With each percentage point worth a cool $10 million, even a 5% stake would be worth $50 million
Like Toronto rapper Drake, the founders of Dave’s Hot Chicken started from the bottom. This month, they may have all cashed in together.
Dave’s Hot Chicken has become one of the fastest growing restaurant chains in America. With over 700 locations in the pipeline and sales growth of 156% in 2022 this hot chicken sensation has taken the country by storm. But how did a parking lot pop-up started by four friends with a portable fryer become a national phenomenon? The answer may surprise you – it involves one of the biggest names in music Drake.
In this article, we’ll uncover the details behind Drake’s involvement with Dave’s Hot Chicken We’ll look at how he became a major investor in the company, what motivated his interest, and what it means for the future of the brand.
The Origins of Dave’s Hot Chicken
Let’s start at the beginning. Three friends, Dave Kopushyan, Arman Oganesyan, and Gary Rubenyan, opened Dave’s Hot Chicken in East Hollywood in early 2017. The first thing they did was buy a portable fryer for $900 and start selling spicy fried chicken tenders and sliders in a parking lot.
The proprietary hot chicken recipe was a big hit. Just 9 months later in 2017, Dave’s Hot Chicken opened its first brick-and-mortar location in East Hollywood. They began riding the hot chicken wave as the trend swept across LA and the nation.
Expanding Through Partnerships
In 2019, Dave’s Hot Chicken inked a licensing deal with the original investors behind Blaze Pizza to grow the brand nationally. This set the stage for massive expansion – with plans for 280 locations across the continent.
But rapid growth requires major capital and investors. That’s when Drake entered the picture.
Drake’s Interest in Dave’s Hot Chicken
In July 2021, Drake’s team contacted Dave’s Hot Chicken to cater his private event after winning Billboard’s Artist of the Decade award. Drake loved the food so much that he expressed interest in partnering up with the company as an investor.
According to co-founder Arman Oganesyan, Drake acquired a “very significant stake” in Dave’s Hot Chicken to become a major investor. While the exact details weren’t disclosed, Oganesyan stated that Drake has a “large stake” in the company.
Drake was interested in the brand because of how Dave’s Hot Chicken got started, how quickly it grew, and, of course, the tasty, spicy fried chicken. His team really vibed with the Dave’s Hot Chicken partners. And the rest is history.
What Drake’s Investment Means for Dave’s Hot Chicken
Having a celebrity investor like Drake on board is a huge boost for Dave’s Hot Chicken. Drake will help raise the brand’s profile and popularity through his massive fanbase and social media presence.
Oganesyan says that Drake’s team also wants to work together to give customers cool new experiences. Drake won’t have any signature menu items or sandwiches, but his ideas and input will help make Dave’s Hot Chicken a better brand.
Drake isn’t the first celebrity to invest in the company – actor Samuel L. Jackson and Boston Red Sox chairman Tom Werner are also stakeholders. But Drake’s star power is unmatched. And his involvement will likely accelerate Dave’s Hot Chicken’s meteoric growth and success.
Dave’s Hot Chicken Continues Expanding
In 2022, Dave’s Hot Chicken was named the fastest growing restaurant chain in America by Technomic. The company saw a mind-blowing 156% increase in sales compared to 2021. They now have over 200 million organic views on TikTok – the highest of any national fast casual brand.
Dave’s Hot Chicken is showing no signs of slowing down. For their sixth anniversary, they went back to the East Hollywood parking lot pop-up where it all began. The company wants to open 40 more locations in 2022, bringing their famous Nashville hot chicken to cities all over the United States.
The Story Behind the Sensational Spice
So how exactly did Dave’s Hot Chicken create their famously tasty spicy chicken recipe? The signature spice blend took months to perfect. They went through over 150 iterations before landing on the final spice mix.
Dave’s Hot Chicken starts with fresh, never-frozen chicken that gets hand-breaded twice. The chicken then goes into their proprietary blend of spices and seasonings. With 7 spice levels ranging from “No Spice” to “Reaper” (which requires a waiver!), guests can customize the kick.
The recipe balances flavor and heat – delivering spicy chicken that customers line up for. The food is so addictive that even celebrities like Drake have taken notice. Now he’s helping expand Dave’s Hot Chicken to satisfy America’s insatiable appetite for this scorching hot chicken.
The Future Looks Hot for Dave’s Hot Chicken
Dave’s Hot Chicken has one of the most remarkable success stories in recent restaurant history. Started by four friends in a parking lot, this homegrown LA brand has caught fire across the nation.
With Drake now in the mix as a major investor, Dave’s Hot Chicken is poised for even faster growth. His guidance and input will help enhance the brand’s offerings and experiences. More celebrity fans will surely take notice.
America’s hottest chicken sensation shows no signs of cooling down. Dave’s Hot Chicken has found the secret recipe – crazy good food, smart expansion, and now celebrity sizzle. We can’t wait to see what’s next for this parking lot pop-up turned national phenomenon. One thing is for certain – Dave’s Hot Chicken is finger lickin’ good!
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The famous chicken chain, which has the singer as an investor, sold a 70% majority stake to the private equity firm Roark Capital on June 2. The deal was said to be worth $1 billion, but the exact terms were not made public. Article content.
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Atlanta-based Roark is known for its portfolio of major restaurant brands including Subway, Arby’s, Dunkin’ Donuts, Baskin Robbins and Buffalo Wild Wings, among others. Article content.
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The sale capped a dramatic rise in the fortunes of childhood friends Arman Oganesyan, Dave Kopushyan, Tommy Rubenyan and Gary Rubenyan, who pooled US$900 together in 2017 to start a pop-up selling Nashville-style chicken out of a parking lot in Los Angeles. Article content.
After six months of hour-long lines caused by word of mouth and social media, the company opened its first real store in an East Hollywood strip mall and began selling its tenders, sliders, fries, and kale slaw. Article content.
There are now 315 Dave’s Hot Chicken restaurants in the US, Canada, the UK, and the Middle East, all thanks to franchising that began eight years ago. The chicken chain has grown thanks to a cult following and a group of famous investors, such as Drake, who bought a small stake in the company in 2021. Article content.
There’s no doubt Drake’s hype and social media buzz — the rapper has 142 million Instagram followers — has played a part in Dave’s Hot Chicken’s meteoric ascent. For the last three years, the superstar has celebrated his birthday on Oct. 24 by sponsoring a free chicken giveaway at Dave’s Hot Chicken locations in Toronto.Article contentArticle content
The latest valuation also marks a big jump from Dave’s Hot Chicken’s first deal in 2019, when the four co-founders sold a 50 per cent stake in the business for $2 million to a group of investors led by Bill Phelps, who became the company’s chief executive, and movie producer John Davis.Article contentRead More
The investor group included such celebrities as actor Samuel L. Jackson, journalist Maria Shriver, television host and former NFL player Michael Strahan and Boston Red Sox chairman Tom Werner. The four co-founders reportedly split the remaining 50 per cent stake.Article content
At the time of the Roark Capital deal, Forbes reported that Phelps and Davis were the company’s largest shareholders with “roughly equal stakes” (though both declined to reveal exactly how much they owned). Each of the four co-founders owned around 10 per cent of the business and sold 80 per cent of their stakes, netting a cool US$80 million each (before taxes), according to Forbes.Article content
So, how much did Champagne Papi make off of the deal?Article content
Bloomberg reported that Drake was among the company’s biggest investors when he bought his minority stake in 2021, but his exact ownership percentage and how much he paid for it has never been disclosed.Advertisement 1This advertisement has not loaded yet.Trending
If the founders owned a combined 40 per cent (10 per cent each) before the deal and Phelps and Davis were the biggest shareholders with roughly equal stakes, Drake would have to own less than 20 per cent of the chicken chain, with the likely total being much lower than that. With each percentage point worth a cool US$10 million, even a five per cent stake would be worth US$50 million.Article content
The Financial Post reached out to Dave’s Hot Chicken for comment about whether Drake sold any of his shares as part of the deal, but did not receive a response.Article content
Dave’s is not Drake’s first foray into the food world, but it appears to be his most successful restaurant investment to date. The rapper has opened two Toronto eateries in the last decade: Frings, a venture with chef Susur Lee and his sons that opened in 2015 and closed three years later, and Pick 6ix, a sports bar that opened in early 2018 and closed by the end of 2019.Article content
The rapper has also reportedly invested in green tea retailer MatchaBar and plant-based chicken company Daring Foods Inc. (the same year he bought his stake in Dave’s) and collaborated with U.S. entrepreneur Brent Hocking to launch his own whiskey brand (Virginia Black) and champagne (Mod Sélection).Article content
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Drake & Dave’s Hot Chicken
FAQ
What food chain does Drake own?
Drake’s early investment in Dave’s Hot Chicken has reportedly earned him between $100 million and $300 million after the chain sold to Roark Capital (owner of Subway, Dunkin’, and Arby’s) for $1 billion .
Does Drake own a restaurant in Los Angeles?
Today, it was announced that Drake has taken on a significant ownership stake in the growing Los Angeles-based restaurant chain Dave’s Hot Chicken. Sep 20, 2021.