Smith says that at the peak of the pandemic, landowners and developers didn’t quite know how to price. But six months into COVID, people are wanting to strike deals.
As he puts it, A+ real estate is still A+ real estate in the mind of landlords, and they aren’t decreasing their prices. Smith explains that landlords are going to be patient and wait for the market to swing back up; they won’t enter a 10- to 15-year lease with someone at a reduced price.
However, Smith says he has seen price pressure and fluctuation with raw land and dark boxes.
“We know that the industry is going to be cluttered with some dark boxes. Unfortunately, there’s going to be a lot of restaurants that aren’t going to make it through this, and haven’t already, and there’s still probably a lot more to come,” Smith says. “And with those dark boxes, a lot of the landlords that have good real estate, they don’t want a dark box, so we’re seeing pressure on real estate costs of 15 to 25 percent. But it’s not what people think. It’s not half price, it’s not free—it’s nothing like that. It’s still expensive, but we’re definitely seeing the pressure downward, which is good for us.”
When it comes to store design, Smith says his team doesn’t want to lean too far into digital or lean too far into sit-down—they’d prefer a happy medium. The Crack Shack’s initial boxes were around 6,000 to 6,500 square feet, and Smith says there will be smaller ones with less dine-in capacity, but there’ll also be bigger stores than what people would expect.
At their core, human beings are social creatures, the managing partner explains. Savory is confident that people will return to their regular behavior, and they’re willing to bet The Crack Shack’s future on that. Smith says he knows the environment will be different, but he still believes customers will want the experience as opposed to eating out of a to-go box on a park bench.
“Now I understand that the pandemic is upon us so there’s different views on if that’s safe or not right now,” Smith says. “But when that starts to dissipate—it dissipated on past pandemics and past recessions. A year later, a year and a half later, people get back to their way of life because we like what we like.”
Smith says the better chicken category is just like the better burger category—people want it, people see the difference, and they taste the difference. That’s what Savory will target, to the point in which The Crack Shack becomes a $100+ million nationwide brand.
If you ask him, a restaurant that quite literally began in a shack is gearing up to become the next breakout success story.
“I think the brand, the cult following, the quality of the food, the difference of the food, the bone-in chicken component, makes it the type of brand that is going to have success in the multiple dozens of units throughout the West, South, Southwest over the next four to five years,” Smith says. “I think beyond that, this brand has the legs to expand across the U.S., probably easier than most brands I’ve looked at.”