Halal Guys, the gyros giant that started as a humble New York street cart, plans to reopen two of the three Chicago restaurants that closed over the summer. The Gold Coast and Loop locations bear signs announcing that both stores will reopen shortly under new ownership. The two restaurants, along with a Wicker Park location, closed in July after a dispute between the former franchise group and corporate ownership that led to a federal lawsuit filed by the franchisees.
The Wicker Park location, 1415 N. Milwaukee Avenue, doesn’t appear primed for a comeback and isn’t mentioned in the lawsuit. Workers painted the exterior on Milwaukee Avenue and replaced Halal Guys’s red-and-yellow color scheme.
A spokesperson for Halal Guys confirmed plans to reopen in the Loop and Gold Coast, but couldn’t provide an opening timeline. The three Halal Guys locations in Chicago were run by the same franchisee. A different group operates the suburban locations in Skokie and Countryside, which are unaffected and remain open.
Halal Guys developed a cult following in New York, with customers waiting in long lines outside to buy street meat from a cart. Investors later began lining up to help fund an expansion outside of New York. Chicago’s Gold Coast location became the company’s first restaurant outside of the Big Apple when it opened in 2015. For the first few weeks, customers queued up outside on Division Street for a taste, and patrons leaving the Rush and Division street bars also found a new spot besides Five Faces for a late-night bite.
The company provided a statement from CEO Ahmed Abouelenein that didn’t mention the lawsuit. A spokesperson didn’t have opening date details.
“We are excited to reopen our downtown Chicago restaurants under new management. We are looking forward to continued growth and expansion in the Chicago market,” Abouelenein’s statement read.
The first signs that something was awry for Halal Guys’s Chicago locations came this spring in Wicker Park when that restaurant mysteriously closed shortly after its April debut. It reopened months later with erratic hours before shuttering for good earlier this summer. Franchisees Steve Chong and Vincent Tan closed the Loop (172 N. Wabash Avenue) and Gold Coast (49 W. Division Street) locations in July.
Chong declined comment, but he and Tan filed a federal lawsuit alleging Halal Guys corporate tried to force them out of the Chicago restaurants so they could resell to new owners for more money. Chong told the company he wanted to sell the restaurants in January, according to the lawsuit, and six months later, Halal Guys terminated its franchise agreement in mid-July. Chong and Tan originally asked the court to grant a restraining order to prevent Halal Guys from terminating the franchise agreements.
The lawsuit, filed on July 24 in U.S. District Court, mentions Abouelenein. His father, Mohammed Abouelenein, co-founded the company. The younger Abouelenein and Halal Guys chief development officer Margaret Carrera apparently held a grudge against Chong and Tan, according the lawsuit. They charged Terry Wilson — Halal Guys’s former director of franchise operations — “with the task of aggressively trying to force plaintiff out of the Halal Guys system with aggressive audits, fabricated charges, and related tactics.”
Wilson, who left Halal Guys and worked as a consultant, allegedly texted Chong that management wanted to sabotage them and sent auditors to the restaurant with the instructions to “fuck you guys up and go hard on you as a franchise,” according to the lawsuit.
The franchisees cited a May default notice sent to them by Halal Guys that alleges they failed “to maintain and operate the restaurant with the requisite sanitation and repair.” The lawsuit claimed Halal Guys passed all Chicago inspections. City records show three failures by the Gold Coast location: Twice within two days in 2018 for not having proper certificates displayed and records logged. The same location also failed an inspection in September 2015. The restaurant continued operations throughout the inspection process.
The company also took issue with cobranding. Tea Ninja, a tea shop, opened next to the Loop location. Chong maintained he didn’t open or run the shop, as the Tea Ninja was only a tenant. Chains don’t usually want to dilute brands with owners operating restaurants next to one another. There are exceptions, such as this instance with a West Town Popeyes and Checkers. The latter’s opening has been delayed for months.
The plaintiffs allege that Halal Guys cut off their restaurants’s food supplies on July 22, three days after they received an email with the notice of termination. That explains the sudden closure.
The lawsuit is pending, so meanwhile, stay tuned for news on the reopening dates.