plate of fried chicken with bun and sauce
A press release was sent out Monday morning, announcing the closure of CHX in Lowry Hill. Right away, something felt weird. The announcement came from "the investors" (though no one was named) and not the three young Black owners who founded the chicken shop. Here is the full press release:
Investors announce CHX Uptown restaurant is closing today, Monday Oct 4th
Minneapolis, Minnesota (October 4th,2021) - “CHX investors knew and embraced the difficult challenges of opening a fast-casual restaurant in Uptown during this volatile marketplace environment, but we passionately surged ahead confident that our tested recipes and farm to table locally sourced products would resonate with customers and that the opening of CHX in Uptown would be instantly successful.
“Regrettably, that’s not what happened. Our operational costs after only 90 days in business is not trending to be profitable, so we’re announcing today that CHX’s is closing its Uptown operation on Monday, Oct 4th.”
Since its mid-summer opening – CHX has shared its 2210 Hennepin Ave. South dine-in location with another fast-casual food operator, Pizza Shark, which offers wood-fired pizza cooked in a brick oven. The Pizza Shark business has been growing and will seamlessly expand to occupy this entire space to better serve its customers. Pizza Shark is open for dine-in, carry-out or delivery from 11 a.m. to 11 p.m. daily. For more information, go to https://pizzashark.co.
So 90 days after you open a restaurant in the worst labor market with massive supply chain woes, you weren't "instantly successful"? Who actually expects that? "Investors" apparently.
After a few calls, I found out more. The three young owners, Marques Johnson, Fredrick Huballa, and Shawn Edwards, also known as Gumbo Group, partnered with a group of investors and the landlord of this space when they decided to leave their kitchen window operation in the Pourhouse. That landlord is Steve Hark. As part of the deal, Hark would assume a partnership with the owners, investing and helping them manage their business. Landlord ownership deals are nothing new, there are a few local restaurants that have these ownership structures in place.
But, within these 90 days, things fell apart. "As young entrepreneurs, we were caught off-guard," Shawn Edwards, CEO of Gumbo Group told me. "We didn't even know that the presser was going out. We didn't see it or approve it before-hand." Edwards confirmed for me that Hark, through a contracted manager, had also fired the entire CHX staff without warning within the last week or so. "These were people that we had hired and trained ourselves, and we only found out when they started messaging us that they'd been let go." Edwards was told that it was in order to cut costs.
Though it was not part of their investment agreement, Edwards said that they were told they'd have to come up with a large sum of capital if they wanted to stay open. "That just took us by surprise. We have been pulling in six figures monthly, and we've been busy," Edwards mentioned that even though they share a space with Pizza Shark, he believes that CHX was bringing in 75% of the revenue generated in that space.
I connected with the PR person behind the initial press release, asking who was the person quoted in the statement, and he told me "The entity CHX : Three Plus One; is represented by multiple stakeholders" and directed me to a lawyer's contact info. Though I sent a message asking about the "our" in the release's quote, no answer was returned.
As for the CHX owners, they sent their own press release in the afternoon and hope to move on. They plan to seek new opportunities. "It's a shame that presser was so misleading," Edwards said, "but we are not giving up. Within Gumbo Group we have a few concepts to bring forth, but I'm not giving up on CHX. We love the cities and we've grown a nice loyal fanbase, we'll take that momentum elsewhere."
