May 1, 2012 at 7:54 AM ET
Cheba Hut is a marijuana-obsessed sub chain where the name on the sign outside is just the beginning of the jokes.
The large-size “toasted” subs are “blunts.” A featured sandwich is the “Dank.” And the company’s motto is “Where the only thing fried is the occasional customer.”
So when talking to senior management, it has to be asked. Do you guys … you know … smoke out?
“We’ve been known to,” Chief Operating Officer Matt Trethewey said with a chuckle, referring to himself and founder Scott Jennings.
But the company isn’t just a stoner joke. Founded in 1998, the chain has grown from one outlet in Tempe, Ariz., near Arizona State University, to 14 locations, mostly Arizona and Colorado, with more planned on the way.
Jennings professes a love of beach culture on the company's website and said the business "combined the three things I like most."
The connection with pot (the name comes from the drug anthem “Cheeba Cheeba” by 80s rapper Tone Loc), may be part passion and part marketing ploy. But Trethewey downplays any politics.
“We try not to be activists. We don’t think a plant should be regulated by the government. We’re restaurateurs and business people. What we do is feed people,” he said.
Expansion has been measured. In the early stages the franchise model, Jennings would sell an existing outlet and use the proceeds to open another. It’s become a more standard model since. But Trethewey said it’s important to keep new restaurants “a mom-and-pop kind of place.”
“Our business systems are dialed in and our menu is dialed in. The footprint and decorations change,” Trethewey said. “There is some character in the build-out with local mural and art. We want to make the shop look local.”
The company plans to stick to major college towns, as close to campus as possible. It pays, after all, to know your customer base.
“If you’re not familiar with the marijuana culture, you won’t know what half the things on our menu mean,” Trethewey said.
For example the chain's top seller is the White Widow -- chicken breast with ranch, mushrooms, bacon and cheese.
Other selections include the Thai Stick (teriyaki chicken), Chronic (roast beef) and Magic Mushroom (portabella).
Dessert menu items, listed under “Munchies,” include Rice Krispie treats and Hemp Brownies. (“Yep, they’re legal!!!” notes the website).
The company, privately held with no plans to go public, posted record sales of $8.4 million last year, an 18 percent increase over 2010. Company executives declined to give details.
Cheba operates in the “Fast Casual” segment of the restaurant industry, a slightly more upscale fast-food experience exemplified by Panera Bread. It’s a fast-growing sector poised for double-digit sales growth in the coming decade, said Bonnie Riggs, restaurant industry analyst for market research company NPD.
“The whole fast casual has done exceedingly well during the recession. When the industry was declining these concepts grew very strongly. They fill several needs. Consumers trading up from fast food. They satisfy consumers' want and need for fresh ingredients at reasonable price,” Riggs said.
Cheba's expansion plans are limited for now.
“We have no intention of developing the suburbs,” Trethewey said. “We have no aspirations to be Subway.”
Oh, and they don’t drug test their employees.
“That would be slightly hypocritical,” Trethewey said. But, “there’s no place to be stoned at work.”