When self-proclaimed foodie Scott Jennings founded Cheba Hut in 1998, a deep passion and love for food was his main motivator. Twenty years later, the brand has yet to lose its focus. Understanding the importance of serving a quality product has helped the brand build a cult following and led Cheba Hut to impressive growth. What’s most impressive, however, is how Cheba Hut has managed to consistently deliver a top-quality offering without resorting to exorbitant menu prices or costing franchisees money. The brand’s strong unit-level economics is a result of maintaining that focus on quality and a major reason Cheba Hut continues to win.
“Cheba Hut has always been a food-driven brand,” said Chief Relationship Officer Seth Larsen. “This mindset is present from our leadership to our franchisees. We know that regardless of what our theme is, if our food and service are subpar, no one is going to come back. That’s why exemplary food and service have always been in our brand’s DNA.”
Each restaurant offers 30 signature toasted subs made with hand-sliced meats and cheeses, fresh vegetables and homemade sauces and dressings. Cheba Hut sandwiches come in three sizes: Nug (4”), Pinner (8”) and Blunt (12”). Other menu items include “munchies” like garlic cheese bread, loaded not’chos, pretzel nuggets and a number of desserts.
“If we're prepping veggies, meat and cheese that day, it’s used that day,” Larsen explained. “All of our recipes and sauces are made in-house using real ingredients. We still have measuring cups and spoons in our kitchens, which you don’t see much elsewhere.”
While Cheba Hut understands there are efficiencies in streamlining the food preparation process, Larsen said the brand wants food-loving franchisees who aren’t afraid to get their hands dirty. Manually slicing turkey breast instead of opening a package is the effort that makes Cheba Hut stand out, he added.
“We still pine over every single ingredient we purchase and use,” Larsen said. “Cheba Hut has never gone backward in terms of quality, even if it meant paying more money.”
While it's easy to understand why delicious sandwiches appeal to customers, conveying their appeal to franchisees looking to save money on supplies wherever possible is a bit more nuanced. Fortunately, through strong franchisee recruitment of like-minded entrepreneurs, Cheba Hut has been able to keep the core focus of its brand intact.
“The majority of our franchisees are opening stores in their own communities,” Larsen said, “So we want these businesses who are serving people they know and love to be delivering a product that is quality and one they’re proud of. Getting franchisees to commit to and invest in that helps us become customers’ go-to option more often.”
Cheba Hut’s simple operations keep product quality high without franchisees having to sacrifice revenue. Larsen explained that ease of operations is critically important to the brand’s successful model. Cheba Hut doesn’t use fryers, flat tops or other expensive equipment, which in turn keeps the investment lower than other concepts and the sales to investment ratio at nearly 3:1.
“We’re executing a great product with minimal equipment package,” Larsen said, adding, “Our food cost is industry-standard. Our purchasing power drives costs down and we’re able to keep our product affordable. We've made a commitment to make sure every single one of our Cheba Hut locations are profitable. When we get a great deal, that trickles down to unit economics.”
Larsen also pointed to Cheba Hut’s cult following built up over 20 years as a strong source of recurring revenue. The brand arrived prior to the Green Wave taking the nation and isn’t chasing trends, which resonates with customers.
“We want people coming back multiple times a week instead of once a month,” Larsen said. “That commitment to quality provides tangible benefits for driving customers.”