded its tech stack to make for a frictionless experience for off-premises customers.
Although originally mostly company-owned, Cheba Hut franchised most of its corporate units to its largest franchisee around four years ago. There are now two company-owned Cheba Huts.
“We’re looking for number three,” Larsen said. “Having skin in the game and an ops pipeline of people is really important to us.”
“We never want our franchisees to be crash-test dummies,” he added, meaning that new point-of-sales systems, menu items, equipment, or processes start by being tested at the corporate stores.
The company, now headquartered in Fort Collins, Colo., has always been an employee-first brand.
“When our founder Scott [Jennings] first came up with Cheba Hut and started opening stores, it was a place to make awesome food and be a really cool place to work. To this day we don’t have uniforms, you can come as you are and be real, and I think that genuineness and authenticity is really important.”
Although it’s unapologetically marijuana-themed and counter-culture (its mascot is a bird named Flip, aka Flip the Bird, who is making that gesture to “The Man,” whoever that might be), the brand’s appeal goes beyond that, Larsen said.
“You don’t get to our average unit volumes, which are $2.3 million, by being an exclusive club for stoners. We want people to feel comfortable while focusing on great food and being a kick-ass place to work,” he said.
That includes paid time off at company locations (franchisees’ policies vary based on what they can manage, Larsen said), 401(k) savings accounts, continuing to offer a free shift meal and drink, and also focusing on quality of life for employees.
“For the longest time, the restaurant industry has been a meat grinder of a career, and it doesn't have to be,” Larsen said, adding that creating a positive vibe and building camaraderie can go a long way.
So does the potential to grow in your career, which is why Cheba Hut is focusing on franchising to multi-unit operators.
“A three-store deal is kind of our bread and butter,” he said. “That’s not just for us but for the employees, because a great shift lead wants to be an AGM, great AGMs want to be GMs, GMs want to be DMs, and providing that pathway is showing that this can be a career … and you can make good money and have a great time along the way.”
Cheba Hut is now in 15 states, with the largest markets being Colorado and Texas, along with Arizona. In the coming years, Larsen said they’re likely to backfill in those states to continue to build brand awareness.
Although a focus on recent years has been on getting operations and systems in place, Larsen said, they remain committed to great food and service.
“That hospitality and food are so important,” he said. “We’re foodies at heart, and as long as we continue to do that, we’re going to be good for another 26 years.”
Contact Bret Thorn at [email protected]
