Costco executives are pouring money into a fast-food chain that's unlike anything in America

Jim Cramer: I Want to Buy Costco on Weakness
Jim Cramer: I Want to Buy Costco on Weakness

A little-known fast-food chain run by two former Costco executives is about to launch a rapid expansion, thanks to an investment from Costco's founder.

The Organic Coup, which is the first USDA-certified organic fast-food chain in the US, just raised $7 million in an initial round of financing led by Costco founder and former CEO Jim Sinegal.

Costco's chief financial officer, Richard Galanti, also participated in the round of funding.

Costco locations around the country:

The Organic Coup will use the investment to open at least two dozen more restaurants over the next year, the company's co-founder, Erica Welton, told Business Insider.

The chain, which specializes in fried-chicken sandwiches and chocolate-drizzled caramel popcorn, currently has two restaurants — one in San Francisco and one in Pleasanton, California.

Welton was a food buyer for Costco for 14 years before leaving to launch Organic Coup with Dennis Hoover, a 33-year Costco veteran.

The Organic CoupWelton and Hoover don't have any prior restaurant experience, but when Hoover was at Costco, he managed 53 of the company's warehouses in Northern California and helped turn Costco into the largest seller of organic goods in the world, according to Galanti.

That's a big reason why Galanti decided to invest in Organic Coup.

"I have complete confidence in him — he's a great operator," Galanti told Business Insider.

"I also like the fact that my boss for many years is a major investor," Galanti added, referring to Costco founder Jim Sinegal.

Items to always buy at Costco:

The Organic CoupHoover and Welton are modeling the new chain off of Costco in many ways.

"Our model is based on that Costco model of efficiency and paying employees a great wage," Hoover said.

Organic Coup is paying starting wages of $16 an hour in San Francisco and $14 an hour in Pleasanton. Fast-food workers in the US make an average of $7.98 per hour, according to PayScale.

The restaurant's specialty is its spicy fried chicken made from organic, air-chilled chicken breasts fried in coconut oil.

The Organic Coup"It's the most expensive oil we could have chosen, but it has good plant-based fats, no cholesterol, and it's high in Vitamin A," Welton said.

The menu is pretty simple. Customers can get the fried chicken with a range of sauces on a bun, in a multigrain wrap, or in a bowl with shredded vegetables.

For a side, customers can get organic popcorn covered in caramel and drizzled with chocolate. The chain will be adding tator tots to the menu as well, Welton said.

The Organic CoupOrganic Coup will also be adding a breakfast burrito soon featuring a wrap with melted cheese, scrambled egg, guacamole and pico de gallo.

The chain is pricier than the average fast-food restaurant. The fried-chicken sandwich costs $9.99, compared to under $4 for a chicken sandwich at Chick-fil-A.

Welton and Hoover have high hopes that Organic Coup will define a new era of fast food.

"We have had an architect come in and say it's the restaurant of the future because it's so efficient," Hoover said.

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Originally published