Latest news with #Oganesyan
CNBC
6 days ago
- Business
- CNBC
3 friends launched chicken finger stand in LA parking lot with $900—it just sold in deal worth ‘close' to $1 billion
Apparently, convincing your friends to sell chicken can pay off — big. At 24, Arman Oganesyan was making $50 a night as a stand-up comedian with no restaurant or business experience when he pitched the idea of selling Nashville hot chicken to his childhood friends Dave Kopushyan and Tommy Rubenyan. Pooling $900 in savings, they launched Dave's Hot Chicken in 2017 as a pop-up in a Los Angeles parking lot. On Monday, private equity firm Roark Capital bought a majority stake in Dave's Hot Chicken, which is now a franchise business with more than 300 locations, in a deal worth "pretty close" to $1 billion, Dave's CEO Bill Phelps said on CNBC's "Squawk Box." "It's insane what we did," Phelps said. "The vision of these guys was just great. Arman Oganesyan was the founder. A high school dropout, but a marketing genius, and he created all of this in his head." But the idea nearly didn't happen. Kopushyan — a chef who had worked at Michelin-starred restaurants — initially told Oganesyan, "'Chicken? First of all, I don't even like chicken,'" Oganesyan said on the "How I Built This Podcast with Guy Raz" in 2024. It took some convincing, but with Kopushyan eventually on board, they went to their other friends looking for investors, Oganesyan said — everyone turned them down, except Tommy Rubenyan. Oganesyan said the trio scraped their savings together and got to work developing a Nashville hot chicken recipe, drawing inspiration from popular Los Angeles restaurant Howlin' Ray's, which has two locations. The friends spent months eating at various fried chicken joints, watching documentaries on chicken and experimenting in Kopushyan's kitchen, Oganesyan said. Some of their "crazier" ideas, like using gummy bears in the recipe, were struck down; others came unexpectedly, Oganesyan said, like using pickle juice in the brine, which they discovered by accident after tossing leftover chicken into a nearly-empty pickle jar. "It was a lot of belief with a lot of doubt," Oganesyan said. Eventually, they were ready to start selling their fried chicken tenders, but couldn't afford to buy a food truck, so they set up in a parking lot in LA's East Hollywood neighborhood with a $150 fryer, a heat lamp for fries and tables they borrowed from their parents, Oganesyan said. They made $40 the first night they opened from four meals they sold to Oganesyan's girlfriend and three of her friends, he said. But five days into opening, they caught the attention of former Eater Los Angeles food critic Farley Elliott through word of mouth. From there business boomed, and Oganesyan said they began selling out and making "a few thousand" dollars every night in a matter of months. At the end of their second month, they paid themselves for the first time, each taking home around $10,000 in cash, Oganesyan said. "It was the most money I'd ever seen in my life," he added. A year later, they brought in Rubenyan's brother, Gary, who helped them open their first storefront. In 2019, an investor group, which included Dave's current CEO Bill Phelps, actor Samuel L. Jackson, Good Morning America anchor and former NFL player Michael Strahan, movie producer John Davis and Red Sox owner Tom Werner, bought a stake in the company with plans to franchise the brand, the company told Nation's Restaurant News in 2019. Phelps, who has served as CEO since then, has expanded the chain's presence nationally and internationally, adding locations in Canada, the United Kingdom and the Middle East, he said on "Squawk Box." In the U.S., Dave's brought in more than $600 million in systemwide sales last year, up 57% from the year before, according to data from market research firm Technomic. This year, the company expects to bring in $1.2 billion in sales and is currently "extremely" profitable both at the franchise level and in its corporate operations, Jim Bitticks, president and COO of Dave's, told CNBC Make It. While the financial terms of the deal have not been disclosed, Oganesyan, Kopushyan, the Rubenyan brothers and Phelps will retain minority stakes in the company and continue in their current roles, CNBC reported on Monday. "The timing was absolutely right," Phelps told CNBC. "We were at an inflection point where we could get an incredible valuation, and yet there was still significant upside for Roark, so that's the perfect place to be."
CNBC
02-06-2025
- Business
- CNBC
Private equity firm Roark Capital invests in fast-growing restaurant chain Dave's Hot Chicken
Private equity firm Roark Capital has bought a majority stake in Dave's Hot Chicken, the company announced on Monday. Financial terms were not disclosed, but Dave's CEO Bill Phelps said on CNBC's "Squawk Box" that the reported $1 billion valuation for the deal is "pretty close." Since its founding in a Los Angeles parking lot in 2017, the fast-growing chicken chain has expanded to more than 300 locations by franchising its restaurants. Dave's U.S. sales soared 57% last year and surpassed $600 million, according to data from market research firm Technomic. Roark's investment follows a boom for chicken-focused restaurants, fueled by the so-called "Chicken Sandwich Wars" sparked by Popeyes in 2019. A wave of quickly expanding upstarts, like Dave's and Raising Cane's, have challenged legacy chains like Yum Brands' KFC, further boosting the category's growth. Dave's success also comes as younger consumers seek more heat in their food. The chain offers a diverse range for the chicken's "hotness" — from no spice to "Reaper," which requires the orderer to waive liability. The Reaper has sent at least one customer to the hospital; co-founder and Chief Business Officer Arman Oganesyan said the diner who signed the waiver offered a bite to her boyfriend, who couldn't handle the heat. But the restaurant's menu overall is small and focused on its oversized chicken tenders, which can also be inserted into a bun to make sliders. According to Oganesyan, its sliders are the perfect size to eat with one hand, leaving the other free to scroll on a phone. Phelps, who previously led Wetzel's Pretzels for 25 years, joined Dave's in 2019, less than two years after its founding. Co-founders Dave Kopushyan, Tommy Rubenyan and Oganesyan have stuck around and plan to continue in their roles after the deal closes. Along with Phelps, they're also holding onto their equity as minority stakeholders. "The timing was absolutely right," Phelps said. "We were at an inflection point where we could get an incredible valuation, and yet there was still significant upside for Roark, so that's the perfect place to be. "Roark has the ability to use their international supply chain to reduce the costs. And it's a better deal for the franchisees, but they also have the international ability to grow with all of their franchisees around the world, so we have an opportunity to blow this thing up very quickly," he added. Looking ahead, Dave's could reach up to 4,000 locations worldwide over the next 10 years, Phelps said. So far, Dave's has resisted conforming to industry practices, like focusing on speed of service, switching to cheaper ingredients or expanding its short menu. Sticking to many of its founders' original practices allowed the chain to keep the quality of its signature chicken high even as it opens new restaurants every day, Dave's COO and President Jim Bitticks said. Executives don't expect that to change under Roark's ownership either. "How did we get to that billion-dollar brand status? We leaned into what they created, rather than adjusting it or changing it based on conventional wisdom," Bitticks said. The deal marks Roark's first restaurant deal since the firm's blockbuster purchase of Subway for a reported $9.6 billion in 2023. Roark's portfolio also includes two holding companies, Inspire Brands and GoTo Foods, that collectively own more than a dozen restaurant brands, like Arby's, Dunkin' and Cinnabon. Roark has been keeping an eye on Dave's since the early days. "They came to our 15-store grand opening," Oganesyan said. "We'd see them at conferences all the time. They understood the potential of the brand. ... When the time came where we needed that new investor to come in, they were some of the only people on our minds. Early Dave's investors aren't the only ones making money from the deal. Masterminded by Phelps, the company plans to give dozens of its employees, from its support center team to restaurant assistant managers, significant bonuses. "He literally made 20 millionaires," Oganesyan said.
