Dave’s Hot Chicken Secures Major Investment from Roark Capital

Dave’s Hot Chicken Secures Major Investment from Roark Capital

Dave’s Hot Chicken, a rapidly growing restaurant chain known for its spicy offerings, has secured a significant investment from private equity firm Roark Capital. The merger deal announced last night values the combined company at about $1 billion. It’s a big deal for the fast-casual dining chain, which got its start in an L.A. parking lot just six years ago.

Founders Arman Oganesyan, Dave Kopushyan, and brothers Tommy and Gary Rubenyan started the restaurant in 2017. It became an immediate sensation, in part for its famed hot chicken. By means of franchising, the brand has grown to more than 300 locations. It attracts a fast-growing demographic of consumers who increasingly demand exotic, bold flavors and spice and heat in their food. Photo Credit, Pexels Bill Phelps joined the regional chain as CEO in 2019 after 25 years steering Wetzel’s Pretzels. He has played a key role in pushing this expansion in the first place.

Under Phelps’ leadership, Dave’s Hot Chicken has stayed true to its values by developing a distinctive business model. The company has withstood that pressure by refusing to play to industry standards, by choosing quality at the expense of speed. Phelps emphasized that the chain will not sacrifice its menu’s integrity or switch to cheaper ingredients, which distinguishes it from many competitors. This commitment has powered robust sales growth. Last year, U.S. sales more than doubled, increasing by 57% to over $600 million, according to market research firm Technomic.

Roark Capital’s investment will enable the concept to significantly increase its store opening pace and capitalize on the strong demand for the brand. According to Phelps, the company plans to grow to 4,000 total locations globally within the next 10 years. This ambitious plan comes in direct response to consumer demand for more adventurous, spicier food. It further underscores the brand’s data points and strategic shift to focus on an elevated menu.

After the transaction closes, the co-founders will still be key players in driving the company forward. Oganesyan, Kopushyan and the Rubenyan brothers are dedicated to continuing the vision of Dave’s Hot Chicken into the future. Their leadership will be essential. They will lead the organization into this exciting new era of growth and transition the organization into a changing food environment.

To congratulate its hard-working staff, Dave’s Hot Chicken is handing out millions in bonuses. This new initiative will extend to all IT-related jobs at the company. Phelps creatively developed this program to incentivize and acknowledge stellar team players. Bonuses will go out to all, from call center employees to restaurant shift supervisors. Like many competitive talent strategies, these initiatives drive performance and help retain staff. They are even more important during this time of rapid growth.

In spite of this success, the path for Dave’s Hot Chicken hasn’t been all smooth sailing. In fact, some of its spicier menu offerings, including the Reaper, have raised quite a stir. The truth is, some customers have landed in the hospital after using them. Oganesyan recognized these events while noting that they result from consumer demand for bold tastes. Finding the right balance between pushing the envelope for adventurous eaters and making safety the brand’s first priority continues to be a tightrope walk.

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