Harold's Chicken Shacks

Lo­cal leg­end Harold’s Chicken has a game plan to go na­tional. Step one: Get the Chicago restau­rants to clean up their act.

Chicago Sun-Times - - GRID - BY MEG GRA­HAM

Harold’s Chicken Shack No. 87 is wedged in a con­crete strip mall in the South Shore. Bul­let­proof glass wraps around the counter, metal bars stripe the win­dows and three vend­ing ma­chines stand in for a soda foun­tain. Cus­tomers wait on tat­tered stools for bas­kets of chicken and fries, sliced white bread and slaw. For more than 60 years, the fried chicken and fish found at Harold’s Chicken Shack have been a sta­ple of South Side cui­sine. Pres­i­dent Obama men­tioned the chain on “60 Min­utes.” Snoop Dogg and Com­mon have rapped about it, and hip-hop su­per­group Slaugh­ter­house said their lyrics are “greasier than Harold’s chicken.”

De­spite be­ing a brand name that verges on the in­sti­tu­tional, grease is just about the only thing that binds Chicago’s 38 Harold’s Chicken Shacks to­gether. Thanks to the lais­sez-faire li­cens­ing model adopted by founder Harold Pierce, all but three restau­rants are tied to the cor­po­rate Harold’s in name, logo and recipe only — leav­ing those who run the brand with lit­tle re­course to force restau­rants to mod­ern­ize or change.

The con­se­quence: an er­ratic con­fed­er­a­tion of restau­rants. Prices vary by lo­ca­tion, as do menus, decor and chicken sup­pli­ers.

Now Kris­ten Pierce, Harold’s CEO and the daugh­ter of the epony­mous Harold Pierce, is ush­er­ing in a new era. “We’re try­ing to elim­i­nate the shack,” she says. “I want to set a stan­dard.”

In re­cent years, Pierce, 43, has stopped is­su­ing li­censes for new lo­ca­tions. She’s opened three com­pany-owned restau­rants in Bronzeville, Bev­erly and Momence, with plans to open be­tween six and 10 more in the next year, in­clud­ing one in the Loop. Tanya Winfield, Harold’s COO, es­ti­mates each lo­ca­tion will cost be­tween $75,000 and $150,000.

The dif­fer­ences be­tween the com­pany-owned Harold’s and many of the li­censed lo­ca­tions are stark. The com­pany-owned res­tau­rant in Bev­erly sits in a new brick de­vel­op­ment, steps from a

Jamba Juice, on a bustling com­mer­cial thor­ough­fare. The walls are bright, the ta­bles sleek black. A white­board ad­ver­tises the store’s In­sta­gram and Twit­ter ac­counts. Em­ploy­ees punch or­ders in on iPads.

Pierce’s po­si­tion as heir to a fried chicken em­pire has given her plenty of cap­i­tal — Harold’s is tak­ing on no debt as she ex­pands. She wants to take the Home­wood-based Harold’s na­tional, with lo­ca­tions in airports, sta­di­ums and on col­lege cam­puses. But if she’s to turn Harold’s into the fast-food em­pire she en­vi­sions, ex­perts say she’ll need to wran­gle the 35 li­censed Harold’s that dot Chicago, some of which gross more than $1 mil­lion in an­nual sales.

“I’ve seen brands have trou­ble grow­ing and suc­ceed­ing, frankly, be­cause you’ve got too many of th­ese rogue lo­ca­tions,” says Amy Cheng, part­ner at Cheng Co­hen, a law firm spe­cial­iz­ing in fran­chis­ing and dis­tri­bu­tion. “If I’m the cus­tomer, I go to one lo­ca­tion and I get hor­ri­ble ser­vice or hor­ri­ble food, I’m not go­ing to that brand again.”

The vari­a­tions even un­set­tle some of the li­censees. Mande Ashkar, whose fam­ily owns a Harold’s in the South Loop, trav­els to dif­fer­ent lo­ca­tions to see how his coun­ter­parts run their restau­rants. “I just went to one Harold’s and the food was ex­cel­lent and the place was wel­com­ing and then I walk into [an­other] place and it’s like, what the heck hap­pened?” he says. “It’s like I walked into two dif­fer­ent com­pa­nies.”

The li­cens­ing model that got Harold’s into this predica­ment is nearly as old as the res­tau­rant. Af­ter mov­ing from his na­tive Alabama, Harold Pierce opened his first res­tau­rant in Ken­wood in 1950. Early on, he de­vel­oped a sim­ple method that al­lowed Harold’s Chicken Shacks to pro­lif­er­ate across the South Side. Af­ter per­son­ally train­ing fam­ily mem­bers and friends in his own stores, Pierce sent them off on their own. New own­ers were re­quired to pur­chase chick­ens from a sin­gle sup­plier (a friend of his); the restau­rants paid Harold a roy­alty of 42 cents for each chicken they sold. “My dad would show you how to op­er­ate it,” Pierce says. “Then he would step out of it.”

Af­ter Harold passed away in 1988, the chicken king­dom changed hands — first to his sec­ond wife Willa, who died in 2003, then his son, J.R. Kris­ten says J.R. tried to work closely with li­censees. “My brother, he was try­ing to make it con­sis­tent, try­ing to make sure no one was cut­ting cor­ners.”

J.R. worked to strengthen the re­la­tion­ship be­tween cor­po­rate Harold’s and the restau­rants by do­ing sur­prise in­spec­tions and slap­ping fines on lo­ca­tions that weren’t abid­ing by their li­cens­ing agree­ments. He be­gan tak­ing a 6 per­cent cut of to­tal sales — in ad­di­tion to chicken roy­al­ties — for some li­censes.

Then, when J.R. died un­ex­pect­edly due to com­pli­ca­tions from a surgery in 2008, Kris­ten Pierce stepped in. Her ap­proach with the li­censees is more col­lab­o­ra­tive. “I guess now you could say we’re hand­hold­ing,” Pierce says.

In many ways, Pierce’s chal­lenge is to put the ge­nie back in the bot­tle. Af­ter decades of vary­ing man­age­ment prac­tices, she’s faced with li­censes that vary in time frame (some are as long as 20 years) and key terms. Across the board, the own­ers have to­tal con­trol over their menu, dé­cor and sup­pli­ers. One Hyde Park lo­ca­tion sells pizza. As long as the li­censees com­ply with their con­tract terms, Pierce doesn’t have a lot of lever­age.

“There are le­gal rea­sons why li­censes can be re­voked,” Winfield, the CFO, says. “But for the most part, it’s based on the ex­pi­ra­tion date.”

The new Harold’s in Bev­erly fea­tures an open kitchen and up­dated lay­out, be­low.

The Harold’s in Hyde Park sells pizza

PHO­TOS BY SARA MAYS

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