Cheba Hut Toasted Subs serves sandwiches in a cannabis-themed environment.
Cannabis-themed Cheba Hut knows its audience and, as its marketing team likes to say, “We’re growing like weeds.”
The brand, founded in 1998 by Scott Jennings in Tempe, Arizona, is indeed cooking up some big numbers, with three-year sales growth of 57.8 percent and unit growth of 47.1 percent from 2022 to 2024.
Chief Development Officer Seth Larson said 2024 was a pivotal year for the company as it solidified its franchise sales efforts after easing off the gas pedal. It increased the average unit volume to $2.3 million and completed a digital transformation of its point-of-sale system and menu boards. Cheba Hut operates more than 80 locations with 34 franchisees in 17 states.
The company also introduced new food items, including a “Secret Stash” which allows operators to rotate their own featured sandwich.
“2024 was great and for a lot of different reasons but mainly because of our digital transformation, a massive undertaking, that we were able to roll out in about a six-month period,” Larson said.
He pointed out that Cheba Hut, which features about 30 core sandwiches, saw 35 percent of its overall sales coming from digital orders and 9 percent from alcohol sales. He said the company is due for a menu overhaul, with plans to undertake that effort in 2026.
“Every decision we make, we have our operators in mind because we’re operators at heart. We know how hard it is to run a high-volume restaurant and we want to make it as easy as possible for them,” Larson said.
Cheba Hut last year finalized a transaction with Diversified Royalty Corp. in which Diversified acquired the trademarks and other intellectual property used by franchisor for $36 million, then licensed the rights back in exchange for royalty payments.