Posted: Jun 29, 2018
A millennial entrepreneur hires former inmates and homeless people who struggle to find work even in a strong economy.
COLUMBUS, Ohio—William Camper searched for jobs for six years after being released from an Ohio prison in 2011. He had spent more than a decade behind bars for selling cocaine while battling his own addiction. Even after he got out, he still felt trapped. He interviewed at McDonald’s and signed up with temp agencies that rarely sent him on assignments. He was homeless for a while, struggling to live on $20 a month, and could not pay child support for his 10 kids. Hiring managers would size him up quickly: round face, wire-frame glasses, a butterfly tattoo on his forehead. “Once they see me with tattoos on my face, it’s basically downhill from there,” he recalled.
Each year, about 23,000 inmates like Camper leave prisons in Ohio, and 640,000 are released from prisons across the country. Nearly two-thirds of them can’t find a job within the first year and a majority of them are arrested again within three years. Not getting a job doesn’t hurt just the former inmate, it hits the whole economy. One think tank estimated that the cost of not hiring felons is $87 billion in gross domestic product every year. Governments have tried to address the issue. In 2016, the Obama administration invited corporations to sign a “fair chance” business pledge to help reintegrate felons into civilian life. Major companies such as Total Wine & More promised to hire people with criminal records. Koch Industries and Walmart no longer perform a background check until after an applicant has been offered a job.
Joe DeLoss, a serial entrepreneur in Columbus, viewed former prisoners as business assets, not charity cases. He knew they were potentially loyal employees who would not take an entry-level job for granted. DeLoss aspired to build a company with a double mission: make money using a workforce the rest of the private sector had largely ignored. And he wanted to accomplish this goal using a somewhat unusual product: spicy fried chicken.
Four years ago, he opened his first location of Hot Chicken Takeover. Today, about 70 percent of his 150 employees are people who were once imprisoned or homeless, recovering addicts and others who have struggled to find employment. He also has a thriving business that has three restaurants and ambitions to expand regionally and even nationally. In a country with the highest incarceration rate in the world, DeLoss’ workforce comprises a tiny fraction of the 70 million Americans with some kind of criminal record, but he’s promoting a concept that social scientists have long said reduces the chances they will re-offend.
“Our own research found that people who get jobs are less likely to return to prison,” says Nancy La Vigne, director of the Justice Policy Center at the Urban Institute. “It’s not just getting a job, but retaining that job over time”—particularly one that pays a living wage.
That’s key to DeLoss’ business model. He pays an average of $12 an hour (including tips) and offers additional matching funds to help employees save up for housing, transportation and education. His HR team can refer them to services such as discounted legal aid, mental health counseling or landlords willing to overlook their checkered past—an essential benefit in a city where new apartments can rent for $1,400 a month.
Columbus’ growing economy is a magnet for millennials but leaves behind many of its residents. In 2015, a study by University of Toronto urban expert Richard Florida said the city was the second-most economically segregated large metro area in the country. The Brookings Institution found that 42 percent of the jobs created in the area from 2010 to 2015 were low-wage positions. “It’s a tricky balance to strike as an employer,” DeLoss says of the wage gap, and he’s “far from” finding the answer. But his average employee compensation is $4 above Ohio’s minimum wage of $8.30 an hour, and he’s intentionally pushing toward a “kind of livable wage.”
Hot Chicken Takeover also promotes from within, promising to hire 75 percent of its management and administrative team internally. The company has an employee turnover rate of 30 percent to 40 percent, far below the below the norm for fast food restaurants, many of which replace their staff 1½ times over the course of a year. “How we hire is inextricable to our business’s success,” DeLoss, 33, says. “This is a contract we’ve entered into together.”
William Camper was at an Alcoholics Anonymous meeting in late 2017 when he heard about Hot Chicken Takeover. He applied online and was surprised to receive a call the next day. No one at the restaurant gave him a hard time about his tattoos. And the company’s managers weren’t concerned about his convictions—they just wanted to know if he was being honest about his past. “I was a little nervous,” Camper, 36, says. This spring, he celebrated a year of sobriety and six months as an employee of Hot Chicken’s newest location. He’s found an apartment and is back in touch with his kids—one of whom came to work with him recently to taste the chicken. “I feel like I owe the company ’cause they gave me a chance to shine when no one else did,” Camper says.
DeLoss looks more like a startup evangelist than a soul-food chef: pale, with oversize tortoiseshell glasses and dark hair that stands up in spikes when he removes his hat. A jean jacket covers his Hot Chicken T-shirt (the logo depicts a chicken with an asterisk), and he speaks in a careful, corporate cadence as he cradles a mug of hot tea. “Fried chicken is this great equalizer of humanity,” DeLoss said recently as we sat in the crowded mezzanine overlooking Columbus’ North Market, where his flagship restaurant is located. No matter their political, ethnic or economic background, “a lot of people have a connection to this food.”
DeLoss has been hustling one product or another since childhood, when his family bounced around the Midwest to follow his salesman father. By fourth grade, he was raiding his mom’s pantry for chips and soda and selling the snacks to construction workers in his suburban Minnesota neighborhood. In middle school he performed magic shows at birthday parties; in high school he chauffeured the elderly residents of a retirement center.
His family also volunteered, and DeLoss learned early on what it meant to have a community of support around him. When he was 7 or 8, his mother was diagnosed with breast cancer, and he saw how members of his church “helped their family at a really rough time,” his wife, Lisa DeLoss, recalls. His mother survived, but Lisa thinks the experience still guides DeLoss today.
DeLoss earned a bachelor’s degree in management and marketing at Capital University in Columbus and kept volunteering to feed the hungry but soon grew frustrated by more traditional forms of charity. “It didn’t matter how much soup I served,” he says. “The line would always be there.” A friend introduced him to Lisa Dolin, then dean of the School of Management at Capital. She explained that his passion for business with a philanthropic bent had a name: social entrepreneurship.
Companies on the East and West coasts had been promoting social entrepreneurship since at least the late 1990s. Dave’s Killer Bread, which is based in Oregon and sells organic bread throughout the country, started hiring people with criminal records in 2005. Founder Dave Dahl rejoined his family’s company after 15 years in and out of prison for crimes such as armed robbery and dealing methamphetamine.
In 2008, after a stint as an investment bank analyst, DeLoss took a job as director of social enterprise for a local nonprofit. Lutheran Social Services runs homeless shelters and food pantries in Columbus and was looking for ways to employ and train its clients. DeLoss started a sandwich catering service called Freshbox. “The idea came together because as an investment bank analyst, I ate a lot of shitty boxed lunches,” he says.
Around this time, he sold his house and moved into a 1963 Airstream trailer. He was paring down his debts and expenses, preparing for the lean startup life. “I’ve never worried about Joe being able to take care of himself and make money,” Lisa DeLoss says. “When this guy says he’s gonna do something, he actually does it.”
His first startup venture was a flop. It was a staffing company meant to supply workers—many of whom had been incarcerated—to companies in need of reliable labor. One early potential client was a distribution center for a large retail brand, which had been churning through employees due to theft and conflict on its team. DeLoss jokingly recalls how his pitch failed to entice them: “I have all these people with records for conflict and theft. We can solve your problem.” But he was determined to prove his staffing strategy was sound.
His peers in the restaurant industry—with more than 14 million employees, the de facto leader in employing former felons—were already testing the theory. In 2008, MOD Pizza opened in Seattle, declaring that it would hire people in need of “second chances”—including those who had been incarcerated. The restaurant now has 300 locations. In 2013, Brandon Chrostowski, who was arrested on a drug-related charge as a teenager, opened a French restaurant in Cleveland to provide cooking and hospitality skills to people with criminal records. DeLoss knew Columbus was an especially good spot to launch a fast-casual chain: Wendy’s, White Castle and Bob Evans had all started there. He just needed the right product.
In November 2013, when Lisa DeLoss was seven months pregnant with their first child, the couple took a “babymoon” to Nashville. Joe kept talking about the city’s hot chicken (spicy enough to make your lips tingle), and how they needed to bring a taste of it back home. Neither of them had ever fried chicken before they bought a table-top fryer. They started inviting friends to watch UFC bouts and sample homemade chicken wings. Then they held ticketed events, using the price of admission to cover the cost of supplies. In April 2014, they opened a pop-up window in a developing part of Columbus called Old Towne East and began selling chicken on Saturdays. The building housed a food co-op and a meat packing plant; DeLoss rented cooking space and served food at communal tables outside.
Lisa, on maternity leave from her job at The Ohio State University’s hospital, brought their 4-month-old daughter with her when she worked the window on opening day. “I guess I thought maybe the timing was weird,” she says of her husband’s decision to quit his day job and launch a business with a newborn. “I think crazy would be the right word.”
By September of that year, DeLoss had served more than 8,000 customers. Three months later he opened Hot Chicken’s first brick-and-mortar restaurant at the North Market, signing a six-month lease to serve lunch on card tables three days a week. Gradually, he expanded the business hours and renovated the restaurant. Celebrity chef Rachael Ray took notice of his unique mission, as did Dave’s Killer Bread and other leaders in the world of “fair chance” employment. In 2017, after raising capital from investors, Hot Chicken expanded to two new locations around the city.
Tronny Monahan likes to arrive at the North Market by 7 a.m., four hours before Hot Chicken opens, to concoct the perfect mixture of flour, milk and butter that will form the base of his macaroni and cheese. When he landed the job last August, he was eight months sober and living 10 minutes away at the House of Hope men’s addiction treatment center. He’d gone to prison twice, cycled in and out of rehab for heroin and crack cocaine addictions, and hadn’t had a legal driver’s license in a decade. But Hot Chicken promoted him quickly, so that by the time I met him in April he was a low-level manager earning $11 an hour plus tips. His goal is to become a regional director—a position that doesn’t yet exist but could pay $75,000 to $100,000 a year—as the chain expands outside Columbus. “It’s still kind of hard for me to wrap my head around the idea of being successful,” says Monahan, 33. “For so long, I was just resigned to the fact that life was just existing.”
Richard Mason, the employment specialist at House of Hope, has referred roughly 25 men to jobs at Hot Chicken over the years, and about six of them work there now. “I’ve never had a guy who worked there and didn’t love it,” he says.
The hiring process is more rigorous than other restaurant gigs. After filling out an online application, potential Hot Chicken employees must undergo a phone interview and an in-person meeting. If a person exhibits a pattern of violent behavior that raises alarms or has committed an offense that prohibits them from working near a school, for example, they might not be the best fit for restaurant work, says marketing manager Dilara Casey. But Hot Chicken does refer them to other employers. In the end, only a quarter of applicants are hired.
Some companies skip this screening process altogether. The nonprofit Greyston, whose New York-based bakery supplies brownies for Ben and Jerry’s ice cream, hires people without asking them any questions at all. They work as apprentices for six to 10 months and, if they graduate, are offered full-time jobs. In 2016, just 20 percent of the apprentices graduated, but 79 percent of those hired stayed on the job, says Greyston marketing manager Anthony Pellegrino. The company has established a Center for Open Hiring to teach others about this novel approach.
Hot Chicken focuses on helping its employees stabilize their lives. For every $2 they save to rent an apartment, buy a car or pursue an education, the company will invest a dollar toward that goal, up to $750. Tronny Monahan is saving up to reinstate his driver’s license. Hot Chicken also has a partnership with roll: Bicycle Company—a local business run by a friend of DeLoss—to provide deeply discounted bikes to its employees. The restaurant can help employees get their criminal records expunged and set up a bank account with a local credit union.
Years ago, DeLoss kept beer in the company fridge so workers could have a drink at the end of the day. When he found out this made things awkward for House of Hope graduates, he took away the beer and incorporated substance abuse recovery into his company’s mission. Selling or using drugs on the job is a firing offense, but if an employee relapses off the clock, he is referred to treatment and can take a leave of absence to recover. New hires qualify for health insurance as soon as they’re promoted to “Crew 2,” a process that took Monahan five weeks. For him, it made a life-altering difference. A medication he was prescribed for psoriasis—a skin condition—would’ve cost $3,000 out of pocket but is now covered by his insurance. “I had spent so much time on Medicaid, kind of, like, draining society, that it was major for me to actually put my own money into something that a company offered me,” Monahan says.
DeLoss has given a TEDx Talk about his hiring model and hosted bag lunches to explain it to other companies, speaking frequently at community workshops and forums. “I think it’s been very helpful for other employers to consider hiring ex-offenders,” says Christine Money, executive director of Kindway, a nonprofit that helps Ohio prisoners transition back into society and land jobs. The first client Kindway referred to Hot Chicken was Shannon Wilson, a former heroin addict who started working at the restaurant three years ago and is now the company’s executive coordinator.
DeLoss’ ultimate goal is to expand Hot Chicken into a national chain. “We want to sell a ton of chicken,” he says. “It bodes well for our ability to create jobs.” But he’s still figuring out how to do that while maintaining his unique HR model.
Genevieve Martin, executive director of the Dave’s Killer Bread Foundation, knows DeLoss and thinks it’s “extremely possible” for his chain to grow. She suggests opening new restaurants in cities, such as San Francisco, that already have nonprofit agencies to help former offenders find jobs and housing. “It takes time,” she says. “But … that time pays off.”
Back at the Easton Gateway mall, Camper tells me he has found new confidence by working the cash register at Hot Chicken. He’s not as shy as he once was; he laughed and danced with his co-workers in the kitchen after we talked. His plan is to become a manager at the company. “What you put into this company is what you get back,” he says. “And if someone is serious about getting their life back on track, this is a place where they can get help.”
By Lisa Rab
June 28, 2018
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