diff --git a/salt/fleet/event_gen-packages.sls b/salt/fleet/event_gen-packages.sls
index 72c02be45..6d1e2264a 100644
--- a/salt/fleet/event_gen-packages.sls
+++ b/salt/fleet/event_gen-packages.sls
@@ -5,9 +5,9 @@
 {% set CUSTOM_FLEET_HOSTNAME = salt['pillar.get']('static:fleet_custom_hostname', None) %}
 
 {% if CUSTOM_FLEET_HOSTNAME != None %}
-   {% set HOSTNAME = {{ CUSTOM_FLEET_HOSTNAME }}  %}
+   {% set HOSTNAME =  CUSTOM_FLEET_HOSTNAME  %}
 {% else %}
-   {% set HOSTNAME = {{ grains.host }}  %}
+   {% set HOSTNAME = grains.host  %}
 {% endif %}
 
 so/fleet:
diff --git a/setup/so-setup b/setup/so-setup
index 7f55c1e46..fbae5b15d 100755
--- a/setup/so-setup
+++ b/setup/so-setup
@@ -499,7 +499,7 @@ fi
 
 		if [[ $is_fleet_standalone && $FLEETCUSTOMHOSTNAME != '' ]]; then
 			set_progress_str 73 "$(print_salt_state_apply 'fleet.event_update-custom-hostname')"
-			pillar_override="{"static":{"fleet_custom_hostname":"$FLEETCUSTOMHOSTNAME"}}"
+			pillar_override=='"{"static":{"fleet_custom_hostname":"'$FLEETCUSTOMHOSTNAME'"}}"'
 			salt-call state.apply -l info fleet.event_update-custom-hostname pillar=$pillar_override >> $setup_log 2>&1
 		fi