On fire: A look at the rapid expansion of Joella’s Hot Chicken

Restaurateur Tony Palombino debuted his new concept Joella’s Hot Chicken in late August 2015, and within a year, he opened three more.

“With Joella’s, when we opened up, I recognized that this had some legs to it a lot quicker than expected,” Palombino said. “I didn’t have such ambitious plans for the brand until probably four weeks in, I realized what we had here.”

Joella's chicken bites back. | Courtesy of Joella's Hot Chicken

Joella’s chicken bites back. | Courtesy of Joella’s Hot Chicken

Typically, restaurants will open a location or two and test the waters for a few years before committing to the rapid growth schedule that Joella’s has taken on.

Another Louisville chain Wild Eggs, for example, opened its first store in 2007, and started moving into other markets in 2012. In 2015, the company brought on New Albany-based Patoka Capital as a partner to fund a more rapid expansion, and today, it has 13 locations, with three more on the way.

Joella’s will open its first store in Indianapolis before the end of this year; one in Cincinnati during the first quarter of 2017; and is looking to move eastward into Columbus, Ohio, in late 2017, according to Palombino. By the end of 2017, the hot chicken restaurant will have at least seven stores open, but Palombino said his goal is to have 10 store running before October 2017, just more than two years after the first one opened.

“It is ambitious, but I tell you we have such an incredible team,” he said.

In addition to expanding into new cities, Palombino said he plans to fill out cities that Joella’s is already in, including another location each in Louisville and Lexington, three to five more in Indianapolis, and two more in Cincinnati.

Popularity of fast-casual restaurants is at “an all-time high,” he said. “I think we’ve struck a cord with the Southern, made-from-scratch menu that people can relate to.”

The first Joella’s on Frankfort Avenue is 2,200 square feet, and it is on track to generate more than $1,000 per square foot in sales, Palombino said.

Quick math puts the first full year of sales at $2.2 million, or more.

Research shows that Palombino’s gut is on point. National restaurant and retail research firm Technomic in August issued a report on the rising sales at chicken-based limited-service restaurants.

The firm found that year-over-year sales for the industry increased 8 percent in 2015, and it predicted that growth would continue this year. Particularly popular national chains include Raising Cane’s Chicken Fingers, PDQ and Nando’s, Technomic reported. All had substantial double-digit increases in both sales and unit growth in 2015 compared with 2014.

“Each brand has its own unique approach, from innovative menu offerings to eclectic ambiance,” a news release about the study said.

Joella’s, which has a rustic Southern vibe, differentiates itself by offering quick service with a full-service feel, Palombino said. Employees check on customers at their tables after they’ve ordered at the counter to see if they need anything, including drink refills.

“There is not an expectation of that in fast casual. I call it fast casual 2.0,” he said, adding that he took from his experience running Merle’s Whiskey Kitchen on Main Street as well as multiple Boombozz Craft Pizza & Taphouse in Louisville and Indiana. Both are full-service establishments. (Boombozz was the first restaurant he opened in Louisville in 1998.)

“Boombozz, when it first opened, was such a huge success out of the gate. I call it lightning in a bottle,” Palombino said. When Joella’s opened, he recognized that lightning in a bottle again and wanted to capitalize on it.

It’s harder to expand the Boombozz chain because the full-service restaurants are larger and take more investment, which is why the brand is open to franchisees. Joella’s stores, however, have a smaller footprint and limited menu that requires 15 to 30 employees and turns tables more quickly.

“The menu makes it more manageable, with making everything from scratch,” Palombino said. “You can keep a lot of quality control.”

Tony Palombino owns Joella's Hot Chicken, Manny & Merle and Boombozz Craft Pizza & Taphouse. | File Photo

Tony Palombino owns Joella’s Hot Chicken, Merle’s Whiskey Kitchen and Boombozz Craft Pizza & Taphouse. | File Photo

Joella’s stores can fit easily into existing spaces, which helps lessen the investment on the front end. Depending on the location, each Joella’s costs $350,000 to $625,000 to open, he said.

Palombino isn’t franchising Joella’s, at least for now.

“I am not saying we will never do it, but right now, we are focusing on company-owned stores,” he said. “With each location, we are able to learn things we can do better, from equipment to build-out.”

Once he’s opened 10 stores, Palombino added, he’ll have a better idea of the growth path Joella’s will take and whether he will start franchising or seek investors to back the concept’s expansion.

Palombino got his start in the industry at age 7 washing dishes at his family’s chicken restaurant in Northern Kentucky in the 1970s. “Child labor laws back then kind of got overlooked,” he said.

For Joella’s, Palombino said he uses many of the same recipes his family did back then.

His father, Pino Palombino, has owned multiple restaurants over the years, including an Italian restaurant where Tony Palombino got his start making pizzas before family friend and mentor Len Ricci brought him out to Kansas City, Mo., to help him start a pizzeria there.

“That was where I cut my teeth,” Palombino said of Ricci’s restaurant. “He gave me my start.”

Palombino knew how to cook from his family, but Ricci helped teach him the business side.

“We gave him the tools, and from there, he learned how to manage the business,” Ricci said. “He learned from the bottom up.”

To this day, Ricci still gives Palombino friendly advice on his restaurants.

“I advised him early on that the restaurant business is a ‘every 10 seconds’ business, you’ve got to be there, you’ve got to know what’s happening,” Ricci said. And “if you don’t back yourself up with really good people you trust in the restaurant business, you may have a good concept, but it’s going to go away.”

Ricci visited Joella’s for the first time this past week, he said, adding that he believes the concept will go far.

“His style of operation there only reeks of success.”