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.
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.”