America’s Hottest Chicken Chain Started With $900—and Just Sold For $1 Billion
As soon as you walk through the door of a Dave’s Hot Chicken, you see all the things that make it unlike other restaurant chains. The simple menu. The walls covered in murals and splattered with graffiti. The range of spice levels topped by “Reaper,” which is so hot that it requires a waiver.
“You acknowledge that eating the Reaper can cause you harm,” the paperwork warns, “including, but not limited to, bodily injury, property damage, emotional distress, or even death.”
But what really makes Dave’s Hot Chicken different from other restaurant chains with hundreds of locations are the two words on every door: “Est. 2017.”
This might just be the unlikeliest part of a billion-dollar chicken brand that was founded in a parking lot by a vegetarian chef.
One night less than a decade ago, three childhood friends pooled their savings and began selling Nashville-style hot chicken in Los Angeles. They couldn’t afford a food truck, so they invested their $900 in the essentials: a few plastic tables, an E-Z Up portable canopy tent, a fryer. On their first night of business, they sold four meals of tenders, fries and kale slaw for a total of $40.
It was the beginning of their improbable empire—and the company they just sold in a $1 billion deal.
I asked Dave’s co-founder Arman Oganesyan what he would have said if someone had told him back then that his company would be worth that much today.
“I want what you’re smoking, dude,” he said.
Since then, so much has happened in so little time that you might not have ever heard of Dave’s Hot Chicken. In just eight years, this California-based company with a rubber chicken as its mascot expanded to 315 locations across the country and around the world with plans for 150 more in the U.S., Europe and the Middle East. Over the past two years, sales tripled and crossed $600 million, according to research firm Technomic. This year, the company projects sales to double again.
And this past week , a private-equity firm gobbled up Dave’s Hot Chicken.
In food, there are plenty of upstart chains and niche brands that have emerged from out of nowhere and suddenly felt like they were everywhere. But even as restaurant businesses are growing faster than ever before, few have ever grown as fast as Dave’s Hot Chicken.
“They’re kind of like a quintessential modern-era restaurant chain,” says Jonathan Maze, the editor of Restaurant Business magazine.
Dave’s Hot Chicken had all the ingredients for success: a highly specific but increasingly valuable market, millions of followers on social media and a product they could devour, plus the right amount of pluck—and perfect timing.
That’s because no food is hotter right now than chicken . Last year, sales at U.S. chain restaurants grew 3%, according to Technomic. Burgers were up 1%. Chicken was up 9%. And at fast-casual chicken chains—think Raising Cane’s, Wingstop and Dave’s Hot Chicken—sales increased by a mouthwatering 24%.
No wonder so many restaurants are being eaten by private equity. The firm with the biggest appetite for buyouts these days is Roark Capital, whose portfolio includes Dunkin’, Subway, Arby’s, Sonic and Buffalo Wild Wings—and now Dave’s Hot Chicken.
Named after the protagonist of “The Fountainhead,” Roark was scouting its latest acquisition as early as 2021, when partners attended the opening of the chain’s 15th store. Over the next four years, Roark paid such close attention to the restaurant that, as my colleague Heather Haddon reports, Dave’s executives joked they had a private-equity stalker.
But if Dave’s Hot Chicken hasn’t caught your attention yet, it’s because Dave hasn’t been making hot chicken for very long.
As it turns out, Dave Kopushyan wasn’t eating chicken of any kind when his friend Arman Oganesyan hatched a plan for them to start a company together. At the time, the guy whose name would be on the door was so committed to his job at a vegetarian restaurant that he’d given up meat altogether.
“If you apply that same dedication to chicken,” Oganesyan told him, “we’ll kill it.”
A chef who trained at gastronomic meccas like the French Laundry, Kopushyan, now 34, came from the world of fine dining. Oganesyan, 33, was a stand-up comedian more familiar with the world of fast food.
“We have completely opposite palates,” he said. “I would eat Lunchables. He would eat caviar.”
Once they teamed up, their initial R&D consisted of stuffing their faces with hot chicken. Without even leaving Los Angeles, they could taste the finest products in the business, so they stood in line at the Howlin’ Ray’s food truck and studied the fare of Gus’s World Famous Fried Chicken.
In fact, the Los Angeles Times review of Gus’s included a photo from inside the restaurant—and in the background, you can spot Kopushyan and Oganesyan conducting market research.
When they weren’t consuming fried chicken, they were on YouTube consuming information about fried chicken. After months of experimenting with recipes, they discovered that pickle juice was the key to the optimal brine, and Dave’s Hot Chicken opened for business in 2017.
At first, there wasn’t much of it.
With a small fryer, a heating lamp and sheet trays, they pitched a canopy tent in an empty parking lot on Hollywood Boulevard across the street from a flower shop owned by the parents of Tommy Rubenyan, the third co-founder. That week, they drummed up interest by chopping up tenders and passing out samples in the line for a nearby burlesque club called Jumbo’s Clown Room.
But they didn’t have to manufacture attention for long. Dave’s was only a few nights old when the food website Eater raved about this new chicken stand with tenders that “might blow your mind.” The next day, there was a line waiting for them in the parking lot and they realized: We’re going to need a bigger fryer.
The only thing harder in the restaurant business than building hype is building on it. But even when Dave’s was in a tent, the founders dreamed of a franchise model and structured the entire concept of the restaurant with that goal in mind. They just couldn’t have predicted how quickly they would get there. “Our goal,” Oganesyan said, “was to have a single store in a few years.”
They opened their first store within months. In a few years, they would have hundreds.
The next crucial moment came when a man named John Davis walked into that first store and left a cryptic Post-it Note asking the founders to call him. When they did, they found out that he was a Hollywood producer who had previously invested in chains like Wetzel’s Pretzels and Blaze Pizza—and now he wanted to invest in Dave’s Hot Chicken.
In 2019, he led a group that took a roughly 50% stake in Dave’s. The company’s founders knew what they wanted to do—and they knew they needed someone who had already done it. One of their investors was Bill Phelps, 69, who founded Wetzel’s Pretzels with Rick Wetzel and served as its chief executive for decades.
When he took over as CEO of Dave’s Hot Chicken, it would be his second time running a chain named after someone else.
As CEO, Phelps has taken the business lessons of pretzels and pizza and applied them to poultry.
The most important part of that playbook was the page on franchising strategy. At Wetzel’s, he franchised to anyone. At Blaze, he learned to pick experienced operators who planned to open multiple locations. At Dave’s, franchisees commit to launching more than five and as many as 25 restaurants. The chain now has a plan to develop more than 1,000 locations in the next five years.
But for everything that has changed about the company, Dave’s Hot Chicken stores have remained the same.
Dave Kopushyan is still cooking up recipes as chief culinary officer, while Oganesyan is responsible for the vibes as chief brand officer. The limited menu still offers four meal combinations and seven degrees of spice, including the one that requires legal clearance. “I don’t recommend people order it,” Phelps says of the Reaper, which accounts for 1% of sales. And there is that “Est. 2017” on every door.
It’s a reminder that when they started out, their $1 billion company didn’t even have a door.
Write to Ben Cohen at ben.cohen@wsj.com
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