The Unlikely Group Getting Rich Off Dave’s Hot Chicken’s $1 Billion Deal

Forbes: Dave's Hot Chicken's $1 Billion Deal

Key Concepts:

• Dave's Hot Chicken: Nashville-style spicy chicken chain.
• ROR Capital: Private equity firm that acquired 70% of Dave's Hot Chicken.
• Systemwide Sales: Total sales across all locations of a franchise.
• Valuation: Estimated worth of a company.
• Equity Stake: Percentage of ownership in a company.
• Pre-tax Earnings: Earnings before taxes are deducted.

The Unlikely Group Getting Rich

The Forbes video focuses on the financial success of Dave's Hot Chicken, culminating in a $1 billion deal where ROR Capital acquired 70% of the company. The video highlights the diverse group of individuals who profited significantly from this deal, including the founders, CEO, and early investors.

The Founders' Journey

• Humble Beginnings: Dave Capushian and Arman Oanessian, along with Tommy and Gary Rubenian, founded Dave's Hot Chicken in 2017 as a pop-up in an East Hollywood parking lot. All four were high school dropouts and children of Armenian immigrants.
• Initial Struggles: The founders initially struggled to raise $900 to launch their first pop-up.
• Cult Following: Their cayenne-coated Nashville-style chicken, with six spice levels (the hottest requiring a waiver), quickly gained a cult following.
• Social Media Hype: Organic social media engagement, particularly on TikTok, generated millions of views weekly.
• Celebrity Investors: Rapper Drake and other celebrities invested in the brand, further boosting its popularity.
• Financial Windfall: Oanessian and Capushian each owned roughly 10% of the business before the sale and sold about 80% of their stakes, resulting in approximately $80 million pre-tax each. Oanessian confirmed the money was in their accounts.
• Previous Cash Out: In 2018, the founders sold half of the business (with only one location at the time) for $2 million to an investor group led by Bill Phelps and John Davis.

The Role of Bill Phelps and John Davis

• Experienced Leadership: Bill Phelps, the 69-year-old CEO, joined Dave's Hot Chicken in 2019 after leading Blaze Pizza and Wetszel's Pretzels. Jim Biddick, another Blaze alumnus, serves as President and COO.
• Early Investment: Phelps and Hollywood producer John Davis invested early in Dave's Hot Chicken. Davis stated, "I fell in love with The Boys there was something about them this is a $1 billion company."
• Growth Catalysts: Phelps and Davis were instrumental in scaling the business rapidly.
• Significant Returns: Davis stated that he and Phelps made 250 times their initial investment.
• Ownership Stakes: Phelps and Davis were the largest shareholders at the time of the sale to ROR, with roughly equal stakes. Phelps sold half of his shares but retained some ownership.
• Employee Bonuses: Phelps and his investment group allocated a portion of their earnings to create a bonus pool for Dave's executives and employees.

Employee Benefits

• Millionaire Creation: Approximately 20 Dave's Hot Chicken employees became millionaires as a result of the deal.
• Substantial Bonuses: Biddick stated that the average bonus for support staff, including assistant restaurant managers, was about $100,000.

Current Status

• Systemwide Sales: Dave's Hot Chicken generated $620 million in systemwide sales in 2024.
• Global Presence: The chain has over 300 locations worldwide.
• ROR Capital Ownership: ROR Capital now owns 70% of Dave's Hot Chicken.

Conclusion

Dave's Hot Chicken's $1 billion deal represents a significant success story for its founders, CEO, early investors, and employees. The video highlights the brand's organic growth, fueled by social media and celebrity endorsements, and the strategic leadership that transformed a small pop-up into a global phenomenon. The financial rewards were distributed widely, creating millionaires among both executives and rank-and-file employees.