Fast-casual chain Honeygrow, a darling with investors, is shuttering several units in Chicago in what the company calls a “pause from its planned expansion.”
On Nov. 16, Honeygrow will close two Chicago locations as well as one of its Minigrow offshoots in the city. A Honeygrow outpost in suburban Chicago will remain open, company founder and CEO Justin Rosenberg told Restaurant Business Thursday.
"It was the last thing on the planet I ever wanted to do, to open restaurants to close them," Rosenberg said. "I'd rather get it right than simply to grow."
The chain struggled with high rent prices and scaling its employee training and other operations to the Chicago market, Rosenberg said.
Honeygrow was in lease negotiations to open new stores in 2019, he said, but the company has decided to step back from all of those discussions.
"We'll use 2019 to clean this up and take a step back and focus on the operations and on the training," he said. "I want to take a step back to move forward. It's critical to take this time now to get it right."
He added, "With growth you lose sight of the things that made you special in the beginning."
The closures affect 75 to 100 employees, Rosenberg said. The company has worked with many of them to find them new jobs, often at other fast-casual restaurants in Chicago, he said.
Late last year, Honeygrow announced it had raised an additional $18 million in funding, bringing its total lifetime cash infusion to $70 million, according to the company. The most recent investment was earmarked to expand its small-footprint Minigrow concept, which launched a year ago.
Honeygrow’s website lists a total of 34 locations, including several Minigrow units. The closures will bring that number down to 31 stores. The Chicago market was Honeygrow’s only one outside of the East Coast.
Honeygrow was founded in 2012 and specializes in customizable stir-fries and salads. Minigrow features a pared-down menu, suited to reduced square footage units in dense urban areas.
The store closures are the latest signs that the fast-casual sector, particularly health-focused fast-casuals, are seeing some softening. In September, Carlisle Corp. sold off its struggling LYFE Kitchen concept, leaving just three units. Fast-casual sandwich chain Taylor Gourmet declared bankruptcy that same month. Noon Mediterranean, which also filed for bankruptcy in September, was recently purchased by Elite Restaurant Group.
"The market is vastly over-saturated, just in general," Rosenberg said. "We were really lucky. We were going to open a lot more this year and next year but we want to get it right. Internally, we're lucky. I'm glad we caught it when we did."