Funny you mention Dewey Beach and Ocean City regarding this band. It was during the summer of '94/'95/'96 (one of those years but can't remember exactly which) that I saw Jimmy's Chicken Shack several times at clubs in Ocean City. This was back when I was teaching and would spend much of my summer at my parent's condo down the Ocean. Which ever year it was, JCS was one of the house bands, so to speak, for a couple of the nightclubs. This was just before HFS fell in love with them. So, you may very well be dead on with your theory.
Personally, that summer, I can't say I was a big fan of their's but they weren't that bad either. Then again, I guess they were a breath of fresh 'Alternative' air in relation to most of the other crap that ended up on most of the local stages. All of the visiting students from the UK sure loved them.
-Edit-
Or maybe it's Hoya whom I should credit for this theory.
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