Dave’s Hot Chicken is a Los Angeles-based hot chicken restaurant chain founded in 2017. In just a few years, it has grown to over 25 locations across the United States. As the hot chicken trend continues to grow in popularity, Dave’s Hot Chicken presents an interesting investment opportunity for those looking to put money into the fast food industry.
Dave’s Hot Chicken’s exponential growth trajectory
Dave’s Hot Chicken has achieved rapid growth since its founding. Its number of locations has doubled year-over-year. This exponential growth can be attributed to strong consumer demand for the hot chicken product, availability of growth capital from private investors, and a franchising model that enables rapid expansion. If Dave’s Hot Chicken can sustain this growth rate, its long-term outlook as an investment would be strong.
Private capital funding driving expansion
Dave’s Hot Chicken has been effective at raising private investor capital to fund its growth. In its latest funding round in 2021, it raised $100 million. This influx of capital from private equity firms and high-net-worth individuals has enabled it to accelerate expansion through opening new corporate-owned and franchised locations.
Potential for long-term profitability improvement
While Dave’s Hot Chicken is currently focused on expansion and growth, profitability metrics remain low. As more locations open and achieve scale, the chain can improve margins through same-store sales growth, supply chain efficiencies, and leveraging overhead costs. More seasoned locations that achieve high sales volumes indicate the long-term earnings potential.
With proven consumer demand for hot chicken, Dave’s Hot Chicken is an emerging fast food chain with significant room for continued expansion. Its ability to attract investor capital and open new locations paint an attractive picture for those evaluating the next high-growth restaurant investment opportunity.