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“Dave’s Hot Chicken is a great American success story”

“Dave’s Hot Chicken is a great American success story”

Food franchise veteran Bill Phelps is all fired up in his CEO role at Dave’s Hot Chicken. Here’s how he is building the brand into the In-N-Out of the hot chicken space.

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Interview by James Fell, editor of Global Franchise

As the co-founder of Wetzel’s Pretzels and an original investor in Blaze Pizza, Bill Phelps knows the secret ingredient to take a fast-rising, fast-casual concept like Dave’s Hot Chicken and growing it from cult favorite to national phenomenon.

This focus and keen eye for an exciting, emerging brand are what led Phelps and his affiliated investment group to take a 50 per cent stake in Dave’s Hot Chicken in 2019, and for him to take on the reins as CEO in the process. The star-studded investor group – the same one behind Blaze Pizza – also comprises fellow investors such as former California First Lady Maria Shriver, movie producer John Davis, and Red Sox owner Tom Werner, as well as actor Samuel L. Jackson and Good Morning America anchor and retired NFL player, Michael Strahan.

With an investment pedigree like that – just like with LeBron James’ much-publicized $1m investment in Blaze Pizza back in 2012 – everybody recognizes the sky-high potential for this hot chicken brand.

“The product is just spectacular and people are really excited about the opportunity for rapid expansion,” says Phelps. “We have lines around the block and order numbers through the roof despite a pandemic. I love the team we have put together to support the franchisees. The story of the founders and the humble beginnings are what make Dave’s Hot Chicken so unique.”

Started in 2017 by Dave Kopushyan, Arman Oganesyan, and brothers Tom and Gary Rubenyan as an East Hollywood parking lot-based pop-up, the band of childhood friends started developing an influential following around their plates of Nashville hot chicken tenders, sliders, fries and kale ‘slaw. Fast-forward to today, and the company has implemented an in-demand franchise concept with hundreds of units in development. “It’s a great American success story,” says Phelps. “I’m thrilled to be a part of it.”

All fired up

It’s the brand’s pared-back menu of “craveable” food items that is the big draw for consumers and investors alike, states Phelps, leading the fast-casual food guru to draw comparisons between Dave’s Hot Chicken and another California-based success story. “We’re the leader of the Nashville hot chicken category and the ‘In-N- Out of the chicken space’, due to our narrow and focused menu,” he says. “Our menu features chicken tenders topped with one of seven signature spice blends, sliders, and slides.”

Spicy chicken with exciting flavor profiles is one thing, but it’s the rapid development of the brand that’s really piquing the interest of the investor community. The brand launched its franchise offering in November 2019, and last year alone signed agreements with 25 new franchise owners for over 270 units, allowing it to expand its presence significantly in California and beyond, with openings throughout Colorado, Texas, Illinois, Michigan, North Carolina, Ohio, and Canada.

“Dave’s Hot Chicken is set to open at least 35 new locations in 2021 with plans to have an additional 300 units in development”

“Dave’s Hot Chicken is set to open at least 35 new locations in 2021 with plans to have an additional 300 units in development,” says Phelps. “There are also plans to expand our presence in Canada. We recently opened our first store in Toronto in January and the results were spectacular. We are now looking to open another 30.”

As with most fast-casual concepts, a multi-unit approach is behind the plans to drive the brand’s expansion. “Dave’s Hot Chicken currently has 25 franchise groups,” he says. “When it comes to finding new franchisees, the individual or group must have restaurant operations and multi-unit experience. The team is currently looking to attract larger multi-unit investors who are available to sign on for five to seven units. The ideal individual or group must also be seeking to diversify their existing portfolio and to be a cultural fit with the brand.”

Launching a franchise program during 2020 brought its challenges, but Phelps says the disruption caused by the pandemic was carefully and quickly navigated. “We were concerned when all of our indoor dining was closed mid-March,” he says. “However, we pivoted almost overnight and went from doing nine per cent of our business online pre- COVID to 65 per cent online in around four weeks. The franchisees and their teams adapted so fast and effectively that three weeks after the closing of dining rooms, our business was back to pre- COVID sales.”

Phelps notes that the pivot brought about by the pandemic will be long-lasting. “I think that the fast-casual will start to return to normal by mid-summer as the vaccines are rolled out to most Americans,” he explains. “But in-restaurant dining will never get back to pre-COVID levels. We’re proud to unveil our new drive-thru options, as well as curbside pickup and third-party delivery at all locations.”

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