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Cheba Hut Sets Sights on Arkansas

4 min read

Cheba Hut, a marijuana-themed sandwich shop chain, is coming to Arkansas, and no one you know will be able to resist the puns its arrival will engender.

Darcie and Hunter Fletcher of Conway have signed a three-store deal with the chain, based in Fort Collins, Colorado, ground zero in the drive to legalize recreational marijuana in the United States. The Fletchers are close to announcing their first location, in west Little Rock, which they hope to open in the fall. They’re also looking at sites in Conway and in Fayetteville or Russellville.

“My husband described it as the Hard Rock Cafe of sandwich shops,” Darcie Fletcher said. “It’s just a fun atmosphere, and that’s kind of what we love about it.”

Cheba Hut franchises also can be lucrative, with average annual sales per restaurant (average unit volume) of $1.5 million, according to Seth Larsen, Cheba Hut chief relationship officer, with some locations bringing in more than $2 million. In comparison, Subway, No. 1 among quick-serve sandwich restaurants in total sales in 2017, had AUV of $417,000, according to QSR Magazine. AUV for Panera Bread, No. 2 in total sales, was $2.7 million. Arby’s, which came in third in total sales, had AUV of $1.1 million.

Let me be crystal clear: Cheba Hut does not use cannabis products in its food or drinks. But marijuana is the theme of the chain, which advertises its “toasted” subs with names like “Thai Stick,” “Acapulco Gold” and “Silver Haze.” There’s also an entire “munchies” category. And the word “cheeba” (usually with two “e’s”) is slang for marijuana. (I came of age in the 1970s, so I am not unfamiliar with marijuana, but “cheeba” was new to me. Merriam-Webster says its first known use in the sense of marijuana was in 1981, so there you go.)

The chain was founded in 1998 in Tempe, Arizona, by Scott Jennings. It now has 25 locations — 13 corporate and 12 franchise — in seven states and plans to open another six this year. Cheba Hut had just less than $30 million in sales last year, Larsen said. And Jennings, the majority owner, has said he plans to double the number of locations every two years.

“There’s no doubt about it that there is a theme to what we do, but it’s not in your face,” Larsen told Arkansas Business. “We have people that come in every day that probably have no idea that our sandwiches are named after strains of marijuana, and that’s fine by us. They just know that they come in and get great food and great service and they can get out at a fair price.”

Larsen noted that while a “green wave” of legalization of marijuana for various uses is crossing the country (in Arkansas, only medical marijuana is legal), Cheba Hut is about more than just a once-naughty theme. The company, he said, focuses on good food and service and the positive word-of-mouth those create.

“We’re a great fit for Arkansas, the Natural State,” he said. “The hospitality down there is warm and genuine, and that’s what really drives us on where we want to go next.”

In addition, there’s this consideration, Larsen said: “I think it’s also easier to make a splash in a typically more conservative state.”

Darcie Fletcher, an optician, and her husband, Hunter, who has a background in sales, had been looking at a variety of franchise opportunities, from Jimmy John’s to window-cleaning services, when a franchisee broker for Cheba Hut brought the chain to the Fletchers’ attention. He urged the couple to look at Cheba Hut’s numbers. They liked what they saw.

But Darcie Fletcher also liked the concept and how the company operated. “I just thought it was something fresh and interesting.”

Cheba Hut restaurants range from 1,800 SF to 2,600 SF, Larsen said, and most of them have a full bar. Their locations will seat from 80 to 110, Fletcher said.

“We have an interesting circle,” she said. “We have everywhere from very liberal friends to very conservative friends, and everybody kind of said the same thing, that Arkansas really needed something different and new.”

And while a couple of friends were initially skeptical, Fletcher said, once they looked into the brand, “the response has been overwhelmingly positive.”

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