Ours is Bigger Than Yours...To The Tune of $1.4 Million-Plus in Net Sales

From its exceptional food to its welcoming atmosphere to its standout financials, Cheba Hut does things a little differently than the competition. It’s no wonder the authentic toasted sandwich concept is attracting franchisees out of other brand’s franchise systems.

One such convert is Joey DeMaioribus, a first-time franchisee who is teaming up with his father to open their first of three Cheba Hut restaurants in Austin, Texas.

DeMaioribus came across Cheba Hut while enjoying a successful career in the sandwich industry with Jersey Mike’s. Within two years, he had worked his way up to general manager, and after overseeing operations at a few units, he decided to see how he’d fare on his own.

DeMaioribus began weighing the pros and cons of several sub franchises, including Jersey Mike’s, which he had become uniquely familiar with. It would have been an easy transition from GM to franchisee. But with an overly saturated landscape of 1,500 locations, Jersey Mike’s couldn’t offer DeMaioribus the opportunity to grow with the company like Cheba Hut could. Even more so, DeMaioribus was struck by Cheba Hut’s unique positioning in the market.

Franchise sales growth

“The first thing that caught my attention when I discovered Cheba Hut was obviously the marijuana theme,” wrote DeMaioribus in an email. “It was something different that stood out from being just another sandwich [shop], and with the momentum the marijuana industry is creating, I see Cheba Hut rolling right into that. Once becoming serious about joining the team, something else that I really liked about the concept was the inclusion of a bar.”

In addition, for potential business owners like DeMaioribus, Cheba Hut’s Franchise Disclosure Document (FDD) Item 19 speaks for itself.

Nothing But Net (Sales.)

Virtually every franchise brand lists gross sales in its FDD Item 19. Cheba Hut, on the other hand, lists net sales, and the brand has no plans of changing that visionary approach.

“Net sales are what move the needle. That’s something we do that’s ingrained in our culture. We’re hustlers and innovators,” said Seth Larsen, Cheba Hut’s Chief Relationship Officer.

Larsen said this unconventional approach to every aspect of the Cheba Hut culture, even its FDD, surprises people—and gets them on board. “When we tell people that we only list net numbers, their jaws hit the floor,” he said. “We don’t take out a full page to advertise our numbers, because we don't have to. I think people respect that. That’s why we attract the best operators, too.”

AUVs That Love To Get (And Stay) High.

Average unit volumes

Cheba Hut’s average unit volume (AUV) numbers are impressively high—especially taking into account that the brand only reports net sales and includes every store that has been open for more than 12 months.

Larsen said that in 2018, Cheba Hut’s AUVs were a little over $1.4 million net, and 2019 is rolling on that momentum. “Our main goal is to make sure our stores open at or above that AUV as well as a two-to-one or higher sales-to-investment ratio,” he said. “We’re a hip brand, and people want to be a part of that. But the financials are what make people really interested to invest and dive in with Cheba.”

Average Ticket Prices Are on Another Level, Too.

In the first quarter of 2019, Cheba Hut’s average ticket clocked in at $13.50 for the entire system. This figure is one of the most competitive in the sandwich segment, which is why Cheba Hut compares itself less with sandwich competitors and more with the fast-casual sector in general.

“We get people to return to Cheba Hut often, which also drives sales. Instead of coming in once or twice a month, we get repeat customers multiple times per week,” said Larsen, adding that Cheba Hut boldly differentiates itself with a full bar that invites people to hang out longer per visit.

The way Cheba Hut is uniquely positioned in the market sets the franchise up for pulling such impressive numbers. “People spend money and eat differently now. They don’t just get a sandwich, chips and a drink anymore. Now, they split an appetizer, get a four-inch sandwich, and a beer or cocktail. Cheba Hut is a great place to start your night, get food in your belly, have a cocktail or a beer or two and move on from there,” said Larsen.

“The more familiar I became with it, the more I realized that Cheba Hut might not even be competing with those other large sandwich franchises at all,” wrote DeMaioribus in an email. “Having run those operations, I can tell you that not a lot of people are really there because that’s where they want to be. Most people get their food and go. Cheba Hut is somewhere that makes you want to hang out and bring your friends with you to have a couple of drinks after work or before a night out. Ultimately, the environment really sold me, as I saw myself wanting to be there.”

Great Franchisees Naturally Gravitate Toward The Cheeb.

Franchise partnerships

Cheba Hut prides itself on its strong, authentic partnerships with franchisees. With 25 restaurants currently open and the brand’s path to 50 planned out, Cheba Hut offers a rare opportunity for frequent back-and-forth feedback and support, fostering a personal connection that’s much more challenging to accomplish within a larger system.

“Franchisees are part of our brand and represent us out in the community. We create a lot of room for direct feedback. It’s something we try to garner all the time, from all of our top people down to our line cooks,” said Larsen. “We pride ourselves on being available at all times. The ability to have your feedback directly impact change speaks volumes.”

Cheba Hut is proud to attract franchise owners like DeMaioribus to help grow the brand and spread the good vibes across the U.S. “We know Austin is a great market,” said Larsen, “And the DeMaioribuses are a unique story. Joey is a young entrepreneur, taking his years of restaurant experience with him as he gets ready to do his own thing. Vincent has had success in other fields and is ready to do something cool that he can be proud of. We’re really excited to grow with them down in Austin.”

When it comes to providing a unique opportunity for franchisees along with an innovative approach to its FDD, Cheba Hut stays true to itself and does things its own way—and it’s working.

“We’ve always been of the mindset ‘no asterisks, no assholes,’” said Larsen. “Other FDDs use many quantifiers to make the numbers seem better than they are. We don’t need to make our numbers dance. We’ve always been transparent and lay it all out there. We do stuff differently, no doubt about it. We think it’s a good thing, and clearly, our franchisees do as well."