OPERATIONS
WHY DAVE’S HOT CHICKEN WANTS TO BE THE NEXT WINGSTOP As the fast-casual Dave’s moves to its next level of growth with a $1 billion private-equity deal, some see an IPO in its future. But can the chain maintain the magic that brought it this far?
BY LISA JENNINGS
E very night, in parking lots across Los Angeles, there are probably countless entrepre- neurs attempting to follow the Dave’s Hot Chicken path to success. The fast-casual chain got its start in 2017, when three friends decided to try making Nashville-style hot chick- en as a popup. They scraped together $900 and a couple of portable fryers and coolers. People seemed to like it, so, just a few days in, they invited a writer from Eater Los Angeles out for a taste. That editor, Farley Elliott, came, and it apparently blew his mind, as told in the video below. Cut to: Early June. It was announced that Dave’s Hot Chicken was acquired by private-equity firm Roark Capital Partners in a deal valued at about $1 billion. While terms were not disclosed, it seems likely those partners would have no trouble scraping up $900 now. But the eight-year journey since Ar- man Oganesyan, Dave Kopushyan and Tommy Rubenyan created the brand is not easily replicable. And now, as Dave’s Hot Chicken moves into a next level of growth, it remains to be seen whether the brand can maintain that certain magic that has propelled the brand so far. The social media world in which Dave’s has thrived is deeply suspicious of private-equity-owned brands. But Oganesyan, Dave’s lively chief branding officer—and a high-school dropout who CEO Bill Phelps calls a marketing genius—doesn’t think much
about Dave’s will change. In fact, the leadership team will remain in place. What Roark brings to the table, in addition to capital, is a portfolio of es- tablished franchise operators, particu- larly international franchisees. Dave’s president Jim Bitticks sees a huge op- portunity for the brand globally, first in Europe, and later in Asia, where KFC has been embraced. In addition, Dave’s has only a handful of nontraditional locations domestically. But the simple menu of chicken tenders, sandwiches and sliders at various spice levels seem ideal for airports, college campuses and malls. Dave’s has 315 units open and an- other 155 expected to open this year at least—potentially up to 175, Bitticks said. About 1,170 franchise commit- ments have been sold, mostly domestic. Dave’s has been one of the fastest growing brands for several years. And that speed has been necessary, in part, because so many other (very similar) hot chicken chains are also racing to plant their flags in various regions, in - cluding brands like Angry Chickz, Hot Chicken Takeover, Hangry Joe’s Hot Chicken and many others. Phelps, the co-founder of Wetzel’s Pretzels who also grew Blaze Pizza with many of the same investors now in Dave’s, got in early (2019) to launch franchising. At the time, people said Dave’s founders had “sold out,” Oga- nesyan said. But, in fact, the result was a potent
DAVE’S HOT CHICKEN TENDERS AND SANDW | PHOTO COURTESY OF DAVE’S HOT CHICKE
mix of investors (Phelps et al.) who knew how to scale brands, and innova- tors (Oganesyan et al.) who knew how to reach a young audience. “What has made Dave’s successful is that the management team didn’t change what the founders created,” said Bitticks. “What we actually did was we leaned into what they cre- ated.” to satiate investors’ appetites. Thus, chains like Dunkin’ or the Cana- dian brand Tim Hortons devote a lot of their attention to coffee, because a con- sumer will come in a lot more often for a beverage than for a glazed doughnut. Krispy Kreme was never able to make that pivot. And it has a second- ary problem in that its doughnuts taste best when they’re fresh out of the fry- er, meaning the company cannot easily shift to an offsite doughnut production model like the others. The company cannot quite gener- ate enough sales to make a tradition- al doughnut shop chain work, at least enough to justify a big national chain, so it must sell its doughnuts off-site. Thus, it became the logistics company. It had long justified that model by arguing its top problem was a lack of access to its doughnuts. Yet now it’s cutting DFD doors because they don’t generate enough sales to make a prof- it. Access is only so much of a problem,
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RESTAURANT BUSINESS JULY 2025
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