- The founders of Dave’s Hot Chicken sold just $40 worth of food on their first day in a dirty parking lot. After eight years of perseverance and luck, the company has been acquired by private equity firm Roark Capital at a reported $1 billion valuation.
He worked for some of the most renowned chefs in Los Angeles and had decided to become a vegetarian, but Dave Kopushyan quit his job to start cooking fried chicken. He and his friend, Arman Oganesyan, had dreamed of building a business together since their middle school days, and Oganesyan thought they could create a killer recipe.
Once they had settled on the perfect formula, they managed to pool $900 with two more friends, Tommy and Gary Rubenyan, to set up shop under a tent on the streets of East Hollywood in 2017. They did $40 in sales on their first day, when Oganesyan’s girlfriend came by with some friends; eight years later, Dave’s Hot Chicken announced it had been acquired by private equity firm Roark Capital at a reported $1 billion valuation.
“This guy is a high school dropout who had no direction in his life,” CEO Bill Phelps said in an interview with Fortune last week, pointing across the table at Oganesyan, “and he manifested this whole thing while they were sitting in his kitchen.”
Overall, Phelps credits Dave’s rise to a classic combination: “perseverance and grit.”
“All of us, in times of our careers, looked like we were at a dead end, and it wasn’t working out,” he said while also sitting alongside Kopushyan and Jim Bitticks, the company’s president and COO. “And all of us, regardless of our background, we persevered. We had the balls to keep going, and we made it better and better. We made the right moves.”
Not long ago, Oganesyan recalled, he and his three partners would need to take shifts in the car to warm their hands as they cleaned up during the winter months. The parking lot was dirty, smelled bad, and had stray cats milling about.
But the decision to open almost every day, rather than the normal once-a-week schedule for most pop-ups, allowed them to quickly take advantage of a stroke of good fortune. When the owner of a local bar noticed their stand, he alerted a popular local food critic.
Oganesyan remembered urging the writer not to give them too much praise, given the team would be unable to keep up with a big surge in demand.
“He wrote about it like we paid him to do it,” Oganesyan, a former stand-up comedian, recalled.
The next day, the founders arrived to roughly 80 people already waiting in line. Soon, they were doing about $60,000 in sales per month.
Luck in other areas mattered, too. Initially, Oganesyan and Kopushyan planned on getting the necessary health permit and other approvals before setting up shop. Tommy Rubenyan, however, insisted they had to open right away. After all, he said, it wasn’t like they had the money for these permits anyway.
Eventually, a representative from the city’s health department showed up to chastise the team. He ended up bonding with the founders over their shared Armenian heritage.
“And then he tried the food, and he really liked it,” Oganesyan recalled. “And he was like, ‘If you guys need help, let me know.’”
Fighting through COVID, tariffs, and other challenges
Dave’s now has over 300 locations doing over $600 million in sales, according to data from research firm Technomic cited by the Wall Street Journal. However, the persistent, optimistic spirit of the company’s early days continues to help Dave’s meet new challenges, Phelps and his colleagues said.
Dealing with tariffs is a “piece of cake” compared with the shock of the COVID-19 pandemic, Phelps said. After managing to go from doing just 8% to three-quarters of the company’s sales online during the pandemic, the company is now tasting American pickles to avoid levies on Mexican goods.
“You adapt,” said Phelps, citing the problem-solving ability of “workaholics” like Bitticks, “and it’s amazing, the resilience of people.”
Before dealing with the issues of a multinational corporation, however, Dave’s founders needed to manage their funds without a bank account. Initially, they packaged their daily earnings in a leftover Styrofoam box.
One night, all four men drove home without the box. Realizing they had accidentally thrown away the cash, they went back to the parking lot and began digging through dumpsters. Oganesyan, still in his apron, found the money mixed in with discarded oil and peppers.
Just as he raised his hand triumphantly, red oil dripping down his arm in the night, a man exited the bar across the street to relieve himself—and freaked out.
“This guy thinks he just witnessed a murder,” Oganesyan recalled, laughing.
Now, it’s fair to say he’s made a killing.
