Preparation
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Chicken Fried Steak:
Combine cracker crumbs, flour, baking powder, salt, black pepper, and ground red pepper (if using). In a second bowl or dish whisk together the milk and both eggs.
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Dredge chicken in cracker crumb mixture; dip in milk mixture, and dredge in cracker mixture again. Pour oil to a depth of 1/2 inch in a 12-inch skillet. Heat oil to 360°.
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Fry steaks in batches, about 10 minutes, adding oil as needed. Turn and fry a couple more minutes or until golden brown.
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Remove to a wire rack that has been place inside of a jellyroll pan. Place pan in the oven to keep the steaks warm at 225° oven.
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Cream Gravy:
Carefully drain the hot drippings, reserving cooked bits and 2 -3 tablespoons of the drippings in skillet. Add 1/3 cup flour to the skillet with the drippings.
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Cook over medium high heat. Using a whisk mix the flour into the drippings until it starts to brown and become a paste.
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This is called a roux. If the roux looks to oily and runny you can add another tablespoon or so of flour and mix again. Whisk constantly until the paste becomes nice and brown.
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Slowly add the milk and water mixture whisking constantly and blending the liquid with the flour mixture until combined.
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Let the gravy come to a boil and then reduce heat and simmer until the gravy thickens up.
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If the mixture thickens to much add more milk as needed until the gravy is the consistency that you want.
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This could end up being more then the required 3 cups.
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Season generously with salt and pepper and serve over the chicken fried steak and mashed potatoes.
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