Dive Brief:
- Roark Capital invested in Dave’s Hot Chicken, taking a majority stake in the brand, the companies said Monday.
- The investment marks a notable turning point for the fast casual hot chicken chain, which parlayed social media virality and a savvy franchising strategy into meteoric growth over the last several years. Reuters previously reported that the deal was worth about $1 billion.
- The deal also further consolidates Roark’s massive influence in the restaurant industry; the private equity firm already controls Subway and Inspire Brands.
Dive Insight:
Dave’s began growing explosively in 2021, when its store count leapt from seven restaurants at the start of the year to 37 by year’s end. By 2023 the chain reached 118 units, and by late 2024 — following openings in the United Kingdom, Canada and countries in the Middle East — it reached 250 locations. That growth drew investor and media interest, and Dave’s ultimately chose Roark as its major backer.
Dave’s expects to hit 400 stores this year, per its announcement of Roark’s investment, and the financial injection will help propel the brand’s next phase of expansion.
“This is one of the great entrepreneurial journeys of our time, and now we begin the next chapter in the story,” said Bill Phelps, Dave’s Hot Chicken’s CEO. “Our entire organization is excited about the fit between Dave’s Hot Chicken and Roark.”
Dave’s leadership will retain operational control of the brand.
While small in absolute terms compared to legacy QSR chains, Dave’s is in a particularly dynamic niche within the restaurant industry. Many fast casual and chicken brands are growing faster than the rest of the industry, meaning Dave’s may benefit from structural trends within the restaurant industry even as consumers pull back from many dining occasions.
Roark has snagged one of the restaurant sector’s out-and-out success stories with the investment, about two years after it bought Subway. The investment giant already owns Inspire Brands, GoTo Foods, CKE and an investment stake in Culver’s, according to its website.
With much of the QSR and fast casual sector in Roark’s pocket, the investment group will have significant influence in the evolution of the American restaurant industry. Blackstone, another private equity firm, has also built up a large restaurant presence recently, with major investments in Jersey Mike’s and Tropical Smoothie Cafe.
