Cheba Hut Toasted Subs Franchise Puts Category Competitors on Notice with AUV of $1.2 Million

When founder Scott Jennings started Cheba Hut in 1998, he set out to put the sandwich industry on notice -- calling out brands that clearly couldn’t communicate their customer proposition. Now, 20 years later, Cheba Hut is clearly walking the talk, with average unit volumes of $1.2 million, outpacing industry averages by up to 200 percent in some cases.

“We market to a core category of customers -- 18-34-year olds who don’t take themselves too seriously,” said Jennings. “But, at the end of the day, we serve incredible foodie inspired products that, no matter your age or your feelings on marijuana, taste pretty damn good.”

Today, Cheba Hut has 21 restaurants in seven states. Those restaurants are experiencing double-digit same-store sales growth. How? A solid consumer positioning; a product that is affordable and constantly wins taste contests; and the fact that the brand is one of few sandwich brands to feature a bar. Now, the brand is seeking great people to continue the commitment to amazing in new markets across the United States.

“At our core, I’m a foodie, and I wanted to create a cool place to work that allowed me and my team to harness our love of food,” said Jennings. “Because of this, we’ve been able to keep our brand intact as we’ve grown and want to partner with entrepreneurs who understand how to run a business but know how to have fun while doing it.”

Cheba Hut is seeking new multi-unit owners with restaurant experience, or with business acumen and the support of a team of operators, to grow the brand’s footprint throughout Texas, California, the Pacific Northwest, Florida, the Carolinas and Illinois in urban or college settings. Four new restaurants are set to open in 2018, including two more in Las Vegas, one in Denver and another in Albuquerque, New Mexico, the second location for franchise owner Isaac Montoya, who went from general manager to franchise owner in just two years.

“When you walk into a Cheba Hut, you can tell we go above and beyond with our product, and that we treat our customers and employees like family. That approach to doing business comes from the leadership,” said Montoya. “We have a saying at Cheba Hut that it’s about the interaction you have with the customers and the employees, not the transaction. That’s missed in a lot of companies but it’s important to us. As a franchisee, the best part of my day is seeing the interactions that the employees and the customers have, watching our customers enjoy their food and our crew having a good time working.”

Service-oriented franchisees and a superior product are how Cheba Hut continues to win. Each restaurant offers 30 signature toasted subs, made with high-quality, hand-sliced meats and cheeses, fresh, crisp veggies and homemade sauces and dressings. Sandwiches come in three sizes: Nug (4”), Pinner (8”) and Blunt (12”) and are accompanied by “munchies” like garlic cheese bread, loaded not’chos, pretzel nuggets, cookies, brownies and other desserts. Unlike many sandwich franchises, beer and wine are served at the majority of restaurants, with a full bar available at more than half. With proprietary ingredients and recipes made in house, like the brand’s signature ranch dressing and hand-rolled, hand-scored garlic-and-herb bread, Cheba Hut’s product is thoughtful, fun and far from traditional, just like its people.

“In the sandwich space, Cheba Hut stands out for a number of reasons, but one major differentiator is our bar program, which contributes up to 20 percent of sales and is a key driver of our higher-than-average AUVs. We’re the only multi-unit sandwich concept with a full bar,” said Marc Torres, Chief Operating Officer at Cheba Hut. “Because of this, 35 percent of our sales come during dinner, which is not typical of the sandwich segment. We are also building out our catering and third-party delivery programs to consistently find new ways to help our franchisees improve upon their already exceptional service and provide new revenue streams across multiple dayparts to grow unit-level economics.”

In addition to providing a superior product and developing multiple sales drivers, Jennings and his team have also created a service-oriented atmosphere that shows the brand’s commitment to quality -- at any cost.

“We want happy employees and happy customers and you can see that throughout our restaurants. We have napkins on the tables and our staff comes by to pick up the baskets for our customers. A lot of other sandwich brands are cheap and make their customers do the work, but we provide a full-service experience at a quick-service price,” said Jennings. “We were doing fast casual before it became trendy. We would gladly take an extra point in labor to make sure we are providing great customer service to our customers.”

As Jennings has grown the brand, he’s managed to find the delicate balance of growing through franchising without losing sight of what makes the brand unique -- its people. Cheba Hut gives franchise owners a playbook to run their business by, but also gives them the freedom to make their individual restaurants as distinctive as they are.

“As we grow, we don’t want all of our restaurants to look exactly the same. The beauty of franchising is that you get to grow your business by partnering with someone that understands that local community,” said Jennings. “I’m proud of what we’ve built, but we want to give our franchise owners the freedom to customize their store and put their stamp on it. Franchisees can choose from five to seven store models that have different finishes and individual characteristics to keep the brand from looking cookie-cutter. We also encourage franchisees to create two signature sandwiches that are exclusive to their restaurants. It gets buy-in from the staff, and shows that we are a locally owned and operated business.”

One of those local owner/operators is Dorian Lenz, Sr., who became Cheba Hut’s first franchise owner in 2004 after learning about the brand through his son-in-law.

“I was a Cheba Hut customer first, and became interested in the business opportunity after being impressed by the product, the relaxed, familial atmosphere, and the branding,” said Lenz. “I became the first franchisee in 2004, and have grown to six locations in Arizona, with every store hitting more than $1 million in sales. I was also the first store in the system to reach $2 million in sales. Our profitability is high, and we’ve been able to pay off all of our stores. We believe in the brand and plan to keep growing throughout Arizona.”