Crack Shack founder signs deal to expand fried chicken chain nationwide
Deal with new Savory investment fund will begin with three new takeout-friendly locations outside California in 2021
Crack Shack, the fried chicken restaurant chain launched five years ago in Little Italy, announced a new partnership deal today that will expand the fast-casual concept across the U.S.
Crack Shack founder and CEO Mike Rosen said up to three new locations will open outside California in 2021 as part of the the deal inked with Savory, a restaurant-focused investment fund launched in May with $90 million in capital by the Mercato Partners Fund in Utah. The new locations will join the six existing Crack Shacks in Little Italy, Encinitas, Costa Mesa, Century City, Pasadena and Las Vegas.
Rosen said he has been approached many times by private equity firms that wanted to invest in an expansion, but Savory brought something new to the table — a management team of restaurant industry veterans with expertise in real estate evaluation, construction management, design, human resources and employee training.
“Most private equity investors like pouring kerosene on a fire. They like saying, ‘We’re just going to give you money and you guys run.’ But we’re not good at everything,” Rosen said. “They have subject matter experts across a wide range of individual knowledge areas. That will enable our team to focus on what they’re good at. It’s like chocolate and peanut butter coming together.”
Crack Shack was the second restaurant venture for Rosen, a San Diego private equity investor and restaurant aficionado. In March 2014, he and chef Richard Blais launched the 250-seat fine-dining eatery Juniper and Ivy at 2228 Kettner Boulevard. Eighteen months later, they opened the first Crack Shack location next door. Blais has since left the company. The executive chef at Juniper and Ivy is Anthony Wells and the Crack Shack team includes culinary director Jon Sloan, director of operations Dan Pena and marketing director Nicole Rogers.
Rosen said Crack Shack is unique in the fried chicken category. It sells only free-range Jidori chicken raised on small farms in California, which are the centerpiece in bone-in dinner plates, sandwiches and salad entrees. That has helped the company stand out from the other fried chicken chains and the up-and-coming Nashville-style hot chicken outlets, which Rosen said he sees as more of a menu option than the basis for an entire restaurant.
“We don’t really have any competitors,” he said. “I think that as we look at what the consumer cares about — ingredients — there is a market for the Crack Shack outside Southern California. It’s a chicken concept that is not Southern-fried, but more Southern Californian, with some fresh salads and not grits and gravy. We planted our flag on using ingredients that are of far higher quality than other chicken restaurants.”
While the menu at future Crack Shacks will remain pretty much the same, Rosen said they will be adapted to changes in consumer dining habits. Even before the pandemic caused a dramatic rise in takeout and third-party delivery orders, Americans were eating more meals at home. Most of the Crack Shack locations offer either partial or full outdoor dining options, but Rosen said to-go orders now make up 20 percent to 30 percent of all Crack Shack sales. In a recent customer loyalty survey, many Crack Shack diners said they plan to continue doing pickup and third-party delivery services after the pandemic ends.
Rosen calls the existing Crack Shack locations “experiential” venues, where families and friends can gather and small children can wander and play. But the 5,000-square-foot and larger locations like those in Little Italy and Encinitas will not be replicated in the future. Rent at these large-footprint stores is too high for stores where nearly a third of sales are in the low-profit delivery category. So future locations will be much smaller.
The burger chain Shake Shack announced in May it plans to open its first drive-through locations, soon to serve the growing eat-at-home market segment. Rosen is looking at drive-through as well. His frustration with delivery services is that food that leaves the restaurant piping hot may be cold by the time it reaches the customer, and that doesn’t represent his company well. To reduce these issues, Crack Shack has changed its packaging to keep takeout food items warmer.
Crack Shack joins three other chains in Savory’s fast-casual restaurant portfolio: Mo’Bettahs, a Hawaiian-style chain with 13 locations; R&R BBQ, with nine locations; and Swig, a soft drink and cookies chain with 20 locations.
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