Winner Winner Chicken Dinner: Roark Capital Acquires Dave's Hot Chicken

Charlie Munger always advised investors to "stay within your circle of competence," and rest assured, I’ll be staying in my circle of competence in this blog. It might not be the first skill listed on a resume for investment banking, but as someone whose most intensive due diligence involves late-night food runs and taste-testing spicy tenders, I think I might know a thing or two when it comes to all things chicken.

So, imagine my intrigue when I find out about four guys barely older than myself, armed with little more than $900, a fryer, and a heavy splash of entrepreneurial courage, turned a single parking-lot pop-up into one of the hottest (literally) fast-casual chains in America. In less than eight years, Dave’s Hot Chicken scaled from late-night Instagram phenomenon to a $1 billion acquisition target for Roark Capital, the private equity powerhouse behind household names like Subway, Dunkin’, and Arby’s. Officially on June 2nd, 2025, Roark Capital bought a majority stake in Dave’s Hot Chicken at what is estimated to be a $1 billion valuation.

On paper, this reads like the dream startup journey: a scrappy group of childhood friends with a simple yet timeless menu item, celebrity endorsements from the likes of Drake and Samuel L. Jackson, and ultimately, a payday worthy of Silicon Valley envy. But beneath the surface, the Dave’s story offers much deeper insights about today’s consumer market dynamics, the risks and rewards of franchise-driven growth, and the careful balancing act of sustaining authentic brand momentum while scaling under corporate ownership.

In this blog, we’ll unpack Roark Capital’s billion-dollar acquisition of Dave’s Hot Chicken, exploring how private equity is increasingly chasing viral consumer brands, the strategic rationale behind paying top-dollar for this Gen Z darling, the history of franchising, and finally the formidable challenges ahead for Dave’s and Roark.

Otherwise, from a personal perspective, covering this deal is a chance to merge my two passions: understanding the complex strategic dynamics driving consumer M&A, and sampling dangerously spicy chicken sliders. Thankfully, at least one of those areas definitely sits squarely within my circle of competence.

Company Overview

Dave’s Hot Chicken

Long before selling billion-dollar stakes and opening hundreds of locations around the country, the Dave’s Hot Chicken story began as humbly as imaginable with just a makeshift pop-up stand in a dimly lit parking lot in East Hollywood. In 2017, three childhood friends in their 20s scraped together $900 to launch a humble pop-up serving Nashville-style hot chicken out of a tent in East Hollywood. One founder, Arman Oganesyan, was a 24-year-old stand-up comedian making just $50 a night when he pitched the hot chicken idea to his buddies Dave Kopushyan (a trained chef) and Tommy Rubenyan. With just $900 and a chicken dream, the three of them borrowed tables and chairs from family, bought a single portable fryer, and began serving their signature Nashville-style hot chicken tenders. Thanks to Instagram hype, word spread fast as curious foodies showed up, snapped pics of the fiery chicken, and told their friends. Within days, the stand drew long lines, and a rave Eater LA review (“Might Blow Your Mind”) supercharged the buzz. The team soon added Gary Rubenyan, Tommy’s brother, as a fourth partner, and by late 2017, they opened their first brick-and-mortar shop in a strip mall. The first permanent Dave’s Hot Chicken location was an instant hit, with lines wrapping around the block nightly.

The origin story of Dave’s is now lore: a group of young friends turned a $900 gamble and a killer hot chicken recipe into one of America’s fastest-growing restaurant concepts. What’s more is that not one of the founders had any corporate backing or business roadmap beyond a spicy menu and an Instagram account, but what they do have is a ton of grit and a little luck. Crucially, they also had a product that hit on two big consumer obsessions— fried chicken and intense flavor. Nashville-style hot chicken, juicy fried chicken doused in tongue-tingling spice, was just starting to explode beyond its Southern roots in the late 2010s, and Dave’s rode that wave. By focusing on a simple menu of just tenders, sliders, fries, and sides with customizable spice levels from “No Heat” to “Reaper” and high-quality execution, Dave’s earned cult status among heat-seeking foodies. Fans would wait hours for its cayenne-dusted tenders and drench everything in the chain’s signature creamy sauce. This fervent demand allowed Dave’s to charge a relatively high-ticket price, with CEO Bill Phelps noting that the “average check is really high” for fast-casual chicken, supporting strong unit economics.

Yet, in this almost utopian startup story, despite the founders having no previous business experience, there are also hints at surprisingly sharp business instinct. Rather than risking the treacherous leap from overnight sensation to sustainable national chain on their own, the young founders embraced humility and pragmatism. In 2018, just a year after launch, Dave’s attracted the attention of a prominent investor group, who ironically, was a group known for another red-hot food startup, Blaze Pizza. In September 2019, the original investors behind Blaze, including Wetzel’s Pretzels founder Bill Phelps, movie producer John Davis, former First Lady Maria Shriver, Good Morning America host Michael Strahan, and actor Samuel L. Jackson, took a 50% stake in Dave’s Hot Chicken. This “all-star” team had propelled Blaze Pizza’s nationwide franchise rollout, and they saw similar potential in Dave’s. Importantly, Bill Phelps joined as CEO of Dave’s Hot Chicken in 2019, bringing veteran leadership to the youthful concept (Phelps co-founded Wetzel’s Pretzels in 1994 and was an early Blaze Pizza investor with a reputation for scaling franchises). Under the 2019 deal, the four original Dave’s founders kept the other 50% ownership and planned to become franchisees themselves for new stores, ensuring they’d remain deeply involved but also allowing more experienced industry veterans to help scale the company to new heights they may not have been able to climb to by themselves, not nearly as fast at least. For four friends who ran the entire business on the fly, it takes incredible courage and business instinct to give up full control of their business. Now, in retrospect, this could quite possibly be the most important inflection point that allowed Dave’s to become the phenomenon it is today and for its founders to all go from “zero” to multi-millionaires in just several years.

The four founders. Source: The Armenian Report

With the veterans taking over, Phelps and the Blaze crew immediately set about launching franchising. By licensing the brand to experienced operators, Dave’s began an explosive expansion. From just 2 locations in 2018, Dave’s grew to 118 stores by 2021. Then around 200 by late 2022. and 315 units by mid-2025. The growth has been predominantly through franchised outlets (as of 2024, about 85% of locations were franchise-owned). Impressively, the company has also sold development rights for over 900–1,000 future units, locking in a pipeline of new openings that could triple the chain’s size in the coming years.

To be honest, everything up to now sounds great, but feels like their strategy is pretty standard for an up-and-coming fast-casual chain, so here’s my question: What really separates Dave’s from all of its competitors?

Well, for one, it’s about the celebrity endorsements. Perhaps nothing amplified Dave’s rapid expansion as much as the authentic, equity-based backing of celebrities like Drake in 2021. Initially encountering Dave as a satisfied customer at a private event, Drake quickly moved beyond mere fandom, investing heavily in the brand. This genuine partnership instantly elevated Dave’s cultural cachet, especially among coveted Gen Z and Millennial audiences. Each year on Drake’s birthday (October 24), the chain celebrated by offering free sliders to customers, further deepening its connection with fans. Other celebrity stakeholders, like Samuel L. Jackson and Michael Strahan, similarly brought organic credibility, aligning their star power directly with the brand’s long-term growth.

Alongside celebrity backing was Dave’s shrewd use of social media. From its inception, Dave’s has leaned heavily on Instagram and viral marketing. The food’s visual appeal of crispy tenders drenched in vibrant red spice, gooey cheese dripping off sliders, made it an Instagram darling. The brand has stayed culturally relevant through collabs and digital engagement. For example, Dave’s built a “rabid fan base” much like Wingstop and Raising Cane’s, who tapped into memes, hip-hop culture, and even Post Malone collaborations. In short, Dave’s cultivated an authentic “cool” factor that money can’t easily buy.

However, attracting customers with celebrity backing and social media is one thing, and actually running the franchises well is another. Truth is, Phelps assembled an incredibly seasoned leadership team for what was a one-year-old company with himself as CEO, Jim Bitticks, who had senior operational experience and Blaze Pizza and Carl’s JR, as president and COO, and kept the founders engaged as brand ambassadors with “chef” Dave still overseeing menu innovation and Arman drives marketing as Chief Brand Officer. Thus, the company fostered a professional yet very much grounded culture even amid hypergrowth. When the Roark deal closed, Dave’s gave every manager and support-center employee a bonus about equal to a year’s salary as thanks, underscoring its commitment to the team. “If you lose the team, you lose the culture,” Phelps said, emphasizing that retaining the passionate people behind the product is critical.

Finally, the ability to grow as a franchise always comes down to franchisee economics, and Dave’s unit economics are exceptional. Dave’s stores reportedly average around $3 million in annual sales, with top locations hitting $5 million+ AUV, which is dramatically higher than many QSR peers. By 2025, the chain expects system-wide sales to reach $1.2 billion across around 400 units, implying an average unit volume in the mid-$3 million range. This is on par with Chick-fil-A and far above typical fast-food chicken rivals. Simply put, Dave’s high sales, combined with an efficient menu (limited SKUs, high throughput), translated to solid store-level profitability for franchisees. Dave’s charges a 6% royalty on gross sales and 5% marketing fees, standard in the industry, and new stores cost about $620k–$1.96 M to open, which is still a relatively modest investment given the volumes. Franchisees need a net worth of $5M and $2.5 M in liquid assets, ensuring they have ample resources to grow the brand. With many operators signing on for multi-unit deals, Dave’s has over 150 new locations slated to open in 2025 alone. CEO Bill Phelps highlighted that “the unit economics (for franchisees) are great,” the franchisees put up the growth capital, drawn by strong ROI, while corporate reaps the royalty stream. This asset-light expansion has allowed over 50% annual system sales growth, with Dave’s U.S. sales jumping 57% in 2024 to about $600 M, despite inflation headwinds.

Now, by mid-2025, Dave’s Hot Chicken had expanded to 315 locations across 4 countries: the U.S., Canada, the U.K., and U.A.E. An astonishing trajectory from just a parking lot stand eight years prior. Their annual system sales are on track to clear $1 billion, placing Dave’s among the fastest-growing restaurant chains in recent memory. Notably, the founders, once literally working the fryer in that parking lot, now own several Dave’s franchises themselves (the four founders collectively operate 7 of the stores as franchisees, according to Forbes) and remain the public “soul” of the brand. As Oganesyan reflected, “I feel like we are living the American dream. We started in a parking lot pop-up…” That dream got a $1 billion validation in 2025, getting one of the restaurant industry’s savviest private equity investors decided to buy in.

Roark Capital

“Franchising is not sexy. That’s why it works.” Said absolutely no one.

But even though Neal Aronson didn’t say those exact words, he’s lived them for nearly a quarter of a century through his investing approach with Roark.

You’ll know the name Roark if you’re on campus at Emory like me, after all, their office is just a few miles up Peachtree. But even if you don’t, you’ll recognize the brands that they own. Dunkin’ Donuts, Subway, Arby’s, Cinnabon, Jimmy Johns, Baskin-Robbins, Jamba Juice, Carl’s Jr… I think you get the point. But long before Subway and Dunkin’ were multi-billion-dollar buyouts, before Inspire Brands became a household name in private equity circles, and before Atlanta emerged as a quiet nexus for restaurant M&A, Roark Capital began with a simple bet: that the some of the most beloved businesses in America are built one store at a time via franchising.

The seeds of Roark Capital were planted in the mid-1990s when Neal Aronson, a then New York-trained investment banker and private equity professional, left the world of Wall Street to help launch a hotel franchising business in Atlanta. That company, U.S. Franchise Systems, started with one brand and just 22 hotels across nine states. But under Aronson’s leadership as CFO, the business scaled rapidly. By the time it was sold in 2000 for about $100 million, it had grown to three brands and over 500 hotels in all 50 states and five countries. For Aronson, the experience crystallized a belief in the power of franchising. And it wasn’t just about the belief in franchising as a scalable business model, but he saw it as a vehicle for enabling entrepreneurship at the ground level.

“It’s pretty exciting to be part of helping people realize their dreams,” said Aronson on QSR. “If you work your tail off and follow the rules, you can be successful… That is where this country has been built, because 65 percent of the job growth for 15 years leading up to the recession came from those people who built a store, then a second store, then a third.” From these words, we get a better understanding of the values that Roark was built on.

After the hotel business was sold, Aronson returned briefly to New York, where he reconnected with one of his early mentors, Jack Nash, who was a cofounder of the hedge fund Odyssey Partners. Nash, known for his sharp intellect and blunt advice, didn’t mince words. “He yelled at me and shamed me into starting Roark,” Aronson recalled, according to QSR. And when he did, Nash became Roark’s largest early investor.

Thus, in 2001, Roark Capital Group was born. The firm is named after Howard Roark, the fiercely independent architect from Ayn Rand’s The Fountainhead, a character Aronson has called his “all-time favorite,” and this name is more than just symbolic. Aronson wanted Roark to stand for the same long-term thinking, operational integrity, and the conviction to avoid chasing fads that Howard Roark had embodied through his individualistic architectural style. With Roark Capital, Aronson set out to build a private equity powerhouse specializing in franchised, multi-unit brands, a strategy that has grown in popularity since the founding of the firm. I mean, in the last blog I wrote about 3G’s acquisition of Burger King, franchising was arguably the most powerful tool that 3G leveraged to turn around the company.

Howard Roark. Source: Life of an Architect

Roark’s first acquisition came in 2001 with the purchase of Carvel Ice Cream, a beloved but struggling franchised brand, for roughly $26–30 million. This deal may seem like a small deal by today’s standards (and even if an underperforming one for Roark’s standards, with Carvel’s sales having fallen 25% since the 2001 purchase), but it is definitely one that laid the blueprint for the firm’s operating model. The company was struggling; franchisees were unhappy, innovation had stalled, and management was disconnected. This issue was that most of Carvel’s resources had been diverted to its supermarket business, and that hadn’t been a new product or flavor in more than five years, which for sure angered franchisees. Thus, when Roark installed new leadership, they introduced 21 new menu items in the first year and rebuilt franchisee trust from the ground up. Under Managing Partner Steven Romaniello, a former colleague of Aronson, the new team restored franchisee trust, refreshed stores, and rapidly introduced new products, including Italian ices and dozens of new flavors, after years of stagnation. Despite Carvel’s underperformance as a brand itself, this acquisition set the tone: Roark would reinvigorate tired brands by listening to operators, updating offerings, and investing in long-term growth.

Following Carvel, Roark established Focus Brands in 2003 as an umbrella holding company for its growing stable of food franchises. Through Focus, Roark acquired Cinnabon (famous for its cinnamon rolls) in 2004 and franchising rights to Seattle’s Best Coffee internationally. In the years that followed, Focus Brands continued to expand: Schlotzsky’s Deli was added in 2006, Moe’s Southwest Grill in 2007, and Auntie Anne’s Pretzels in 2010. Each of these concepts was a franchised, multi-unit business in the quick-service or fast-casual space, aligning perfectly with Roark’s expertise. By keeping these brands under the Focus Brands platform (now rebranded as “GoTo Foods” as of 2024), Roark could share resources and best practices while still allowing each company to remain autonomous in day-to-day operations. This approach of centralizing some support functions but preserving the unique identity of each chain helped improve efficiencies without stifling the individual brands’ entrepreneurial spirit. In other words, there were synergies in having brands under the same holding company; “there was talent at Carvel that Cinnabon could benefit from, and talent at Cinnabon that Carvel could use,” said Geoff Hill, who was Cinnabon’s president.

In the following decade, Roark Capital raised successive private equity funds and steadily increased its capital under management from about $1.5 billion in 2012 to $3 billion by 2014. With more capital, Roark pursued larger acquisitions and entered new segments of foodservice, but still adhered to its core strategy of franchised, multi-location businesses. In 2010, Roark bought Wingstop, a fast-growing chicken-wing chain, and in 2012, it acquired McAlister’s Deli, further diversifying its restaurant holdings.

The pivotal acquisition came in 2011, when Roark made one of its first big moves into mainstream quick service by acquiring a majority stake in Arby’s. The legacy sandwich chain was struggling at the time, with some industry analysts calling its pre-sale performance “amongst the worst in modern restaurant history.” Aronson later recalled, “Arby’s was a mess – in menu, speed of service, cleanliness, physical box, focus, relationships, strategy, marketing.” The chain had cycled through four CEOs in six years under prior ownership. Despite the problems, Roark saw many attractive attributes: brand differentiation, a large and loyal customer base, good locations, upside potential, and, importantly, fixable issues given enough time and patience. Roark soon installed a new management team, bringing in industry veterans and even adding luminaries like Jon Luther, former Dunkin’ Brands CEO, as Arby’s chairman, and gave them the runway to execute a turnaround. The result: by 2016, Arby’s same-store sales were growing again, average unit volumes had climbed 20% to over $1 million, and the chain logged multiple years of consecutive quarterly sales gains. This validated Roark’s approach as a patient investor willing to spend the time needed to improve operations and rebuild a brand.

Roark’s growing reputation for restaurant savvy led to more deal opportunities. In late 2013, Roark made its largest acquisition then by purchasing CKE Restaurants (the parent company of Carl’s Jr. and Hardee’s) for about $1.7 billion. This deal added a major burger franchise system of nearly 3,450 units to Roark’s holdings and cemented the firm’s status as one of the dominant players in quick-service dining globally. By early 2014, Roark’s portfolio included three of the 25 biggest U.S. quick-service chains (Arby’s, Hardee’s, and Carl’s Jr.), as well as well-known snack franchises like Auntie Anne’s and Cinnabon and fast-casual brands like McAlister’s and Corner Bakery.

Importantly, throughout this expansion, Roark stayed true to its operating playbook. The firm focused on a few sectors, primarily restaurants and franchised retail/service, and dove deeply into them to gain insight. Roark partnered with strong management teams, often giving them an equity stake, and emphasized improving unit-level economics (so that franchisees thrive) as the key to success. Darren Tristano of Technomic noted that Roark’s team “keeps their companies autonomous, but they understand how to control costs and focus on getting the profit margins up,” which in turn drives value. Unlike some private equity firms that buy, lever up, and quickly resell companies, Roark at that time had sold only a few holdings, and none of its restaurant brands, in its first 13 years. As Aronson explained, “It takes time to build a really good company…We have to make the growth long-term.” This long horizon gave franchisees and management confidence that Roark’s interests were aligned with sustainable growth. One franchise industry veteran even remarked that Roark “is like the Warren Buffett of restaurants” because the only way your investment is rewarded long term is if you make long-term focused decisions, which Roark does very well.”

Roark’s Portfolio Companies Throughout the Years

By mid-2014, Roark Capital was a major force in foodservice franchising, with an expanding wall of deal plaques in its Atlanta boardroom. The firm’s assets under management had grown to around $3 billion across three funds. Its confidence was high, but as Neal Aronson noted that year, Roark was “not a big believer in shortcuts,” the team remained focused on steady, principle-driven expansion rather than chasing fads… staying true to the values that Howard Roark embodies.

One of the first milestones post-2014 was Roark’s decision to take a portfolio company public, providing an exit (at least partial) for one of its investments. In June 2015, Wingstop, which Roark had acquired in 2010, launched an IPO on NASDAQ. The offering was a success: Wingstop’s IPO priced at $19 per share, which was above the expected range, valuing the fast-casual wing chain at about $543 million. Roark sold a portion of its shares in the IPO but retained a roughly 67% stake afterward. This marked Roark’s first restaurant brand to go public, signaling to investors that Roark’s model could create significant value while having feasible exit paths for capital distributions back to LPs. In the years following, Wingstop’s stock price would soar as the chain expanded, and Roark gradually exited its position, locking in a strong return for investors.

While Wingstop’s IPO was a notable liquidity event, Roark largely continued to hold on to its brands and seek new acquisitions. In 2015, the firm branched further into franchised automotive services by acquiring Driven Brands, the parent of Meineke Car Care, Maaco collision centers, and other auto-service franchises. Roark applied the same roll-up strategy in this sector: under Roark’s ownership, Driven Brands would acquire additional car service franchises and grow into a major platform. By 2021, Roark even took Driven Brands public (NASDAQ: DRVN), raising over $700 million while still retaining a roughly 60% controlling stake. This echoed Roark’s long-term approach, where even in an IPO, Roark often holds on as a majority owner to continue guiding the business.

Another major acquisition for Roark happened in 2017 when it set its sights on Buffalo Wild Wings, a leading casual dining chain specializing in wings and sports bars. Buffalo Wild Wings had stumbled with declining sales, and activist investors were circling. Sensing an opportunity, Roark made an offer to buy BWW through Arby’s Restaurant Group. In late 2017, Arby’s, backed by Roark’s capital, agreed to acquire Buffalo Wild Wings for $2.9 billion (a deal at $157 per share, a 38% premium over BWW’s pre-announcement price). The acquisition added over 1,250 locations to Roark’s restaurant network. When the BWW deal closed in February 2018, Roark and Arby’s leadership launched Inspire Brands, Inc. as a new holding company to oversee Arby’s, Buffalo Wild Wings, and a smaller taco chain (Rusty Taco) that came with BWW. Co-founded by Neal Aronson and Arby’s CEO Paul Brown, Inspire Brands was conceived as a multi-brand restaurant company that could leverage scale for shared services and growth investments while allowing each brand to remain distinct. At its founding, Inspire Brands encompassed over 4,600 restaurants and $7.6 billion in system sales across its concepts. The formation of Inspire Brands in effect created a private restaurant conglomerate for Roark, similar to how Restaurant Brands International is to 3G, as we discussed in the last blog. For private equity shops, these kinds of platforms allow them to acquire additional brands to continue to improve efficiencies and scale.

And once the platform was established, Inspire didn’t waste any time to act. Later in 2018, Inspire Brands announced the acquisition of Sonic Drive-In, the classic carhop burger chain, for about $2.3 billion in cash. Sonic added roughly 3,600 locations to Inspire’s portfolio and expanded Roark’s reach into the burger and drive-in segment. Again, Roark’s modus operandi was to keep the brand’s operations intact, and Inspire stated Sonic would continue to be operated as an independent brand with its own identity and management. With Arby’s (sandwiches), Buffalo Wild Wings (casual dining/bar), and Sonic (burgers and drive-ins), Inspire Brands by 2018 had a highly diversified mix of restaurant concepts.

Meanwhile, Roark was also busy on other fronts in 2016–2018. In 2016, Roark acquired a majority stake in Jimmy John’s, the popular sandwich chain known for its freaky-fast delivery. The deal terms were not disclosed, but reportedly, around $2.3 billion valuation gave founder Jimmy John Liautaud a liquidity event while keeping him on as chairman. Roark’s reputation helped win over Liautaud; he spent two years getting to know Roark’s team and called them “best-in-class people” with the expertise to take the brand to the next level. The Jimmy John’s acquisition marked Roark’s 56th franchised or multi-unit brand, bringing its total system-wide sales to about $23 billion across 25,000 locations by late 2016.

On the Focus Brands/GoTo Foods side, Roark also continued to add concepts. A notable deal was the 2018 purchase of Jamba Juice, a leading smoothie and juice bar chain. Jamba was a publicly traded company but had seen its growth slow; Focus Brands agreed to acquire Jamba and take it private in a transaction valued at around $200 million. This brought another well-known franchise under Roark’s umbrella, complementing Focus’s existing treat brands. By late 2018, Focus Brands was overseeing seven food brands (Auntie Anne’s, Carvel, Cinnabon, Schlotzsky’s, Moe’s, McAlister’s Deli, and Jamba) – a collection of mostly snack and fast-casual concepts prevalent in malls, airports, and shopping centers.

Around this time, Roark also expanded into fitness and wellness franchises. In 2016, Roark invested in Orangetheory Fitness, a rapidly growing boutique fitness franchise, and later backed Self Esteem Brands, parent of Anytime Fitness. These moves into health and wellness showed Roark applying its franchise expertise beyond restaurants, into any consumer business with a multi-unit model. Likewise, Roark acquired Massage Envy, a massage clinic franchise, and made deals in pet services, home services, and retail. For example, in 2020, Roark purchased ServiceMaster Brands for $1.55 billion, entering the home cleaning and restoration franchising space. All these investments were part of Roark’s broader strategy to be the premier investor in franchised businesses across industries.

The culmination of Roark’s aggressive deal-making in 2020 was its largest restaurant acquisition up to that point: Dunkin’ Brands. Inspire Brands (on Roark’s behalf) announced in late 2020 an agreement to acquire Dunkin’ Brands (owner of Dunkin’ Donuts and Baskin-Robbins) for a whopping $11.3 billion all-cash buyout at $106.50 per share. The deal closed in December 2020, bringing Dunkin’s 12,000+ coffee shops and Baskin-Robbins’ 8,000 ice cream outlets into the Inspire portfolio. This single acquisition instantly made Inspire/Roark one of the largest restaurant operators in the world, as Dunkin’ Brands added roughly $11 billion in annual system sales on top of Inspire’s existing ~$14 billion. Dunkin’ also gave Roark a strong foothold in the booming coffee/snack segment, complementing its strengths in sandwiches, wings, burgers, and more.

By the end of 2020, Roark’s empire spanned many of America’s most iconic foodservice names, and the firm’s assets under management swelled correspondingly, from $3 billion in 2014 to roughly $20–25 billion by 2020. Yet at the same time, Roark had only a handful of exits from its many investments, adhering to their long hold strategy. It spun out Wingstop via IPO in 2015. It later went public as Driven Brands public in January 2021. It sold Corner Bakery Cafe in 2020 to a strategic buyer after almost a decade of ownership, and Wingstop’s remaining shares were eventually divested. But notably, Roark still owns legacy brands like Carvel (held since 2001), a sign of its willingness to hold companies indefinitely. In nearly every case, Roark’s exits have been measured and strategic, not rushed.

Finally, as we get closer to the present, the firm’s biggest headline of the past few years was its acquisition of Subway. In 2023, the founding families of Subway decided to sell the privately held sandwich giant after almost 60 years of family ownership. Subway, with nearly 37,000 franchised restaurants in over 100 countries, is the world’s largest sandwich chain, but it has seen declining U.S. sales and store count in recent years. A competitive auction unfolded, and Roark Capital emerged as the winning bidder. In August 2023, Subway announced an agreement to be acquired by Roark affiliates, and by late 2023, regulators had cleared the deal. The transaction valued Subway at up to $9.55 billion (including an earn-out structure that could pay the sellers more if Subway hits certain performance targets). The sale formally closed in early 2024, marking Subway’s first change in ownership since its 1965 founding.

Adding Subway to the fold is a crowning achievement for Roark, but also a test. With Subway, Roark now has an unprecedented concentration of restaurant brands. In fact, Roark’s affiliated companies (Inspire, GoTo, CKE, etc.) collectively generate more than $60 billion in annual system-wide sales from around 66,000 locations. The sheer scale makes Roark one of the largest restaurant operators on the planet. For perspective, if counted as a single “restaurant group,” Roark’s collection of brands would rival or exceed the system sales of well-known conglomerates like Yum! Brands or RBI.

From 2001 to today, the firm scaled from one failing ice cream brand to a $40 billion AUM empire of over 109,000 locations, generating $96 billion in annual system revenues. Its brands now operate in 121 countries and across every U.S. state. The firm’s investment model is rooted in several core principles. First, unit economics matter. Roark won’t back a brand unless it believes the franchisees can make money at the store level. Second: reinvestment over rotation. Unlike traditional PE firms that flip assets within 5–7 years, Roark prefers long holds. It had only exited three restaurant brands in over two decades (Wingstop, Corner Bakery, Naf Naf). The rest it continues to own, sometimes through continuation funds that extend holding periods beyond the usual PE fund horizon. Third: alignment over aggression. The firm views itself as a steward, not a disruptor. It often retains incumbent management, promotes from within, and emphasizes its “win-win-win” philosophy, ensuring that franchisees, employees, and shareholders all benefit from growth. These principles are codified into Roark’s culture, and words like integrity, accountability, collaboration, and long-term thinking aren’t just posted on office walls but are embodied by each and every one of Roark’s acquisitions and post-close operating playbooks.

That said, Roark’s track record is not without questions. While some wins are undeniable—McAlister’s Deli grew over 500% under Roark; Cinnabon quadrupled in size; Wingstop returned 19x and is now a $5+ billion public company—others have lagged. Carvel, despite being held for almost 25 years now, its performance remains relatively flat and is even shrinking from a sales perspective. Jamba has struggled to differentiate. And while Roark’s early funds performed strongly (Fund II reportedly delivered ~24% net IRR), more recent vintages have shown mixed results. Fund IV (2016 vintage), for example, was among the bottom quartile of its peer set with a ~5% IRR as of 2022. Analysts have raised questions about the firm’s lack of major exits outside Wingstop, especially Inspire and GoTo Foods, which remain privately held. As one 2023 review put it, Roark has built a “quiet empire,” but whether its aggressive dealmaking will translate into top-tier LP returns remains to be seen.

Still, it’s hard to argue with the pure scale of its operations. With ten of Roark’s brands generating over $1 billion annually, Dave’s Hot Chicken, its latest darling, is on track to be the eleventh. If the past is any guide, Roark will remain a key influencer in how these companies evolve; firmly applying its “no shortcuts” philosophy while helping its portfolio companies realize their full potential, one cinnamon roll, sandwich, or chicken tender at a time.

Industry Overview

The rise of Dave’s Hot Chicken is inseparable from the broader surge in demand for chicken-centric fast-casual dining in the United States. While the global fast-food sector grew steadily at about a 5% CAGR from 2018 to 2023, reaching approximately $800 billion in revenue, the chicken-focused quick-service segment in the U.S. outperformed. It posted an annual growth rate of 7–8%, reaching roughly $61 billion by 2024. Analysts project continued momentum, with the overall global fast-food market expected to surpass $1.1 trillion by 2028 and chicken chains contributing a disproportionate share of that growth.

Few categories have benefited more from shifting consumer behavior than chicken. Amid growing skepticism around red meat and rising demand for comfort food that doesn’t feel quite as indulgent, chicken has carved out a sweet spot. Americans are consuming fewer burgers and more chicken sandwiches, with datasets showing a 19% increase in chicken sandwich consumption between 2019 and 2024, compared to a 3% decline in burgers. This trend is not just about protein preference; it reflects broader shifts in health consciousness, cultural flavor adoption (notably Nashville-style spice), and the desire for portable, Instagrammable meals.

In this dynamic, fast-casual chicken chains have become star performers. The U.S. market is now led by a few dominant players. Chick-fil-A, with its focused menu and obsessive operational control, captured nearly 45% of the U.S. chicken QSR market by 2023. It was trailed by legacy giants like KFC and Popeyes, each wielding national scale but contending with more complex menus and aging brand identities. Still, the most disruptive forces have come from below: upstarts like Raising Cane’s, Wingstop, and Dave’s Hot Chicken have surged by committing to narrower concepts with wider cultural resonance.

Dave’s, in particular, has exemplified the power of going deep, not wide. With a menu built entirely around chicken tenders, sliders, and crinkle fries, the company eliminated operational bloat from day one. Its simplicity is strategic: fewer SKUs mean faster throughput, lower food waste, and easier replication across locations. That operational clarity has enabled it to scale at an almost unprecedented rate. From a street stand in East Hollywood in 2017 to 169 units in 2023, generating over $400 million in systemwide sales, Dave’s reached 245 units in 2024 and is projected to cross $1.2 billion in sales by 2025. It achieved this while maintaining a per-unit economics profile that rivals more mature QSR peers.

Much of this growth owes to franchising— a playbook common in the space but rarely executed with such early aggression. Dave’s sold the rights to over 1,000 units in just a few years, partnering with experienced operators and high-profile investors (including Drake and Samuel L. Jackson) to drive brand awareness and unit openings. The result: a wave of new locations in major cities, college towns, and affluent suburbs, each designed with eye-popping street art, bold red-and-black interiors, and a menu that scales heat levels from Mild to “Reaper.” The brand found cultural virality by offering not just food, but a challenge, and that challenge traveled fast on TikTok and Instagram.

Still, the industry isn’t without its headwinds. Wholesale chicken prices rose over 30% between 2021 and 2023 due to supply disruptions and inflationary pressures. Labor costs, particularly in coastal markets, have also climbed significantly as minimum wages inch toward the $15/hour mark. And while Dave’s tightly controlled menu helps insulate against some of these pressures, it also concentrates risk, commodity volatility, or safety concerns around poultry disproportionately affect a brand whose identity is built on one protein. The simplicity that enables scale can also amplify exposure.

Finally, competition is another looming variable. With the success of Dave’s, a flood of regional Nashville-style chicken concepts has emerged, and legacy chains are adding spicy chicken to their menus to ride the trend. Whether the "hot chicken" craze becomes a staple or fades like so many viral food fads will depend on how well Dave’s evolves. Fortunately, its lean menu structure gives it the flexibility to experiment at the edges, rotating sauces, seasonal LTOs, and regional tweaks, without compromising the core value proposition. It also has an international runway. Though the U.S. remains its anchor market, Dave’s has already entered Canada, the UK, and the Middle East. While the U.S. boasts the highest per capita QSR saturation, emerging markets offer long-term upside, particularly in urban centers with strong Western food affinity and disposable income.

Deal Rationale

My first instinct on the deal rationale was that this was just another acquisition from the same old Roark playbook. I mean, when Roark Capital inked its $1 billion acquisition of Dave’s Hot Chicken a few months after it was first leaked to the press, the move seemed inevitable to those who’ve followed both the investor and the brand. On paper, it was a textbook Roark deal, an early-stage, high-growth franchise brand showing breakout performance. But the truth is, I see the acquisition as a carefully constructed decision based on timing, strategy, and identity.

For Roark, the deal rationale started with a familiar metric: momentum. By 2025, Dave’s had exploded into one of the fastest-growing restaurant franchises in North America. From a single parking lot pop-up in Los Angeles to over 180 locations globally, the chain posted a blistering 57% increase in U.S. systemwide sales in 2024 and projected north of $1.2 billion in global system sales for the following year. That kind of velocity mirrored the early-stage profiles of prior Roark winners like Wingstop and Dunkin’. It’s precisely this inflection point Roark likes to underwrite, not a turnaround, not a mature cash cow, but a brand surging into national relevance with its best chapters still unwritten.

But this wasn’t just about growth for growth’s sake. Dave’s filled a conspicuous white space in Roark’s sprawling portfolio. While Inspire Brands owns Arby’s and had once been home to Wingstop and GoTo Foods (Focus brands), houses indulgence-oriented mall favorites like Auntie Anne’s and Cinnabon, Roark lacked a foothold in the fast-casual chicken wars, which is arguably the hottest combat zone in American quick-service dining right now. Dave’s offered a differentiated wedge: Nashville-style spice, minimalist menus, TikTok-friendly presentation, and locations built for urban appeal. It catered to a younger, diverse, social media-savvy customer base that was distinct from the more traditional demographic profiles of Subway or Dunkin’. In this sense, Dave’s gave Roark something new to say to Gen Z and late-night diners, while also slotting neatly into their goal of owning every daypart, every taste profile, every consumer mood.

As I said, chicken may just be the most competitive space in the quick service restaurants sector currently, and its sector dynamics added another tailwind. Chicken has overtaken beef as the dominant animal protein in U.S. restaurants, driven by perceived health, price stability, and versatility. But more specifically, spicy chicken concepts have emerged as trend leaders. Whether it’s Popeyes’ sandwich war, KFC’s fire-forged innovations in Asia, or the cult following of Raising Cane’s and Wingstop, bold flavor and heat are no longer niche. Dave’s sits at the center of that taste shift. With a menu built around scalable simplicity and a clear brand identity, it possesses the kind of focused operating model that franchisees— and private equity investors— love. And this, too, made it irresistible for Roark.

Moreover, Dave’s is not only hot on the consumer side, but it’s also printing money on the franchise side. With average unit volumes reportedly nearing $3 million and franchisees paying a 6% royalty and 5% marketing fee, even a conservative 17–20% store EBITDA margin could yield ~$500K per unit annually. For operators, that’s a compelling cash-on-cash story; for Roark, it’s a high-margin, capital-light stream of predictable royalty revenue. It’s no surprise, then, that Roark was willing to pay roughly 2.5x system sales and an estimated 25x trailing EBITDA, placing the deal alongside premium transactions like Blackstone’s Jersey Mike’s purchase or the 2023 Subway sale.

Another aspect to consider is that Roark may have plans for Dave’s as a new platform. From day one, this must’ve been seen as a deal about scaling, not just domestically, but globally. With over 63,000 locations across its broader brand network, Roark brings a global franchising infrastructure that Dave’s, for all its heat, simply didn’t have. CEO Bill Phelps admitted as much, noting that Roark’s international footprint was a primary draw. Whether through GoTo Foods’ partners in Asia or Inspire’s expansion playbook in Europe and the Middle East, Roark has the scaffolding to take Dave’s from regional hero to global juggernaut. Early openings in Dubai and London are just the beginning; it’s the fact that master franchisees in Japan, India, and Latin America, who are already running other Roark concepts, may soon be plating Nashville hot chicken to a new class of spice-chasing diners that excites investors the most.

Finally, operationally, Roark’s touch may be light, but its impact will be deep. From bulk poultry procurement and real estate analytics to digital ordering platforms and loyalty ecosystems, Roark’s portfolio has developed tools and systems that Dave’s can now plug into. This kind of functional leverage of centralized marketing know-how, supply chain scale, and cross-brand tech, is crucial for a brand that’s expanding at breakneck speed while trying to replicate flavor profiles across borders and suppliers. And Roark may just be the perfect partner to help Dave’s reach new heights.

A newly opened Dave’s Hot Chicken Restaurant in Chicago. Source: Forbes

Deal Structure

On June 2, 2025, Dave’s Hot Chicken confirmed its acquisition by Roark Capital Group at a post-money valuation of approximately $1 billion, following months of speculation and active engagement with North Point Advisors to explore strategic alternatives. Roark acquired a 70–75% controlling stake, leaving the remaining 25–30% with the founding team and early investors. The transaction was structured as a majority recapitalization, enabling founders to realize significant liquidity while maintaining operational involvement and equity upside. All four founders will remain with the company in both leadership and franchise ownership roles.

The deal’s valuation reflects strong growth expectations. Based on 2025 system sales projections of roughly $1.2 billion, the transaction equates to a 2.5× system sales multiple and approximately 8× franchisor revenue. On a profitability basis, analysts estimate the brand was generating up to $40 million in EBITDA at the time of sale, implying a 25× EBITDA multiple. Bill Phelps, CEO of Dave’s, suggested the final valuation was “pretty close” to the $1 billion figure, potentially adjusted downward slightly post-closing.

Although detailed financing terms were not disclosed, Roark likely utilized a mix of equity from its recently raised $5 billion seventh fund and a moderate level of acquisition debt, consistent with its playbook on similar transactions. Given Dave’s predominantly franchised model, predictable royalty income, and low asset intensity, the business can support some leverage while maintaining financial flexibility.

The deal may also include performance-based incentives or earn-outs tied to growth milestones, though these were not made public. Roark’s investment thesis is underpinned by aggressive unit expansion, where management has projected over 150 new openings annually and over $1.2 billion in system sales by the end of 2025. To ensure alignment, Roark likely incorporated performance-linked upside into the founders' retained equity or compensation.

Critically, both sides emphasized that the deal was structured as a partnership rather than a takeover. The entire executive leadership team, including CEO Bill Phelps and founders Dave Kopushyan and Arman Oganesyan, will remain in place. “The most critical thing is keeping the team together,” Phelps noted. Roark’s hands-off, support-driven approach allows existing management to continue running day-to-day operations while leveraging Roark’s operational playbooks, infrastructure, and international networks. This model ensures cultural continuity, preserves brand authenticity, and sets the stage for long-term scalable growth.

Deal Discussion

Private equity loves franchises. That much is clear from the 3G Capital playbook I explored in my Burger King post. The appeal lies in the royalty-based, asset-light model, meaning predictable cash flows without the burden of owning or operating every location. But a more interesting question is this: why has franchising become even more potent today? How did it evolve from medieval toll roads and soda fountains into a lever that can scale a business from zero to one hundred in just a few years, allowing these relatively young businesses to be eagerly sought after by multi-billion-dollar funds? And what does the power of franchising today mean for Roark’s investment in Dave’s Hot Chicken?

The History of Franchising: A Centuries-Old Concept

Source: Franchising Guru

The very word “franchise” is rooted in the language of liberty. From the Old French franc (“free”) to the Middle French franchir (“to free”), the term historically connoted a loosening of restrictions — a delegation of rights from the powerful to the enterprising. “Franchises” in feudal Europe were privileges granted by kings, bishops, or lords to collect tolls, run markets, or maintain order. In return, licensees paid tributes or “royalties,” which is a word descended from “Royal Tithes,” when “freemen” took a cut of land fees paid by serfs. In other words, early franchising was about outsourcing governance and economic participation to trusted intermediaries.

This structure laid relatively dormant for centuries and finally resurfaced in a commercial form as industrial capitalism took root. In colonial America, Benjamin Franklin is often credited with pioneering a franchise-like agreement in 1731 when he partnered with Thomas Whitmarsh to open a printing shop in South Carolina, an arrangement that included fixed terms, management obligations, and exclusive territory, remarkably similar to modern franchise contracts. By the 1800s, elements of modern franchising began appearing across continents. In 1809, Australia’s Governor Macquarie granted a franchisee the right to import 45,000 gallons of rum in exchange for building Sydney’s first hospital. Meanwhile, in Europe, brewers in Germany and England turned indebted pub owners into exclusive distributors, cementing a model of product-based franchising where territory and brand were tied together.

A pivotal leap for franchising came in the U.S. during the mid-19th century. In 1851, Isaac Singer, facing capital constraints and a sprawling customer base, began licensing sales and repair agents for his sewing machines, becoming arguably the first structured franchise system. Agents paid territory fees and received training and brand rights, setting the precedent for formalized contracts and network-wide consistency. As the machines gained mass adoption, Singer transitioned to company-owned outlets, but the template was set for franchising as a way to scale distribution without owning the entire chain.

By the turn of the 20th century, U.S. cities were granting monopoly utility franchises to water, sewage, and electric companies. In 1898, William Metzger of Detroit became the first General Motors franchisee, buying land and building a dealership in exchange for discounted access to GM cars. One year later, Coca-Cola launched its bottling franchise network in 1899, paving the way for consumer goods franchising with high margins and decentralized capital investment.

Franchising entered a new era in the 20th century as American consumerism took off. Henry Ford franchised his car dealerships. Rexall Drugstores began licensing outlets in 1902. By the 1920s, A&W root beer stands and Howard Johnson’s ice cream counters offered early examples of food franchising. Between 1938 and 1955, a wave of now-iconic brands launched franchise systems like Baskin-Robbins, McDonald’s, and eventually Kentucky Fried Chicken. Then by the late 1960s, McDonald’s, Holiday Inn, and KFC had each surpassed 1,000 locations. In just five years (1964–1969), an estimated 100,000 new franchise businesses launched. That period was essentially the era that made franchising synonymous with American expansion, and two renowned personalities shaped this age.

First, Ray Kroc, the founder of McDonald’s (Actually not the founder, but essentially he was the one who turned McDonald’s into the franchise giant we know today), licensed McDonald’s from the original founders in 1954 and systematized every part of the operation from kitchen layout to fry times. He also pioneered a dual-entity model: McDonald’s Corporation owned the land beneath each store and leased it to franchisees, earning rent and royalties. By 1987, McDonald’s had over 10,000 locations and had sold more than 65 billion hamburgers.

Colonel Harland Sanders, meanwhile, took a less structured path. After losing his Kentucky restaurant due to highway rerouting, Sanders spent the 1950s persuading diner owners across the Midwest to pay a 5-cent royalty to use his secret chicken recipe. By 1963, KFC had 600 franchised locations. By the end of the decade, it had nearly 1,000. Like Kroc, Sanders understood the power of standardization, branding, and the franchisee’s capital. From then on, franchising as a business model grew exponentially and never looked back.

Yet today, franchising is no longer just a model; it’s almost like a financial asset class. PE firms like Roark Capital, Blackstone, and TSG view franchisors as royalty-based cash flow vehicles. In 2023, Roark acquired Subway for $9.5 billion. In 2024, Blackstone bought Jersey Mike’s for $8 billion and added Tropical Smoothie Cafe and 7 Brew Coffee to its portfolio.

What makes franchises attractive isn’t just the brand. It’s the scalability. Franchisors grow without deploying capital. Franchisees bear the risk, while franchisors earn royalties, often linked to inflation. And the back-end training systems, mobile apps, and cloud-based compliance now allow even a 5-location chain to behave like a Fortune 500 company.

It’s worth reflecting that this is a model that began with medieval lords granting ferry rights. Today, it fuels billion-dollar deals. The essence really hasn’t changed— delegate rights, maintain standards, collect royalties. But the tools have. And in that evolution lies the blueprint for why private equity is betting on the next wave of franchising giants.

Franchising Today: An Old Engine Rebuilt for Hypergrowth

As I said, while the essence of franchising has been the same for centuries, franchising today is much more powerful than it was centuries ago. Just look at Dave’s as an example, it expanded from a single 2017 pop-up in Los Angeles to a global franchise brand valued at around $1 billion within eight years; this type of growth would have seemed unthinkable a generation ago. The same goes in China. Tea and ice cream chains like Mixue and Chagee have scaled even faster, with Mixue surpassing 46,000 stores worldwide by 2024 (more outlets than McDonald’s or Starbucks) and Chagee rocketing to 6,440 stores in just six years. These explosive trajectories are no coincidence. So how is franchising different today than it was before? I think there are four key factors – from the changing profile of franchise owners to the power of social media, technology, and eager capital – that have rebuilt the old franchising engine into a hypergrowth machine capable of unprecedented speed and scale.

1.     Franchisees: From Mom-and-Pop to Major Players

One big change is who franchises today. In the past, a franchisee was often a single mom-and-pop operator learning on the job. Now, many franchise networks deliberately partner with well-capitalized, experienced operators or, conversely, make it ultra-easy for armies of new entrepreneurs to sign on. In the United States, for example, Dave’s Hot Chicken didn’t scale up with beginners at the helm; it required franchisees to already have significant restaurant experience and infrastructure. The company’s franchise agreement calls for operators who already run at least five restaurants and carry a net worth in the millions. This meant Dave’s franchisees were more like growth partners who were often multi-unit restaurant groups (some backed by private equity) that had real estate teams, supply chains, and operating systems ready to deploy. As a Dave’s executive explained, partnering with franchise groups “who have scaled restaurants previously” allowed the brand to expand as fast as it has. In short, seasoned operators acted as accelerators, opening dozens of locations at “startup speed” while Dave’s corporate team stayed lean.

In China, the franchisee equation took a different form but achieved a similar acceleration. If any of you can recall from my Mixue IPO blog, many brands like Mixue in China opt to attract thousands of small franchisees by keeping barriers to entry low rather than focusing on a few large operators like Dave’s. According to Mixue’s IPO prospectus, 99% of its stores are franchised, and it deliberately charges relatively low franchise fees, making ownership attainable for first-time business owners. The initial investment to open a Mixue is about ¥210,000 (~USD $30k), which is also lower than comparable competitors, but franchising costs for many brands in China are much cheaper in hopes of scaling faster. Moreover, franchisees receive a turnkey package from equipment to training and benefit from Mixue’s established supply chain and branding support. By tapping into a huge pool of aspiring entrepreneurs across China’s smaller cities and towns, Mixue was able to sign up nearly 20,000 franchisees, who in aggregate opened over 45,000 outlets.

In essence, modern franchisors either partner with heavyweight operators or empower swarms of new ones, where both strategies have replaced the slow, one-store-at-a-time growth of the past with a much more rapid deployment of units.

2.     Viral Branding in the Digital Age

A second factor behind today’s breakneck franchise growth is the ability to build brand awareness overnight thanks to digital media. Classic franchisors like fast-food giants spent decades and huge ad budgets on TV commercials, print, and billboards to become household names. By contrast, newer brands are often digital-native, leveraging social media virality to achieve in months what used to take years in marketing.

Dave’s Hot Chicken is a prime example of harnessing the internet’s rocket fuel. The founders relied on Instagram and Facebook posts rather than expensive ads in their early days. The real breakthrough came when viral content began to drive awareness – for instance, videos of customers daring to eat at Dave’s insanely spicy “reaper” chicken tenders (and ending up in tears) spread like wildfire online, essentially serving as free publicity. Even celebrity involvement happened organically: Canadian rapper Drake became an investor and vocal fan of the brand, amplifying Dave’s visibility without a corporate marketing push. By the time Dave’s started franchising in earnest, it already had millions of social media followers and a frenzy of customer demand built purely through these digital channels. In effect, TikTok, YouTube, and Instagram created nationwide buzz for Dave’s far faster (and cheaper) than traditional advertising ever could.

Chinese upstarts have been arguably even more masterful at social-driven branding. Mixue built an almost cult-like following through a quirky, meme-friendly approach. The brand’s mascot, a cartoon snowman called “Snow King,” became an internet sensation, featured in countless memes, parody videos, and even an ultra-catchy theme song that wormed its way into everyone’s head. The jingle “You love me, I love you, Mixue Bingcheng sweet sweet” went viral on platforms like Douyin (China’s TikTok) and Xiaohongshu (Rednote), with users creating their own remixes and joke videos. This flood of user-generated content turned Mixue into a household name, especially among young consumers, without the company spending big on ads. Chagee, another contemporary Chinese tea chain, took a more premium tone but still capitalized on social media influence, and by late 2023, it ranked #1 on China’s social media influence index for freshly made tea brands, indicating it had outsized online buzz. The bottom line: digital virality has become a cornerstone of modern franchising success. A new franchise concept that captures the public’s imagination on social platforms can achieve a level of brand recognition in a year that older chains could only dream of after a decade. This pent-up consumer demand then creates a virtuous cycle where franchise investors line up, knowing the brand will attract crowds on day one, which in turn accelerates expansion.

3.     Tech-Enabled Operations and Infrastructure

However, rapid expansion isn’t just about hype and franchisees; it also depends on delivering a consistent product at scale. Traditionally, growing a franchise system quickly was perilous: more stores meant more chances for quality to slip, training to falter, or supply chains to break. Modern franchisors have overcome many of these pain points by embracing technology and innovative infrastructure, allowing them to maintain consistency even while opening hundreds or thousands of units in a short span.

One aspect is the use of data and cloud-based tools to streamline operations. Dave’s, for example, has kept operations simple (a limited menu of chicken tenders and sliders) and invested in rigorous training and oversight systems. The company can remotely monitor sales and customer feedback for each location in real time, and it employs measures like secret shopper audits and online review tracking to catch any service issues early. New franchisees go through standardized training modules (often delivered via online platforms), so that whether a store opens in California or Dubai, the staff know exactly how to brine, fry, and serve to Dave’s specs. Furthermore, Dave’s restaurant design is modular and flexible; the chain can inhabit anything from a 2,000-square-foot standalone building to a former inline store of 2,500+ square feet or even smaller food-court stalls. This flexibility means the brand can take advantage of whatever real estate is available and open locations faster, without waiting for perfect, cookie-cutter sites. In fact, Dave’s often retrofits second-hand restaurant spaces and reuses existing kitchens or equipment to speed up launch times. All these operational optimizations from digital training, real-time oversight, and adaptable layouts, help the company scale up at a pace that would have caused older chains to stumble.

First Chagee in the US, grand opening in Los Angeles.

Chinese franchisors have introduced their own innovations to support hypergrowth. Automation and IT systems play a huge role. Chagee, for instance, uses proprietary automated tea brewing machines that can extract and brew tea in as little as eight seconds, ensuring that even high-volume outlets can serve quality tea quickly. The company also built a holistic digital management system that synchronizes everything from inventory to personnel across its thousands of stores. This digital backbone gives Chagee real-time visibility into each franchise’s operations and helps maintain consistency and efficiency at scale. Meanwhile, Mixue focused heavily on building a vertically integrated supply chain, which is an often-overlooked form of tech and infrastructure. The company realized that to support tens of thousands of budget-priced stores, it needed absolute control over ingredient quality and cost. Thus, Mixue owns or operates large portions of its supply network: it has its own farms, factories, and fleet of delivery trucks to supply franchisees. By 2023, Mixue was producing 60% of all ingredients it ships to stores (from ice cream powder to tea syrup), cutting out middlemen and slashing costs. It runs 27 massive warehouses and a logistics system reaching over 4,900 towns – even far-flung franchisees get next-day delivery of fresh ingredients, something that keeps quality high everywhere. This kind of integrated, tech-enabled backend allows Mixue to maintain ultra-low prices (as low as ¥4 for a lemon tea) without sacrificing margins or consistency.

By tightly controlling every aspect of its supply chain from farming lemons to producing syrups and managing cold-chain logistics, Mixue ensures consistency and low costs across tens of thousands of franchise outlets. Modern franchisors like Mixue have built infrastructure and tech systems that allow them to scale up rapidly without the quality hiccups or supply shortages that might have stalled fast growth in the past.

Thus, technology, data, and infrastructure innovation have removed the traditional friction from franchising. Cloud-based training and monitoring mean a brand can uphold standards even with far-flung locations. Flexible store formats and automated prep equipment mean new units can open (and operate) in all kinds of environments. And vertically integrated supply chains ensure that scaling up doesn’t break the system, but instead, actually improves efficiency through economies of scale. This is a stark contrast to earlier eras, when a franchisor opening too many units too fast often led to horror stories of inconsistent products or logistical meltdowns. Today’s franchises, by design, are built to run like well-oiled machines no matter how fast they grow.

4.     Abundant Capital and Asset-Light Economics

Finally, and perhaps most importantly, there is no shortage of capital chasing franchise concepts today, which greases the wheels of hypergrowth. Over the 2010s and 2020s, private equity firms, venture investors, and family offices have poured money into franchisors, attracted by their asset-light, high-return business model. A franchisor can scale revenue exponentially without massive capital expenditures because the franchisees fund the new stores. This flips the traditional growth finance equation on its head, and investors have taken notice.

In the case of Dave’s Hot Chicken, growth capital was readily available almost from the start. As the brand’s popularity exploded, it drew interest from celebrity investors like Drake and Samuel L. Jackson, and more recently from institutional investors. Not to mention, Roark’s involvement not only validated Dave’s model but also provided deep pockets and expertise for further expansion. The fact that such a young chain could command a 10-figure valuation underscores how eager investors are to back scalable franchise platforms. From an investor’s perspective, a franchisor with hundreds of stores (97% of Dave’s 400+ locations are franchised) can look like a cash-flow machine collecting royalties or supply fees from each unit without bearing the cost of building each store. Those royalties often rise in line with store sales (providing an inflation hedge), and profit margins for franchisors tend to be high. It’s little wonder that franchises are sometimes viewed almost like “financial assets”: a portfolio of contracted revenue streams across many units.

In China, a similar flood of capital has propelled the growth of new franchise champions. Mixue, notably, operated for years with organic growth, but in 2020 it took on its first major outside investment via a round led by Hillhouse Capital, one of Asia’s top private equity firms. This infusion (over ¥900 million from Hillhouse alone) was immediately put to work expanding Mixue’s supply chain capacity and digital systems. The payoff was evident: with stronger infrastructure, Mixue accelerated to adding over 8,000 new stores each year from 2022 to 2024. In 2023, Mixue’s revenue topped ¥20.3 billion with a net margin of ~19%, which was definitely a performance that vindicated investors’ faith in its asset-light expansion model. Chagee, for its part, raised capital through public markets. The company debuted on the Nasdaq in April 2025, raising $411 million to fuel its global expansion plans. By the end of 2024, Chagee had over 6,200 franchised stores and was boasting a net profit margin above 20%, higher than industry averages. Clearly, investors have been rewarded for backing these models.

Crucially, the franchise boom has coincided with a low-interest-rate era (in the late 2010s and early 2020s) and abundant liquidity, meaning growth capital was not just available but actively seeking opportunities. Franchisors with their ability to deploy new units without heavy capex became ideal targets. We’ve seen the rise of franchise-focused funds and multi-unit franchise conglomerates that treat franchise locations almost like yield-generating assets. In some cases, franchisees themselves are backed by private equity, essentially acting as the expansion arm for the franchisor in exchange for a share of the cash flows. The end result is that if a franchise concept proves even moderately successful, there is ample money to rapidly scale it up – a stark contrast to earlier times when expansion was limited by how fast a company could reinvest its own earnings.

In summary, franchising today has evolved into a far more potent engine for growth than in the past. The core idea of letting independent owners run locations under a common brand remains the same, but the context and execution are new. Franchise networks now leverage sophisticated owner-operators or massive numbers of eager entrepreneurs to open stores at high velocity. They ignite consumer demand through viral, digital-first marketing rather than slow traditional advertising. They ensure consistency and efficiency via tech-enabled training, data, and supply chains, avoiding the pitfalls that once limited fast expansion. And they fuel it all with plentiful capital, thanks to an economic model that investors love for its scalability and returns.

Brands like Dave’s Hot Chicken, Mixue, and Chagee embody this convergence of old and new. A few years ago, it would have been inconceivable for a regional concept to explode into thousands of units spanning multiple continents so quickly. Now it’s not only possible, but quickly becoming a repeatable playbook for business owners. For better or worse, the age of hypergrowth franchising is here, and it’s changing the global business landscape of food & beverage at a pace that shows no sign of slowing down.

Implications for Roark, Dave’s, and the Future of the Franchise Model

So, what does all this mean? For Roark, Dave’s fits perfectly into its thesis: a high-growth, franchise-first QSR concept with proven unit economics, a cult-like following, and a capital-efficient expansion engine. But Dave’s is also something more: it’s a case study in how franchising has evolved from a legal structure into a venture-scaling strategy.

The private equity playbook of these large buyout shops also seems to be shifting. No longer is it just about buying stable cash flow businesses and cutting costs. Increasingly, it’s about identifying young brands with viral potential, institutionalizing them early, and scaling them globally by riding the rails of franchising. The blueprint: prove product-market fit, leverage social media for demand generation, onboard multi-unit operators, then use tech to standardize execution. Do it right, and you create a royalty stream that grows faster than corporate overhead, a dream outcome for investors.

But the implications stretch beyond Roark. This model, where franchise brands behave like venture-backed tech companies, is becoming the new standard. Brands like Crumbl cookies, 7 Brew, and Clean Juice are following similar playbooks. What Dave’s proved is that if you can combine the emotional pull of a cult brand with the rational economics of franchising, growth is limited only by your ability to sign development deals.

So, that’s the new franchise frontier… and private equity is already lining up.

Bear or Bull

Does Dave’s have a Long-Term Competitive Moat, or could it be the one thing that Roark tries to avoid the most— a Fad?

Every decade brings a new fast-food phenomenon. In the 1980s, it was pizza, in the 2000s it was burgers, and for the 2020s it’s fried chicken. The craze arguably began with a viral chicken sandwich war in 2019, when Popeyes and Chick-fil-A’s social media feud over who had the better chicken sandwich captured the internet’s attention. The battle sparked a rush of over 20 fast-food chains introducing their own fried chicken sandwiches in the following two years. In retrospect, this wasn’t a one-off fad, and it’s revealing a deeper structural shift in demand toward chicken. U.S. chicken consumption has more than doubled since 1970; the Department of Agriculture projects per capita chicken intake will exceed 100 pounds in 2024 (up from about 50 pounds in 1970). Even as overall quick-service restaurant traffic fell in late 2024, fried chicken concepts saw visits rise 4.3% year-over-year in Q3 2024. In short, consumers are flocking to chicken, and the category’s momentum is real rather than a mere meme.

Why chicken? In an inflationary environment, economics and psychology favor poultry. Chicken is far cheaper than beef or pork: $1.99 per pound for a whole chicken versus $5.59 for ground beef, according to recent federal data. That cost advantage gives restaurants better margins on chicken items and allows them to position chicken meals as an affordable protein for budget-conscious diners. As one industry analyst put it, “the future for chicken remains bright” because it’s convenient, cost-effective, and perceived as a bit healthier than red meat. This broad consumer appeal and cost profile have fueled a crowded “chicken wars” landscape. From niche hot chicken startups to giants like McDonald’s (with its McChicken variations) and even Taco Bell (testing chicken sandwiches), everyone is vying for a piece of the fried chicken market. The question is whether Dave’s Hot Chicken can carve out a durable edge in this crowded arena or if it’s riding a short-lived wave of heat.

The Bull Case: Crave-Driven, Margin-Friendly, Franchise-Proven.

Dave’s Hot Chicken’s rise has been nothing short of astonishing. They followed the Charlie Munger advice well: take a simple idea and take it very seriously. They made just one simple thing, Nashville-style hot chicken tenders, but they made it exceptionally well. Dave’s kept its menu ultra-focused on one core product (hot chicken tenders/sliders), one flavor profile with a choice of seven spice levels, and this minimalist menu became part of the brand message. With a clear message and leaning into social media buzz, the founders generated cult-like craveability around their product. In essence, product simplicity led to product consistency, and product consistency led to consistently satisfied customers. As COO Jim Bitticks recounted, the recipe centers on quality: the chicken is brined and cooked to order, and importantly, “the spice is in the batter, rather than in the sauce”, ensuring every bite packs equal heat instead of just a spicy coating. This yields a reliably bold, “mind-blowing” taste experience that fans find addictive. In an era when many restaurants chase trends with expansive menus, Dave’s focus on doing one thing extremely well gives it a unique identity and strong customer loyalty. Digital engagement data shows customers aren’t just trying Dave’s once for the novelty; they’re coming back repeatedly. The company has amassed nearly 6 million followers across social platforms, reflecting its viral traction and youth appeal. Even more remarkably, franchise demand is so high that Dave’s has already sold franchise rights for over 1,000 future locations globally. In other words, its pipeline for expansion is massive, indicating many operators are betting on Dave’s long-term.

Behind this expansion is also exceptional unit economics, as we’ve already talked about. Despite its bare-bones menu and lack of drive-thrus, Dave’s restaurants generate astonishing sales volumes. The average unit reportedly rings up roughly $2.7–3.0 million in annual sales, rivaling legacy fast-food outlets that have far bigger menus and drive-thru operations. (For perspective, a typical McDonald’s does about $3–4M and a Chick-fil-A over $6M, but those benefit from drive-thru lanes and 24/7 or extended hours.) Some top-performing Dave’s locations in Los Angeles are said to exceed $5–6 million in yearly sales. These are Chick-fil-A-like numbers achieved with a fraction of the complexity. Franchisees also enjoy robust profitability: industry observers estimate Dave’s franchise restaurants can achieve 20–25% store-level profit margins, which translates to about $500,000–$700,000 in annual profit per unit. This is unusually high for the restaurant business. It reflects Dave’s simple operations (limited SKUs mean less labor and waste) and economies of scale, where hot chicken uses cheaper inputs and fewer costly prep steps than, say, a full burger kitchen. Build-out costs are relatively modest as well, since a Dave’s doesn’t require large kitchen hoods or complex equipment beyond fryers. Initial investment per store ranges roughly from $600K to $1.4M (according to its FDD), lower than many QSR concepts (for comparison, a new Wendy’s or Chick-fil-A can cost $2M+). With $3M average volumes, franchisees can recoup their investment in as little as 2 years, an extraordinarily fast payback period. These compelling economics have made Dave’s a magnet for experienced franchise operators. Many of its new outlets are being opened by multi-unit franchisees who reinvest in more locations after seeing the returns. It’s no surprise Dave’s systemwide sales have exploded, from just $22 million in 2020 to around $617 million in 2024. At this trajectory, system sales are on pace to approach the $1 billion mark in the near term, making the Roark valuation a mere 1x revenue multiple. Dave’s has essentially engineered a franchise growth machine that combines viral brand appeal (driving revenue) with franchisee-friendly economics (driving rapid unit expansion). It’s a formula that Roark Capital evidently found attractive.

The Bear Case: Saturation, Fatigue, and Generational Tastes.

Despite Dave’s red-hot performance, skeptics wonder if the hot chicken boom is overheating. The barrier to entry for a basic hot chicken concept is low; I mean, all you need is chicken, flour, spices, and a fryer. Since the success of pioneers like Dave’s, a glut of copycats has sprung up, especially at the regional level. In cities like Seattle, it’s joked that a new Nashville-hot chicken joint opens practically every week (whether it’s a food truck, a mom-and-pop, or an existing chain adding spicy tenders to the menu). Even big QSR players jumped in virtually every major burger chain and chicken chain introduced a version of a spicy chicken sandwich between 2019 and 2021. This crowded, competitive field means differentiation is razor thin. Dave’s recipe is delicious, but is it truly defensible long-term when competitors can mimic the concept? Unlike proprietary formulas (e.g., KFC’s secret herbs or Chick-fil-A’s pressure-frying technique), Nashville-style hot chicken is more of an open genre. There are already dozens of multi-unit hot chicken upstarts (one industry analysis counted 22 emerging hot chicken chains operating ~281 units total as of early 2023). If all are chasing the same Gen Z and millennial customers with similar menus, market saturation is a real concern. The novelty that drove lines early on could wear off as the field gets saturated with lookalikes.

Another challenge: scope of appeal. Spicy, ultra-crispy chicken with a youthful, irreverent branding is great for the social media crowd, but will it play equally well to older or more conservative diners? Dave’s branding leans heavily into edgy internet meme culture – think neon graffiti murals, a cartoon-ish “rubber chicken” mascot, and tongue-in-cheek marketing. This has resonated with Gen Z consumers (who famously love bold flavors and Instagrammable food), but youth culture trends can shift quickly. What’s cool on TikTok today might feel passé tomorrow. There’s a risk that Dave’s brand image ages out or needs constant reinvention to stay relevant. Meanwhile, older demographics might be turned off by the very same spiciness and aesthetic that young fans adore. Unlike pizza or burgers, which have broad, cross-demographic appeal, extremely spicy chicken could have a natural ceiling in the mass market. Not everyone craves the burn of a Reaper-level tender (which at Dave’s even requires signing a waiver to order, as a novelty). This raises a question of sustainability: can Dave’s keep expanding into more mainstream markets (e.g., suburbs, international locales with different palates) without dialing back its core heat-and-edge formula? If it dilutes the spice or vibe to attract a wider audience, it could lose the cultish appeal that made it famous. It’s a delicate balance.

There’s also menu fatigue to consider. Dave’s meteoric rise was built on doing one thing extremely well. But that same one-note menu could become a limitation. After a few visits, will customers start craving more variety, like salads, desserts, and other flavors that Dave’s doesn’t offer? Many fast-casual brands eventually face pressure to innovate their menu to drive repeat traffic. Dave’s has thus far resisted adding much beyond the basics (though it introduced a limited time “Dave’s No Chicken” cauliflower tender for vegetarians during Lent 2024). The minimalist approach yields operational simplicity and consistency, but over the long term, it might constrain customer lifetime value if patrons tire of the limited choices. Rival chain Raising Cane’s has shown that a narrow menu can succeed for decades, but Cane’s operates in the more universally palatable fried chicken (plain tenders) niche. Dave’s spicier, more extreme profile might not inspire the same weekly habit for the average consumer as, say, a go-to burger or pizza joint. In short, skeptics wonder if hot chicken is a heat-fueled fad that will cool off, leaving an oversupply of similar concepts vying for a finite pool of spice-loving customers. Dave’s unprecedented speed of growth could itself become a risk if unit economics suffer from cannibalization or if the brand’s culture and quality control strain under rapid scaling.

What Roark may offer: Scale as a Moat.

So far, Dave’s has relied on product quality and buzz to stand out. But another emerging advantage is simply scale. In franchising, being first to scale can create a self-perpetuating moat. This is analogous to what Subway did in the sandwich category: by aggressively opening stores on every corner through the 1990s and 2000s, Subway boxed out competitors and became synonymous with “quick sandwich,” amassing over 37,000 global locations. Dave’s appears to be pursuing a similarly aggressive land grab strategy in hot chicken. The company has pre-sold large development territories to experienced franchisees with many operators signing on for 10, 20, even 30 units at a time in their regions. New franchisees must commit to opening 5 or more locations and have substantial restaurant experience and capital. By doing this, Dave’s locks in growth and ensures that prime trade areas are claimed under its banner before emerging rivals can get there. Ubiquity itself can become a competitive moat: if Dave’s is the first hot chicken chain to achieve a nationwide footprint, it will be the name consumers recognize, and the brand landlords prefer to lease to. There is precedent for this. Subway’s playbook involved flooding markets to crowd out competitors, and while that eventually led to some oversaturation problems for Subway, it undeniably made Subway the dominant sandwich chain for decades. Dave’s is aiming to scale faster than any peer, and arguably, it already has a huge head start. From 7 units to 250 in three years, now aiming for 400+ by the end of 2025, it’s outpacing even other trendy brands. If it continues selling franchises at the current clip, Dave’s could end up owning the hot chicken mindshare simply by virtue of having the most locations and being everywhere.

Roark’s involvement only cements this scale advantage. Being part of Roark’s portfolio gives Dave access to supply chain leverage and real estate opportunities that an independent brand might not get. Dave’s can plug into those existing vendor contracts and distribution networks to save on food and paper costs. Roark’s team also has deep franchising expertise to guide site selection using data and analytics. All these advantages grow with scale, and they are advantages that smaller competitors will struggle to match. In essence, Dave’s may build its moat by being first to scale. The brand doesn’t necessarily have patents or secret recipes protecting it, but if it can secure customer loyalty and prime locations before the copycats do, it creates a de facto moat. It becomes the category leader that later entrants are measured against. Given how fragmented the hot chicken space is right now, Dave’s aggressive expansion could leave most would-be rivals without breathing room. Thus, perhaps the strategic question is not whether Dave’s has an impregnable moat today, but whether it can construct one faster than others can react. Roark is betting that speed plus scale will yield a winner-takes-most outcome in hot chicken. Dave’s swift franchise rollout, if executed well, might ensure that when the dust settles, it’s the last brand standing spicy and tall.

Final Verdict: Bull

The bottom line is this: Whether or not Dave’s can maintain their momentum and status in the chicken war is tougher to say, but their deal and partnership with Roark is almost certainly a bullish play in my books.

One last thing, I’m getting hungry just from writing this blog, and Dave’s menu is looking more and more appetizing…