Dave’s Hot Chicken: Still Franchising And Going Strong Despite The Pandemic

Dave’s Hot Chicken, which started out in a mobile van in Los Angeles, and led to an investment by the group who runs Blaze Pizza, was primed to become a franchising success story.  Specializing in Nashville Hot Chicken and launched in mid-2017 by a classically-trained chef Dave Kopushyan, Dave’s Hot Chicken was ready to burst out with 100 proposed franchised locations.

But that was before the pandemic closed most restaurants across the U.S. except for take-out and delivery. It could easily lead to a restaurant atmosphere where franchisees tread very cautiously before jumping back on the expansion bandwagon.

Franchising during a pandemic may prove to be a challenging task, even for promising fast-casual eateries.

Kopushyvan and three of his childhood buddies raised a modest $900 to start Dave’s Hot Chicken in a pop-up parking lot on Hollywood Boulevard. 

Its tangy fried chicken sandwiches, capitalizing on the success of Popeyes and Chick-fil-A, generated a huge social media following. That buzz led to Dave’s Hot Chicken opening three company-owned outlets in Los Angeles, and one franchise, which launched in San Diego in late May. Most accommodate 40 to 60 patrons, and are considered fast-casual dining.

The investors of Blaze Pizza, which now has 341 outlets, took note, acquired a 50% interest and installed Bill Phelps, a co-founder of Blaze Pizza and Wetzel’s Pretzels, as CEO. Kopushyan continues as head chef.

Dave’s menu is streamlined and modeled after the success of In-N-Out, the cult West Coast burger franchise. It specializes in three combo platters that consist of sliders and tenders with fries.

Delivery is critical to its success. It works with several third-party vendors including Postmates, Seamless, GrubHub

GRUB
and Uber Eats. Dave’s is installing its first drive-through window and already has walk-up, take-out windows.

But Phelps attributes Dave’s Hot Chicken’s success to its tasty, halal chicken recipes. “It comes out as the juiciest, most moist, tender chicken at its base and then you add the hottest spices,” he exuded.

Franchising, he noted, is the quickest way to grow. “You can grow fast, with minimal capital, almost no capital, just as we did with Blaze Pizza,” he asserted.

When the pandemic struck in mid-March, Dave’s business dropped about 25%. But two weeks ago, business picked up and was down 5% and then it rose 12%. Why?

“It’s a huge takeout and delivery business, and it travels well,” he stated. Burgers get soggy if they’re not delivered soon, but Dave’s chicken 45 minutes later is “sassy and juicy,” he added.

Staff is protected by having their temperature taken daily, checking for symptoms and wearing masks and gloves.

Customers can dine on a chicken sandwich, French fries and a soda for $11. Its target audience is mostly men, aged, 18-to-35 years. Many are African-American, Latinos, Asians and whites, an urban mix.

But Blair Bitove, the CEO of Obelysk, a Toronto investment management group and owner of the NBA champion Toronto Raptors, said that he is moving forward with opening 30 Dave’s Hot Chicken outlets throughout Canada. He says expansion will start in Ontario and British Columbia and “we hope to be coast to coast as quickly as we can grow.”

And yet despite Bitove’s appetite for growth, even he takes a realistic approach. He expects to have two locations opened in Toronto by December but adds cautiously “as long as all goes according to plan and is not affected by Covid-19.” 

Bitove decided to invest in Dave’s Hot Chicken because he was won over by its taste and its “simple menu and variety of spice levels. There is nothing like it in Canada.”

He says Dave’s Hot Chicken’s outlets in Los Angeles thrived based on take-out and delivery. “We are anticipating that this will be the case for some time, so we are preparing for take-out orders by having walk-up windows when applicable,” Bitove said. 

He cites that delivery and take-out have been the growth magnets for the restaurant industry, not sit-down dining.

CEO Phelps too remains optimistic, though a bit wary. “When you have 20% unemployment and a pandemic, yes, you should be a little paranoid. The fact is these stores have blown it away over the last eight weeks,” he exclaimed. 

Furthermore he added, “You still have to eat lunch and dinner every single day.”