Dave’s Hot Chicken: Arman Oganesyan

Dave’s Hot Chicken began as a tiny pop-up, selling spicy chicken tenders and fries from a tent in East Hollywood. Their homemade take on Nashville Hot Chicken was an overnight sensation in a city that had barely heard of it, and within days, co-founder Arman Oganesyan and his partners were working frantically to serve the long lines out front. Since launching seven years ago, the pop-up has grown into a chain of 200 stores, with franchises across the country, and a beloved rubber chicken mascot. This episode was produced by Sam Paulson with music by Ramtin Arablouei. It was edited by Neva Grant with research help from Katherine Sypher. Our audio engineers were Robert Rodriguez and Patrick Murray. You can follow HIBT on X https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected]. And sign up for Guy’s free newsletter at guyraz.com http://guyraz.com/ See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:16Guy Raz?

  on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,

• 3:00Guy Raz?

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• 3:45Guy Raz?

  or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the car that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day. And it reminds me a little bit of the founders I talked to on this show, because the best

• 4:27Guy Raz?

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• 5:11Guy Raz?

  Hey, really quick before we start the show, we have an announcement about a really exciting new thing we're launching: a newsletter. And like our show, the newsletter is designed to be interesting, informative, inspiring, and most importantly, fun. It's 100% free, and to sign up, just visit guyraz.com. That's G-U-Y-R-A-Z dot com.

• 5:44Guy Raz?

  I heard that at some point you guys actually threw away your cash. Like you had a bag of cash and you threw it in a dumpster.

• 5:51Speaker 01

  We did it, dude. So we finished every night because it wasn't the best neighborhood, right? And throughout the night, what we'd do is we'd put our cash away in like a styrofoam container, like one of our to-go containers. So one of the nights, we're cleaning up and then we get to Tommy's house and we're like, okay, we're like, who has the cash so we can count it? And then Tommy's like, I think Dave has it. And I'm like, hey, Dave, do you have it? He's like, no, I thought you had it. And we kind of realized pretty early on that we probably threw it away with the other styrofoam containers. So we had to go across the street to our main dumpster, this big dumpster. And I jump in the dumpster and the funniest thing is the money happened to be in the bag that we threw away our oil mix in. So the money was covered in like red oil. I mean, we were spending red money. It looked like we had robbed the bank.

• 6:40Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:52Guy Raz?

  I'm Guy Raz and on the show today, how a pop-up chicken stand in a parking lot grew into one of the most celebrated fast food joints in the country, Dave's Hot Chicken.

• 7:11Guy Raz?

  I really hate standing in line. I'm just wired that way. I'd rather have a good enough cookie than wait two hours for the world's greatest cookie. It's just not worth the time to me. But I admit, I'm kind of an outlier. And how do I know that? Because every single day, I pass people willing to wait for over an hour to eat that special thing. A cupcake, a croissant, a burger, boba tea, gelato, whatever it is. These are people who are essentially telling you and me, "If you're not waiting, you're crazy. You're missing out." Now, the thing is, if you have the power to generate this kind of line with your product,

• 7:55Guy Raz?

  it better live up to the hype, because after two hours of standing, that cookie better blow our minds. If not, your business probably won't last that long beyond the hype. So the key is to figure out how to build hype and keep people coming back without getting frustrated. Now, this is actually an interesting business strategy, a way to think about the kind of brand you want to build. And it's precisely how the founders of Dave's Hot Chicken thought of their brand, even before they fried up their first batch of chicken. The company was founded in 2017 by four friends who met as kids. The Dave in Dave's Hot is Dave Kapushian.

• 8:40Guy Raz?

  He's a chef who worked on the line at some of the top restaurants in California. And Dave came up with a recipe for their Nashville-style hot chicken tenders and sandwiches. But the idea for the business came from Dave's best friend, Arman Oganesian. Arman was the hype man. He was the guy who came up with the plan to build the buzz. Dave's Hot Chicken started with the kind of supplies you buy at Home Depot: a plastic fold-out table, a simple accordion canopy tent, a few propane tanks, and they set it up in a parking lot in East Hollywood. But within days of opening, the wait for Dave's Hot Chicken could sometimes stretch for hours.

• 9:24Guy Raz?

  And not just that, but those same people were willing to come back and wait again. So how did they do it? How did they expand from a parking lot pop-up in 2017 to a chain of more than 200 restaurants in six countries today? Well, a big part of it was the product, of course, but the other side was execution. Armando Ganesian, who you'll hear in this interview, was born in Armenia and came to the US as a toddler. His parents settled in Los Angeles into the tight-knit Armenian community there. His dad worked as an auto mechanic and made sure that his kids spoke Armenian in the house.

• 10:05Speaker 01

  So my dad used to always say that, like, you live in America, so you can learn English at any time, but if you forget how to speak Armenian, or if you don't learn it, it's gonna be really hard to learn it, like, as you're older. So growing up, we were only allowed to speak Armenian inside the house.

• 10:20Guy Raz?

  I love that.

• 10:20Speaker 01

  Yeah, it was cool. I mean, I'm, I used to not like it so much, but as I grew up, I realized how that really helped me, and, you know, if it wasn't for that, I might not be so fluent in Armenian.

• 10:30Guy Raz?

  Yeah. I mean, not, not a super useful language, like, outside of Armenia, but super useful if you're, like, somewhere stranded and you, there's another Armenian, and, like, you can connect right away.

• 10:41Speaker 01

  And you know what's actually really interesting about it is because Armenian is such an old language and has so many different sounds, and growing up, I did, like, acting and comedy, so it really helped me with, like, learning different accents and learning, like, different impressions, because I was so used to pronouncing different sounds, you know? So it kind of, like, came in really handy as I got older.

• 11:00Guy Raz?

  Yeah, and I guess you really got, got into acting as you got older. I think you, like, you even left high school, like, I guess you, you dropped out in your junior year to, to pursue acting full-time.

• 11:13Speaker 01

  Yeah, so right after I got out of high school, I went to, like, a local, like, acting school, and then through the acting school, the teacher, like, I think immediately noticed that I was pretty good, so she recommended me to an agent, so, you know, I started doing little auditions here and there, but I realized it was a lot harder than I thought it was.

• 11:31Guy Raz?

  Yeah.

• 11:31Speaker 01

  I think everybody assumes, as soon as you start, you're gonna get discovered, and, but it's, obviously, the reality is not like that, and, so it was like, it was like a, a nice awakening.

• 11:43Guy Raz?

  So like, all right, you start to take some acting classes and you start to

• 11:47Speaker 01

  Yeah.

• 11:47Guy Raz?

  audition. Did you get any, any hits? Did you get any gigs in the first couple of years?

• 11:52Speaker 01

  No, so, no, so by the time I started auditioning, I was like seventeen and a half.

• 11:56Guy Raz?

  Yeah.

• 11:56Speaker 01

  And for like a couple of years, I did auditions up until like, maybe like twenty. And I was like, you know what? I'm like, I don't think I want to do acting. I think I want to do comedy. So I started making Vine videos and it really actually blew up. Like I got a lot of like Armenian followers and you know, I was kind of popular and people really liked the videos.

• 12:13Guy Raz?

  And what were you, what were the videos? Like, can you give me like a?

• 12:16Speaker 01

  So I was getting, yeah, I was getting creative with mine. So I started making mine out of the box and I was like, oh, it's an Armenian superhero problems. And Armenians have a problem of being late. So the superhero was always late to whatever he needed to save. So he never got to save the. So it was like little.

• 12:28Guy Raz?

  Like the crime happened and then the Armenian superhero is like, oh, I'm late.

• 12:31Speaker 01

  He just got there, yeah.

• 12:31Guy Raz?

  That's so funny.

• 12:32Speaker 01

  Exactly. So there was like episodes like that. Yeah. So people were, there was more creative than what people were making. So it got, it got some followers. Um, and then I kind of like leveraged that into like doing some live shows, you know, like doing sketches and stuff, you know, I eventually transitioned from that to doing stand-up comedy. I just, I didn't have like a direct path. I didn't, at the time, I didn't understand how I can go from stand-up to making money. And I was making no money. I was making like, um, fifty bucks a night doing stand-up.

• 13:03Guy Raz?

  All right. So you, um, you essentially are trying to figure this out, but it's not necessarily clicking. And meantime, I mean, you're one of your best friends, this guy Dave, right?

• 13:15Speaker 01

  Yeah.

• 13:16Guy Raz?

  Uh, Dave Kapushian, he goes off to study culinary, he goes to culinary school. He basically decides I want to be a chef. But I guess from what I understand, you guys had always kind of talked and dreamed about maybe one day doing something together.

• 13:31Speaker 01

  Yeah. Later on, so when we initially met, we met like right around like middle school. And he was already very into food. And, um, I remember like, obviously me and Dave hung out throughout the years and you know, every time I'd see him, he'd have like a bunch of cookbooks with him and he was like learning recipes and he'd work at a restaurant for like six months and he'd kind of like master the type of food and he'd move on to the next one and then he'd move on to the next. And he was so passionate about food. So he was putting all of his effort into it.

• 14:00Guy Raz?

  And I guess at a certain point, he even did a stint at French Laundry, the one, probably the most famous restaurant in the United States.

• 14:06Speaker 01

  Yep. Yep, yep, yep, he did.

• 14:08Guy Raz?

  I mean, that is a high-pressure environment. So Dave is doing all this stuff. And in your mind, the thought of Dave as somebody you might do something with one day?

• 14:18Speaker 01

  Yeah.

• 14:19Guy Raz?

  So clearly around food.

• 14:21Speaker 01

  Yeah, well, it wasn't originally around food. So obviously, as we were getting older and as comedy wasn't paying so well, and obviously as Dave realized being a chef doesn't pay that well. So funny enough, restaurants were never something we thought about. I had no knowledge in restaurants.

• 14:36Guy Raz?

  Yeah.

• 14:36Speaker 01

  But I think also because Dave and me had kind of talked about how, especially the types of restaurants that he was working in, the profit margins were probably very small because of the type of prep that went into it and the quality of food that went into it. So it didn't seem like a... And again, me being a person that had no experience in food, I didn't think that I had any knowledge of how to help out Dave in any way, shape, or form.

• 15:03Guy Raz?

  Yeah. And so, I mean, how was your just state of mind at that time? I mean, you're like, you know, 24, haven't really yet kind of figured out what you want to do, which is fine, totally normal. Nothing wrong with that if you're listening, you're 24. But it can create anxiety and you watch your friends and they seem like they have it all figured out even though they don't. I remember that time in my life. How were you feeling at that time? Were you anxious?

• 15:29Speaker 01

  I mean, obviously, we had our parents that weren't putting pressure on us, but we can kind of see that they can't work as hard as they used to, right? So you have that pressure on you. You obviously have a little bit of self-regret. You're like, should I have studied? Should I have stayed in school? Would it have been easier to do something? You know, you start thinking to yourself like, what life skills do I have? How could I... You know, so you do have a lot of anxiety, you have a lot of self-doubt. But at the same time, what's interesting is me and Dave always kind of had in the back of our heads that something is going to click for us one day. So it was like a mixed mindset, you know? There was a lot of belief with a lot of doubt.

• 16:08Guy Raz?

  Yeah. All right, the story that I, from what I understand, it seems too simple, so it's probably more complex, is that around 2016, you go to this place called Howlin' Ray's Hot Chicken, which is a Nashville hot chicken restaurant based in LA.

• 16:25Speaker 01

  Yeah.

• 16:26Guy Raz?

  You have a sandwich there, hot chicken sandwich, which is basically a fried chicken sandwich, just bathed in spices, like fiery, flaming chili spices. And it just blows your mind, is that the story? Tell me the story.

• 16:39Speaker 01

  It's really close, actually. So I was, I loved fried chicken, that was like my favorite food, right? So one day, one of my friends, Andy, is like, hey, he's like, there's this really good hot chicken place, we should go try it out. So we get there, and there's like a four-hour line.

• 16:55Guy Raz?

  What?

• 16:55Speaker 01

  It was this huge line, yeah, and I'm like, dude, is this all for a chicken sandwich?

• 16:59Guy Raz?

  Nothing's worth four hours.

• 17:01Speaker 01

  I know, and I was like, dude, this is all for a chicken sandwich? And he's like, yeah. And then as we, you know, got closer and we tried it, it was, it was one of the best sandwiches I've ever had, you know, being a fried chicken fanatic, it was a great sandwich. So naturally, I went back a few times, and I feel like they had too much on their menu for the line they had. And I felt there was too many options, because me and 95% of the people I knew in the line were just getting the sandwich.

• 17:26Guy Raz?

  And I've been, I've been in the situation where you're like in line, and you're like, I know what I want, and you're like five people, it's like six people deep, and you're like, oh my god, are you kidding me? And then they bring the family members up, and then everybody looks at the menu, and they're, which, by the way, I have stood in a line at In-N-Out Burger that seemed so insurmountable, it was like 15 people deep, and it moves so fast. You, you are in the front row line five minutes, because there's, there's only a couple of things to order.

• 17:55Speaker 01

  Yeah, and when people, so like now, these people will always tell us like, oh, you guys should check out this place, they have a huge line, check out this place, they have a huge line. And what I always say is like, I'm like, it's not that hard to have a huge line, you can artificially have a long line, you can take orders slower, you can give them out slower until more and more people pile up. What shows like, a true quality of a restaurant is having a long line, but getting through it really fast. Because that means you have, besides having a lot of customers, you have really good operations, you're able to get all these customers their food in, in a reasonable amount of time versus people waiting three hours for, you know, a sandwich. So I feel like even though they had a long line, I felt like they, there were some things they weren't doing that right, you know what I mean?

• 18:37Speaker 01

  And on top of that, I was like, yeah, fried chicken is its own category, but hot chicken is not. That's a pretty new category. It existed in Nashville.

• 18:45Guy Raz?

  In 2016, it was a new category.

• 18:47Speaker 01

  Brand new, yeah. I mean, it existed in Nashville and Johnny had tried it, the chef of Howlin' Raisin, he liked it enough to bring it to LA. And then we tried it, so by the time we had tried it, it was really only in two places.

• 18:59Guy Raz?

  Yeah.

• 18:59Speaker 01

  Right? And we saw how people, how much people loved this food, like the, I mean, hot chicken is a great food. I mean, the mixture of all those spices, it's kind of hard to top that flavor, right?

• 19:10Guy Raz?

  Yeah.

• 19:10Speaker 01

  So, over time, as I saw it, I'm like, that's when the restaurant thing kind of kicked in. And it was, it was so funny, because I was like, dude, I'm like, I'm like, Dave is a chef, dude. I'm like, and it was funny that you said that, I was like, why haven't we like, thought of anything like, restaurant necessarily, but that's why I clicked that we had him, because there was never like a food or like a, a genre of food that me and Dave, because me and Dave have completely opposite palates, right? I'm like, fast food, I like like, fast food like Big Macs and things like that, and junk food.

• 19:39Guy Raz?

  He's caviar and foie gras.

• 19:40Speaker 01

  Exactly. He's like, I see notes of this and that, and I'm like, I think it's bad. So, we had, and it's funny, Dave will say, he's like, Armand is never somebody I thought I'd get into a, a, a restaurant business with, because our palates were so opposite, you know?

• 19:55Guy Raz?

  But you wanted him to, to try this fried chicken, this hot chicken?

• 19:59Speaker 01

  Yeah, I remember when I told him, I'm like, um, I'm like, hey dude, I'm like, ah, I'm like, wouldn't it be interesting if we opened up a chicken restaurant? And I remember he's like, chicken? He's like, first of all, I was like, I don't even like chicken. He's like, I don't even eat chicken. And he's like, I'm so close to being a sous chef at my restaurant. And he's like, I, why would I leave, give that up?

• 20:16Guy Raz?

  Yeah.

• 20:17Speaker 01

  And I think, I think what really convinced him is I remember telling him, and I, and I told him, I was dead honest when I told him. I'm like, look dude, I'm like, you're an amazing chef. You know, the guy that started Hall and May is a great chef. And look at the line he has when he made with the sandwich he made. I'm like, if there's anybody in the world that can make a better chicken sandwich and have a bigger line, it's you. And I I kind of saw a little flame in his eyes like, okay, he's like, let's let's event. He's like, let's try it out. So we eventually obviously went to Hall and we tried it out. And again, he was like, mind blown like as a chef, I'm sure to him it was even crazier like the flavor profiles and you know, all the different peppers. So he was in it. He's like, I love it. He's like, I'm in it. Let's do it.

• 20:57Guy Raz?

  And it was like traditional, it's like two pickles, sauce, hot chicken.

• 21:01Speaker 01

  Coleslaw, yeah. It's it's good. It's a great fried chicken sandwich. I mean, it's really hard to eat and not like it.

• 21:07Guy Raz?

  So you start to so basically you say to him, let's kind of brainstorm this thing. Let's just start talking about what this could be. Is that is that kind of what what how it started? This is, I guess, in late, late November of 2016.

• 21:22Speaker 01

  So Dave was on board. And then what we kind of talked about is like, okay, well, we don't have too much money. But what we could probably do is ask a bunch of our friends and see if anybody is down. And we can gather up like, you know, our initial idea was get like seven friends or eight friends. And all of us invest whatever money we have and we buy a food truck. But as we kind of started asking all of our friends, nobody was like, everyone was like, no, why would I do that? I don't want to do that. Tommy was like, immediately is like, I'm down. I'm down with you guys, like whatever you guys want, I'm with it. Let's do this.

• 21:52Guy Raz?

  And just to remind people, you met Dave, Dave Kapushin, back in middle school. And I think Tommy, Tommy Rubenian, I think that that you guys met even before then, like you guys became friends in grade school, right?

• 22:07Speaker 01

  Yeah, I met I met Tommy in kindergarten, literally like the first day of kindergarten. So what's funny is the first day of kindergarten, we fought. And the second day of kindergarten, we were like best friends and we've been friends literally ever since then. So in the end, it was pretty much me, Dave, Tommy and Tommy's older brother, Gary, that were kind of like on board to try this out.

• 22:28Guy Raz?

  A food truck, okay. And and this is like the height of food truck mania in America. I mean, so so this this is a great idea, buy food truck. Okay, so what happened?

• 22:39Speaker 01

  Um, okay, so we realized before anything, we kind of needed like, obviously a recipe and we needed a foundation for the restaurant. So we kind of, again, talked to ourselves like, well, what are the problems that we thought we saw with Talon Ray's? One of it was a really big menu, right? But the reason their sandwich was so good is because they cooked it right before they gave it to you. It wasn't pre-cooked, sitting in a heated area.

• 23:01Guy Raz?

  Yeah.

• 23:02Speaker 01

  And we realized people either like to eat chicken by hand, you know, kind of like grab it with bread and eat it by hand, or they like to eat it in a sandwich. Um, so we're like, well, what's one piece of chicken besides the breast? Because we kind of didn't want to do the same thing Hal and Ray's was doing, you know? We didn't want to, as much as we were inspired by them, we didn't want to copy them. We wanted to do our own version of hot chicken, right? So we thought to ourselves, okay, what's the one menu item that they don't have? That's a piece of chicken that could be eaten both ways, and that was the chicken tender. It's part of the breast, but it's not the breast.

• 23:32Guy Raz?

  It's like that, it's separated with like this, the sort of the tendon or whatever, right?

• 23:37Speaker 01

  Yeah.

• 23:37Guy Raz?

  You just cut it off and that's the tender.

• 23:39Speaker 01

  Yeah, exactly, because the breast is a lot bigger and the tender is kind of like two little strips, right?

• 23:44Guy Raz?

  Yeah.

• 23:45Speaker 01

  So we kind of eventually decided on the chicken tender. So, um, so it's really cool when I think about it, that was so fun. But what our days would consist of is, you know, David would wake up, he'd go to work. I wasn't working at the time, so I'd kind of hang out. And when he was done with work, like midday, we'd meet up and we'd go eat at a local chicken place that we'd find that we maybe haven't tried before, whether it was like a popular one, a non-popular one. And we saw what we liked about their chicken, what we didn't. And then we'd go back to his house and we'd just start cooking our own, you know, and like working on a recipe. And then after we'd cook, we'd sit and watch documentary about chicken. You know, what could we learn from these? Yeah, we were watching like people giving tours of their, you know, kitchens and how they cook their fried chicken and things like that. And then we take some of those ideas and go back and make another one.

• 24:31Speaker 01

  And we pretty much did this like every day for months. You know, I remember I had stupid ideas all the time. I was like, what if we put like, gummy bears in, I don't know where it came from, but it was like, first of all, you can't put gummy bears in oil because it's gonna burn and separate. It's like, so there was a lot of, and that was the dumbest one, but there was a lot of ideas I had that I thought could work.

• 24:51Guy Raz?

  Deep fried gummy bears?

• 24:52Speaker 01

  I know, man, it was so bad. It was so bad.

• 24:54Guy Raz?

  Oh, I don't know about that.

• 24:55Speaker 01

  And I feel like what worked really well with Dave's is we both had ideas that were kind of crazy, but we had each other to kind of bring us back down to earth, right? Like, I'd have like the fried gummy bears idea and he'd bring it down to earth. And then Dave had more like gourmet ideas. He's like, oh, well, what if we made our own bread and pickled our own cucumbers? And I'd be like, yeah, but if we're gonna be a franchise concept, you know, you can't ask your franchisees to bake their own bread.

• 25:17Guy Raz?

  You're talking about a franchise concept?

• 25:18Speaker 01

  Oh, yeah. Oh, yeah, dude.

• 25:21Guy Raz?

  That's a lofty goal at the time?

• 25:23Speaker 01

  I know, man. And the way we were thinking about it is like, we wanted it to be a franchise and we wanted to be this thing. And we were trying to develop it from the ground up as a foundational restaurant to be very franchisable, yet maintain very high quality. So we were like thinking all these things as we were in the house.

• 25:41Guy Raz?

  I mean, think big, right? I mean, you're 25, you don't even have, you don't even sold a single chicken sandwich. You guys are talking about a national chain already.

• 25:48Speaker 01

  Zero dollars.

• 25:49Guy Raz?

  But I mean, I mean, it's, it's kind of crazy and a little in over your head, but at the same time, like, if that's how you were thinking, that was probably getting you out of bed every morning, keeping you excited about this thing. Cause you're, right? Cause you're like, okay, we gotta keep experimenting. And, and did you just have like a big vat of oil, like, in a pot and you would just, you know, fry chicken every day?

• 26:12Speaker 01

  Yeah. And what's funny is Dave's roommate, John, was a vegetarian. So we'd go to like Dave's house with like a bunch of chicken and he would see us and he's like, are you guys gonna cook more chicken? And we're like, yeah. He's like, all right, just please clean up, dude. And we just like have like a bunch of chicken all over the place, like raw chicken. It was, it was really fun.

• 26:29Guy Raz?

  Tell me about how you were. Like what you were searching for, I mean, as you were like just making the chicken, you were like, at what point would you know it's right?

• 26:41Speaker 01

  You know, what's funny is before that, we would have a lot of people try the chicken. So obviously Dave had a lot of roommates. There was tons of people to try it and kind of give us feedback. So we had like a really good, like almost like a testing group that we'd work with. And then we make this joke that once our parents liked it, because Armenian parents ate everything.

• 27:00Guy Raz?

  I did not know that. Is that true?

• 27:02Speaker 01

  They're very strict with food. Like you don't like outside food.

• 27:05Guy Raz?

  They have high standards.

• 27:07Speaker 01

  They do. So once they liked it, we're like, they like it. This is gonna be great. You know what I mean?

• 27:11Guy Raz?

  If an Armenian parent likes your food, you are a Michelin star restaurant.

• 27:15Speaker 01

  If an Armenian woman likes your food, you've got something going on, dude.

• 27:19Guy Raz?

  That's really valuable information. I'm gonna remember that if I ever open a restaurant. I'm gonna recruit Armenian mothers to try my food before I open.

• 27:26Speaker 01

  That's so funny when you think about it. But yeah, we did a lot of experiments, you know, like we're very spiritual people and we kind of always believe that the universe is helping us and guiding us. And, you know, a lot of weird things would happen, like our logo, for instance, you know, I remember we went to swap meat to buy like, you know, I think like a container for oil or something like that.

• 27:47Guy Raz?

  Yeah.

• 27:48Speaker 01

  And we're just like in a store that sells kitchen equipment and there's one rubber chicken for sale there. And I was like, Dave, I'm like, what are the chances that there's a rubber chicken for sale at a store that sells kitchen equipment and swap meat and there's only one of them? I'm like, I feel like this is kind of meant to be, let's buy it. So we bought that chicken and obviously that's eventually what ended up becoming our logo was that rubber chicken.

• 28:09Guy Raz?

  Your like mascot. Yeah.

• 28:11Speaker 01

  So there was a lot of things like that, like our brine, like we spent weeks trying to figure out a brine, right? And, you know, Dave had like milk brine and this and nothing was right. And one day we were really tired and, you know, we're like, we're like, we're done with cooking today. And we had a few pieces of chicken left over. And I was like, yo, Dave, where should I put this? And there was like a Velastic pickle jar that was pretty much empty. And he dumped out the rest of the pickle juice and he's like, put it in here. I'm like, oh, that's nasty, dude. I'm like, there's pickle juice in there. He's like, oh, no, he's like, it's fine. It's like chicken and pickle juice is not a big deal. So we put it in there and we left it in there. And when we came back like a few hours later and we took it out, it looked like... Like the the the salts had almost worn away at the chicken and opened up all the muscles and made it so tender.

• 28:53Speaker 01

  So we're and then when we cooked it and we tried it, we're like, dude, this tastes so good. We're like, why don't we just use this? And then obviously we added a little bit more recipes to the uh to the pickle juice, but the pickle juice eventually became our brine. And it was like accidental discovery.

• 29:11Guy Raz?

  All right, so you guys are working on this recipe. Meantime, trying to figure out how to get a food truck. What's the status of the food truck?

• 29:20Speaker 01

  So obviously, again, just like everything else, we realize we're pretty in over our heads when it comes to being able to afford a food truck. So as we were getting closer to having, you know, the recipe more or less finalized, you know, we started kind of like looking into what a food truck actually costs. It was way, way, way, way over budget. Like, there's no way we could afford it.

• 29:41Guy Raz?

  Yeah.

• 29:41Speaker 01

  So I remember I was having a talk with one of my friends, Ed, and he used because he used to own a chicken wing place. And I was just kind of trying to ask him for advice, like what he would suggest. And he's like, well, have you guys ever considered doing like a pop up? So we're like, well, that's not a bad idea. We're like, we could probably start a pop up a lot faster. We could save some money through it. And maybe if within a year of working this pop up, we get a four to food truck.

• 30:05Guy Raz?

  Yeah.

• 30:06Speaker 01

  So that kind of became our goal now was like, okay, now we're doing a pop up. That's that was our thing. You know, we planned a lot of different things around it, like Farley.

• 30:15Guy Raz?

  Farley is the the reporter from Eater LA.

• 30:17Speaker 01

  Eater LA, yeah. I mean, we used to go to all the restaurants he would suggest, right? So he had a very big pool on people in LA. Like when he would recommend a place, like people would go there.

• 30:26Guy Raz?

  And you followed him, this reporter specifically?

• 30:29Speaker 01

  Yeah, we knew we wanted, we really wanted him to try days. Like that was one even way before we were in the pop up or anything. As we were still talking about like the foundational stuff, one of the things we're like, okay, once we're ready, we need to have Farley come and try the food and write an article about it. Because like that's what's really going to blast us off to the next level. We saw what he had done for other restaurants and we kind of understood that like if our food was good and we had good operations and we can kind of get that little boost from him where people know us, then we can kind of ride that wave.

• 31:00Guy Raz?

  All right, so you had him in sights, but you're not going to get to him yet. First, you have to figure out how you can do this pop up thing.

• 31:06Speaker 01

  Yep.

• 31:06Guy Raz?

  So how are you going to do it?

• 31:09Speaker 01

  Okay, so Tommy's parents had a little flower shop in Hollywood in like this little plaza. And Tommy's like, well, I could potentially maybe talk to the landlord, see if he'll, you know, give us a little space there. And we asked him about it. And so he's like, I can give you guys a little parking lot space across the street in this parking lot plaza where we eventually ended up. And it's funny because we didn't like it. We're like, dude, we're like, it's not visible. We're like, it's dirty. We're like, it's a parking lot. Like, this place isn't right at all. You know, we're like, this is not gonna work here.

• 31:39Guy Raz?

  And this was, by the way, where was this parking lot?

• 31:42Speaker 01

  Uh, this is in Hollywood Boulevard, East Hollywood Boulevard.

• 31:45Guy Raz?

  So in East Hollywood?

• 31:47Speaker 01

  Yeah.

• 31:48Guy Raz?

  And he's like, you guys can have a pop-up. And was he gonna charge you?

• 31:51Speaker 01

  At first, he said, no. He's like, you guys can have it for free. He's like, you guys have one spot for free. Yeah. And then Tommy was like, let's just do it. And he's like, and funny enough, it was like, early morning, he's like, let's do it tomorrow. And we're like, what do you mean tomorrow? He's like, okay, we was like, we have the spot, right? We're like, yeah. He's like, we have the recipe. We're like, yeah. He's like, so why don't we do it tomorrow? And we're like, we have no equipment. We have no nothing. He said, okay, how much money do we kind of have? And we all kind of like, I had like a few hundred bucks that I'd saved up. Dave's like, well, I'm getting my paycheck in like a day or two. And he was gonna quit anyway. So he's like, I'll have like a few hundred bucks. And then Tommy's like, okay, I'll cover whatever's left, you know? So we had like, a bunch of like $900 that we set. We had 900 bucks.

• 32:29Guy Raz?

  And did you apply for permits and stuff like that?

• 32:32Speaker 01

  No.

• 32:32Guy Raz?

  Okay.

• 32:33Speaker 01

  Dave wanted to. We're like, because once we got the official location of the pop-up, right?

• 32:39Guy Raz?

  Yeah.

• 32:39Speaker 01

  Me and Dave were like, oh, we should apply for like, all of our like paperwork before we get started. And then Tommy was like, he's like, we're not, we're not gonna get paperwork. He's like, nobody's gonna give us paperwork to open up on a street. He's like, we either do it or we don't.

• 32:52Guy Raz?

  It was just like, let's do this and ask for forgiveness later?

• 32:55Speaker 01

  Yeah, exactly.

• 32:58Guy Raz?

  When we come back in just a moment, how the pop-up begins to pull in hundreds and then thousands of dollars. And how a chunk of that change winds up in a dumpster. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 33:18Guy Raz?

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• 35:30Guy Raz?

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• 36:55Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's May of 2017, and Arman and his partners have set up a tent and a fryer in a parking lot in East Hollywood to sell their spicy fried chicken tenders and fries.

• 37:10Speaker 01

  The first day, we had literally like a few tables that we got from our parents, a $150 fryer, an Easy Up, we had a heating lamp for the fries, and... Pretty much that was it besides like, you know, all the like sheet trays and stuff like spicing.

• 37:29Guy Raz?

  And so, all right, so you have, you bring all this stuff to the parking lot and you open up, what time of day did you open up?

• 37:36Speaker 01

  So like, we did, we did an initial test run the day before. It was on the first and we, we posted that we're going to open up at seven, but we really opened up at like eight. Obviously, nobody showed up because, you know, it was on IG with like 50 followers. And my girlfriend was there, Lola, with three of her friends, and they were our only customers for the night. And they bought four meals and we made $40 that night.

• 38:00Guy Raz?

  So 10 bucks for a meal?

• 38:02Speaker 01

  Yeah, yeah.

• 38:03Guy Raz?

  What would you get? What would you get for 10 bucks?

• 38:05Speaker 01

  You'd get two tenders, fries and slaw.

• 38:08Guy Raz?

  Nice. Okay.

• 38:09Speaker 01

  Yeah, it wasn't bad at all. It was, it was pretty affordable, I think.

• 38:12Guy Raz?

  So you sold four meals and what was the verdict? Did they, were they like?

• 38:16Speaker 01

  Oh, they loved it. But the second day when we went back, we're like, okay, we have to get more serious. So we got back and we obviously didn't have that many customers. So the first thing we did is we cooked like three chicken tenders. We cut them up into little pieces and me and Tommy kind of like walked around the block. And, you know, there was like a few, there was like Jumbo's Clown Room, which is a pretty popular like burlesque bar down the street and they had a long line. So we went and we kind of started handing out pieces of chicken to people in the line, whoever would take it. And what was really cool is a lot of the people came back like a couple hours later. You know, that second day, we might've made like 80, $90 or something like that, but we were like, wow, like dude.

• 38:55Speaker 01

  And they were all real people. Like, nobody was like girlfriends or friends. There was real people that came in from either trying a sample or just passing by. You know, and then the, again, the third day, even more people came by. People, you know, would bring a friend and be like, this is the place I tried yesterday and it was really good.

• 39:11Guy Raz?

  Meantime, you had this strategy to get this guy, Farley, this eater critic, to come to the restaurant. How were you even gonna do that?

• 39:19Speaker 01

  So here's the interesting thing. We wanted him to come, but we knew we didn't want him to come really early on. We knew as much as a Farley article would help us, if it came at the wrong time where we weren't ready for it and we got an influx of customers and we couldn't serve them, then it was actually going to be detrimental to us and not help us. So we knew that we needed him to come when we were a little more familiar with our operations and when we felt like we could actually serve people in like a speedy pace.

• 39:46Guy Raz?

  So how are you going to get his attention?

• 39:48Speaker 01

  So funny enough, Farley contacted us on Instagram. Like, I remember I saw the message and it was Farley. He was like, "Hey, I heard about what you guys are doing and I really want to come check out the food." And I was like, "Oh, man." I'm like, "This is crazy." But it was pretty early on. This was like, we had like five days in. So to us, it was still early because we wanted at least like a few weeks or a month under our belt, you know?

• 40:11Guy Raz?

  Yeah. And he came on like day five or six. Did you know that he was there? Did you recognize him?

• 40:18Speaker 01

  Yeah, I talked to him and I, you know, me and him had like a conversation. I was like, "Yeah." You know, he's like, "I'll come around." And sure enough, like, he showed up and he was, I don't think he realized like what a small operation it was. Because he kind of looked at it and he's like, "This is what you guys are doing?" He's like, "Why?" And he was really curious, like, "Why do it like this?" And, you know, we kind of explained like, "We have no money and we just had a recipe and we felt like the recipe was good and this is the only way that we could sell it to people was just kind of setting up in the middle of the street and just, you know, bootstrapping it.

• 40:52Guy Raz?

  And I mean, you must have been pretty nervous when he finally tried the food. So what happened? How did he react?

• 41:00Speaker 01

  Um, so he had a tender and he didn't give an overwhelming reaction. So we couldn't gauge whether he loved it or not, you know? He was like, he was like, "Interesting." You know, he was kind of like, more like that and just he wanted to kind of get to know us, right? And I remember mentioning to him, I'm like, "Hey, if you're going to write an article," and I'm like, "I don't know if you're," I'm like, "But please, if you are, please make sure to mention that we're like a week in, we have a very small fryer, and if anybody comes, they should expect very, very, very long wait times." Which is funny enough, when he wrote his article and he wrote, "Late night chicken sandwich will blow your mind," down at the bottom, he had written, you know, "Get ready to wait because they're a very new operation."

• 41:40Guy Raz?

  So what happened the next day?

• 41:42Speaker 01

  It was like, it was kinda like we made it dude. Like, everybody that had doubted us was like, dude, you guys got an article! And it was so weird to us, like, we'd never been a part of anything like that, like, somebody writing about something we did. You know, reading the article and the things he said was, it was so overwhelming to us because he was saying so many nice things.

• 42:01Guy Raz?

  So the next, the day after that piece-

• 42:03Speaker 01

  That night, yeah.

• 42:04Guy Raz?

  That night, what happens?

• 42:06Speaker 01

  So we obviously get to our pop-up late, knowing us. We're supposed to be open at 7, that's what it says in the article. We get there at like 7:15, and there's maybe like 90 people in line at the pop-up.

• 42:18Guy Raz?

  At your little tent pop-up?

• 42:21Speaker 01

  And it's not set up, and it takes us like maybe 15 minutes to set up, or 20 minutes to set up.

• 42:26Guy Raz?

  Wow.

• 42:26Speaker 01

  And our dads were there too, and they were like, they were like, what are all these people doing here? And you had, like, people from the other businesses were coming out, and, you know, because they'd seen us for four or five days there, just cooking, and then the sixth day, there's like a hundred people in line.

• 42:41Guy Raz?

  Did you have enough food to feed everybody?

• 42:43Speaker 01

  No, no, we didn't.

• 42:46Speaker 01

  What's funny is like, as we got there, we were really nervous and we kinda didn't know what to do. And then our dads kinda gave us a little courage, like, don't worry, you guys got this, and we're like, hey, we got this. And as we started setting up, I kinda like walked everybody in line, I said, hey, thank you guys so much for coming. We're a very new operation, so it's gonna take us a long time to set up. And I'm like, our fryer makes about four orders every 20 minutes. We might not be able to serve everybody. And that first day was hectic, dude, it was hectic. But we adapted quick, so after that night, me, Tommy and Dave, we kinda got together, we're like, hey, we need to adjust our system, dude, because this is not gonna work. And we had just enough to buy another fryer, so we went and we bought a bigger fryer that made like 18 orders every like 10 minutes.

• 43:25Speaker 01

  So now we were ahead of the curve, so now even though we had this long line, we were actually producing orders really fast, so...

• 43:32Guy Raz?

  Here's the thing, right? One article can have a massive impact, but oftentimes, that impact can be very short-term. Like, you know, you could have, okay, 80 people come, and then 100 people come, and then, you know, for a couple of weeks, it's like a line of 80, but then eventually, it kinda tapers off, right? And there are very few restaurants anywhere that can sustain long lines. So how are you going to kinda sustain them? I mean, now you've got this thing. And it's still two tenders, right? Chicken tenders and it's not sandwiches yet?

• 44:08Speaker 01

  No, that was part of our strategy too.

• 44:10Guy Raz?

  Okay.

• 44:10Speaker 01

  We we did tenders at first because we knew that if a month later, we added sliders, then we can get a whole new wave of media. You know what I mean? So you start off with tenders, you get all the media coverage you can, then you add sandwiches to your menu and kind of get another lapse of.

• 44:24Guy Raz?

  And then people like, now they've got sandwiches.

• 44:26Speaker 01

  Now they've got sandwiches. Yeah, exactly.

• 44:28Guy Raz?

  And and could people get their spice level or was did that would that come later?

• 44:33Speaker 01

  Yeah. Uh, that time we had, I think, a mild, hot and extra hot.

• 44:37Guy Raz?

  Okay. So and probably a lot of people coming, certainly in those early days, are going for extra hot because these are these are Nashville hot chicken freaks.

• 44:44Speaker 01

  Yep, yep, yep. Obviously, we because we only had a limited amount of time, right? The chicken took like 16 minutes to cook. So you'd have to set up 18 plates. You'd have to put bread in all of them. If it was sliders, you'd have to start toasting the buns. Um, and then you'd have to so it took a while to set everything up. And then, once the chicken came out, you needed to spice it and get it on the bread one second earlier so it could be piping hot. And then the fries would go on it and it would go out. So you it was very clockwork. If you missed a second, you could ruin the next batch.

• 45:15Guy Raz?

  So in in a matter of months, you guys are probably pulling in a thousand bucks a day?

• 45:20Speaker 01

  A little, a little more than that.

• 45:22Guy Raz?

  More, a lot more?

• 45:23Speaker 01

  We're doing like, we're doing like a few thousand a day.

• 45:25Guy Raz?

  That's um, so I mean, okay, what about the guy who lets you use the parking lot for free?

• 45:30Speaker 01

  That's the thing is like, dude, he came in, he came in like a month in and he saw he's like, what is this? And he's like, this guy's got a whole restaurant over here because there was like a hundred people. He's like, I thought this is a hot dog. So I was like, I'm gonna have to start charging. And every month he charges a little bit more until we eventually got out of there. But like, he was a great guy and we kind of understood that allowing three kids to do a pop up in your parking lot is taking all the liability. If if anything happens, it's on you, it's your property. So we kind of appreciated that he was taking that risk for us. And we kind of understood that paying him rent was just part of business. So we were happy, we were just happy to be there, you know?

• 46:05Guy Raz?

  Yeah, it was really nice of him.

• 46:06Speaker 01

  Um, yeah.

• 46:07Guy Raz?

  And tell me about just like your day to day life.

• 46:11Speaker 01

  Mm hmm.

• 46:11Guy Raz?

  Is that whole summer of 2017 just a grind? Like every day, hot like?

• 46:17Speaker 01

  Yeah.

• 46:17Guy Raz?

  Tens, hundreds of people in line?

• 46:20Speaker 01

  Yeah. Um, it was really cool actually. So um, me and uh, Dave would have to wake up early to go shopping for the food. So we'd wake up at like maybe seven or eight o'clock.

• 46:30Guy Raz?

  Yep.

• 46:31Speaker 01

  And we kind of, you know, go to restaurant depot. We buy our chicken there. We'd buy fries. Um, obviously the spice mixes, you know, all the different peppers to make the spice mix with. You know, just all the like food stuff. And then we'd kind of, you know, come back. We, so we would do our prep at Tommy's house.

• 46:46Guy Raz?

  Yep.

• 46:47Speaker 01

  Because Tommy had like the biggest backyard out of all of us. Um, and Tommy's grandparents would actually help us. So like his um, grandpa would pour out all of the sauces into like the containers for us. Into like the little boxes. And his grandma would help us make the lemonade every morning. And then from literally like ten or eleven until like five o'clock, we were just prepping the food. But yeah, it was a lot of prep because obviously like each individual tender, you know, you gotta wash it, you have to brine it, you have to spice it, you have to put it into flour. So it was like a long process. So we'd barely finish in time.

• 47:20Guy Raz?

  What time did the pop-up close? Like what time do you stop serving sandwiches?

• 47:24Speaker 01

  Like, I mean, we, we would sell out fast, but by the time we got through all the orders, it'd be close to midnight.

• 47:30Guy Raz?

  So midnight, then you've got another hour or so of cleanup.

• 47:33Speaker 01

  Like two hours of cleanup.

• 47:34Guy Raz?

  All right, home at two AM and then up again at seven, eight AM.

• 47:38Speaker 01

  Six days a week.

• 47:39Guy Raz?

  Took Sunday off?

• 47:40Speaker 01

  We took Sunday off and we, all we could do was sleep. And for six months, that's what it was.

• 47:45Guy Raz?

  So, all right. I mean, if you guys were doing a couple thousand bucks a night on Good Nights, I mean, it's, it was just a matter of time before you're doing, you're bringing in like fifty grand a month.

• 47:56Speaker 01

  Yeah.

• 47:57Guy Raz?

  Maybe more.

• 47:58Speaker 01

  Yeah, I mean, I remember um, like obviously the first month, we started in the middle of it. We were still getting, you know, all of our operations and stuff down. And you know, our, our parents, as proud as they were of us, were like, hey, well, are you guys making any money? Like, you guys have been doing it for a month and there's all these people, but where's the money? And obviously at the time, we were just kind of reinvesting most of it back into the pop-up, you know? But the second month um, was the first month that we actually paid ourselves. And at the end of the month, we, we had each made like, I think it was like ten or eleven in cash.

• 48:29Guy Raz?

  Thousand.

• 48:30Speaker 01

  Yeah.

• 48:30Guy Raz?

  Wow.

• 48:31Speaker 01

  And it was the most money I'd ever seen in my life at the time.

• 48:34Guy Raz?

  Wow, you guys made forty grand in profit. You could distribute that to each of you. That's in a month. That's amazing.

• 48:39Speaker 01

  And it was the second month, dude, I was sitting in outside of my house that night looking at the money and I was like, dude, what did we do? I'm like from a parking, from a pop up in a parking lot selling chicken, I'm like, we made this much cash. And I remember I went home and I, we had all these like overdue bills and I put all the money in every single bill and I put a couple thousand on each of my parents' nightstands. And the next day they woke up and they're like, where did you get all this money? And I was like, like, pretty much like, don't worry about the bills from now on, like we, we, we got everything covered from now on. So it was like, that was probably like one of the best nights of my life. It was just like, everything like coming together, you know?

• 49:14Guy Raz?

  Yeah. I heard that at some point you guys actually threw away your cash, like you, you had a bag of cash and you threw it in a dumpster.

• 49:22Speaker 01

  We did it, dude, so we finish every night because it wasn't the best neighborhood, right? And um, we were always kind of afraid that like somebody might try to rob us or something like that.

• 49:30Guy Raz?

  All cash business, yeah.

• 49:32Speaker 01

  All cash business. So at night, um, or throughout the night, what we do is we put our cash away in like a styrofoam container, like one of our to-go containers. At the end of the night, we take that home with us. So it was like inconspicuous. So one of the nights, you know, late into the pop-up, again, very tired, it's been a whole week and you know, we're cleaning up and then we get to Tommy's house and we're like, okay, we're like, who has the cash so we can count it? And then Tommy's like, I think Dave has it. And I'm like, hey, Dave, do you have it? He's like, no, I thought you had it. And I'm like, dude, what do you mean? I'm like, where, where's, I'm like, and we kind of started panicking because it's a lot of money, especially for us at the time, because we're like, you know, saving up. So we started looking around everywhere. It's not on the car. We're like, hey, we go back to the pop-up. And we kind of realized pretty early on that we probably threw it away with the other styrofoam containers.

• 50:16Speaker 01

  But what sucks is we throw away like a hundred fifty styrofoam containers a night. We would throw away maybe ten bags of trash a day. So we had to go across the street to our main dumpster, this big dumpster. And I had to, and I told Tommy, I'm like, keep lookout. I jump in the dumpster. And the funniest thing is the money happened to be in the bag that we threw away our, our oil mix in. So we make a oil mix and we put spices in there when it's boiling, we mix it up and it becomes like this red oil mix. And we throw that away at the end of the night and that's where the money was. So the money was covered in like red oil. And I remember I got the money and I was really happy. So I got out of the dumpster and I was like, Tommy, I got the money. And there was a guy there that was using the bathroom because there was a bar right there.

• 51:01Speaker 01

  And he looked at me and there was a guy like, and I'm, and I think about it now, I was wearing like an apron and I had this like red dripping money and I was in a dumpster and he saw me and he freaked out and he ran away. And I'm sure till today, that guy thinks he like witnessed the murder or something like that. So we found the money and we were, I mean, we were spending red money. It looked like we had robbed the bank because we had like money with like red dye on it. So, you know, we'd have like slip it in as we were shopping, you know, we'd give like five greens and then one red in there.

• 51:29Guy Raz?

  Um, so, all right. You, you launched this thing in the parking lot on May 2nd, 2017. By January 1st, 2018, your brick and mortar opens. Before we talk about that, um, how did you guys, I mean, now you're bringing in serious money. So you presumably you had the money to take out a lease on a location.

• 51:53Speaker 01

  Yeah, um, kind of. So the first couple of months, obviously because we weren't that used to money, we just kept paying ourselves.

• 52:00Guy Raz?

  Yeah.

• 52:01Speaker 01

  And I think by the fourth month, we realized like, hey, if we're ever going to get to a store fast, we have to stop paying ourselves and, you know, kind of put the money towards the store. And then, um, that's kind of also where Gary came in, Tommy's older brother, because he was the oldest one. He had a little bit of experience with business.

• 52:18Guy Raz?

  And did he have any money? Did he have a little bit of money to invest?

• 52:20Speaker 01

  He had, he had money. Like, he was the one that actually invested 60% of the first store's funds and then we put up the rest of it.

• 52:26Guy Raz?

  Got it.

• 52:27Speaker 01

  And obviously he was seeing how big Dave's was getting and, and I mean, at the time, the pop-up was falling apart because we were seeing so many people. Our fire was almost like, it was bad. Like it was, we weren't able to handle the amount of people coming in. Every night, we were turning away a couple hundred people because we were sold out. So we were like, we really need to get to a store. So Gary was very on board. Um, so we kind of started like store hunting. And what's funny is like, Gary was like, well, first we need to like, he's like, we need to at least a little bit legal, right? So like, you guys need to at least establish Dave's as like a business, you know what I mean? So he sent us, um, to a friend of ours, Rafi Babayan, who was a lawyer. So he kind of started helping us out on the legal end a lot, you know, even till today, like he's actually partners with us on our stores.

• 53:12Guy Raz?

  Wow.

• 53:12Speaker 01

  And he helped, dude, he helped us so much. Like he, him and Gary were kind of the ones that came in and helped us a lot, like getting us to like a mature state.

• 53:23Guy Raz?

  How did you guys divide the business up? Did you just split it evenly between the four of you?

• 53:27Speaker 01

  Evenly, yeah, evenly. And even in the parking lot, it was evenly between the three of us. And then-

• 53:32Guy Raz?

  You brought Gary in and then-

• 53:34Speaker 01

  Yeah, yeah. We felt it's the fair, it's the most fair way to go. If everybody has an equal portion, then everybody puts in equal, equal effort.

• 53:41Guy Raz?

  I mean, it's kind of remarkable because as businesses get more successful, that can tear even friends apart. But that clearly didn't happen.

• 53:52Speaker 01

  No, you know what's funny is we, we, we had this understanding of like, you would rather own, let's say, 10% of a cow than 100% of a grape. So, you know, you would rather own 25% of a store than 30% of a pop-up. So to us, it wasn't how much, what was the percentage we owned? It was what did we own the percentage of, you know?

• 54:12Guy Raz?

  How big was that pie, yeah?

• 54:14Speaker 01

  How big was that pie that we own the percentage of? So a store was obviously much more valuable than a pop-up.

• 54:19Guy Raz?

  Well, one of the things that I think is really important is, is where you were, right? Because, you know, seven, eight months in, you have a brick and mortar. And the first brick and mortar is, was in East Hollywood as well, right?

• 54:31Speaker 01

  Yeah.

• 54:33Guy Raz?

  And I think had you done this in like Birmingham, Alabama, or, you know, Boise, Idaho, it wouldn't, it wouldn't have, even if with the quality of what you're doing, it wouldn't have scaled so quickly because LA is a media capital of certainly the United States and, and one of the media capitals in the world. And being in LA, there's a critical mass, right? Like, how important do you think LA was to the, to the, just the rapid success of this brand?

• 55:02Speaker 01

  Very important, very important. And I think Los Angeles not only played a big role in Dave's Hot Chicken, but Hot Chicken in general. Because if you think about it, the second place that Hot Chicken really came after Nashville was Los Angeles. And Los Angeles is kind of what helped it really blow up into this like nationwide thing. Everybody in, in the US wants Hot Chicken now.

• 55:28Guy Raz?

  So, all right, so you guys have this first store in Hollywood in 2018. Tell me about the design, because there's a look. I mean, it's like got sort of the stylized graffiti on the wall and you've got the rubber chicken. And tell me about how you were thinking about the design.

• 55:46Speaker 01

  It all goes back to when we were working on the recipe. So Splatter House, the guys that do our art, demkin art, they're really close friends of mine from before Dave's, from when I used to stand up comedy. And they do amazing artwork. So I remember as we were working on the recipe and I talked to him like, hey, I'm like, we're doing this chicken thing and blah, blah, blah. And I'm like, one day if we have a store, like, would you guys be down to do art on the inside? And like, yeah, of course we would, you know, like, why wouldn't we? So as the store obviously came, they're the first people we called. So we kind of like, you know, came up with the first design just together.

• 56:20Guy Raz?

  And it was, I mean, I should mention, every single location is different.

• 56:25Speaker 01

  Yeah, and it's hand done by the same artists. And every single store has their own like mascot Dave. So every store will have a Dave after like a pop culture figure. You have like Muhammad Ali Dave, you have like Bruce Lee Dave or Darth Vader Dave. So you have all of these, every store has like their graffiti wall, their white walls, their neon lights, and then their particular Dave.

• 56:46Guy Raz?

  All right, in that first store, how did you figure out how to, you know, how to run an operation, the store is different, an efficient operation, to get enough orders out at a time and to meet the demand? And was it, you know, how did you guys start to figure that out?

• 57:04Speaker 01

  We, it's actually really funny, as we were getting like kind of closer to opening, we watched the movie The Founder, the one about McDonald's.

• 57:11Guy Raz?

  Oh, yeah, great movie, so good with Michael Keaton.

• 57:14Speaker 01

  Yeah, and we saw that scene that how they were kind of like developing their kitchen system, like with chalkboards and stuff. And we kind of took that inspiration and we went into our kitchen and we kind of tried to like. Understand like how we could set things up to have the fastest possible operations within the restaurant. And we eventually came up with this island system where there was like a table in the middle that everything would be put on, chicken, fries and stuff. And then from there, you'd kind of spice them up and then categorize them into mild, medium, hot. And then the person on the line would just turn around. So we kind of like, using the inspiration from the founder, developed our little like island system in our kitchen that we felt was like the most efficient for getting food out.

• 57:52Guy Raz?

  That is so cool. That movie inspired you guys.

• 57:55Speaker 01

  Yeah, it was really fun, dude. It was really fun.

• 57:57Guy Raz?

  Cause you guys had ambitions even before you had the tent to have a franchise business. So by the time you opened a brick and mortar, you knew that you were, it was just a matter of time before you could figure out a second location.

• 58:08Speaker 01

  Yeah, we knew we were close. And what's funny is even during the pop-up and up until now, we had so many people that would come be like, oh, let me invest and make you guys a franchise. Let me do like, oh, I got, so we had a lot of, a lot of offers going into it.

• 58:21Guy Raz?

  Wow.

• 58:22Speaker 01

  But I think we kind of realized, one, it's too early. Two, we realized that like the right partner is probably the most essential piece of the puzzle. So we were very careful with who we even consider as partners. But most of the people kind of didn't pass that energy check right away. So we were just, we didn't want to work with them.

• 58:40Guy Raz?

  But you were open to this idea of, of having a franchise partner because you, you felt like the four of you guys were not even have the capital and you didn't have the experience to do it on your own.

• 58:49Speaker 01

  Yeah. Uh, we, well, at the time, we were a little, yeah, we were a little naive. So we felt like if we really tried, we maybe might be able to do it on our own. But looking back to it, there was no way. Um, the amount of like overhead you need, the training, the scaling, it's, it's almost impossible to do, I think, if you haven't done it before or have people with you that have done it before. It can be really easy to mess it up.

• 59:12Guy Raz?

  When we come back in just a moment, the business gets a boost from two new partners and some big name celebrities. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 59:39Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2018, and Arman, Dave, Tommy, and Gary have opened one chicken restaurant and are about to open another. And they're starting to think about finding franchise partners. And then, almost on cue, someone leaves them a mysterious message.

• 1:00:01Speaker 01

  So I remember that we were in our office, and one of our friends that worked for us and is one of our partners now, Vahé, he came into our office like, hey, somebody left a post-it note for you guys. And we're like, post-it note? And the post-it note said, "Founders of Dave's, please call John Davis." And we're like, who's John Davis? We're like, this is really weird. And Tommy's like, yo, guys, I have a really good feeling about this one. He's like, we should probably call. And we were literally gonna throw it away if Tommy hadn't said that he has a feeling about it. You know? So we call, and they go, "Davis Entertainment, how may we help you?" And me and the guys looked at each other like, he doesn't even pick up his own phone? This guy must be big, you know what I mean? So, and then he picked up the phone, and he was a really super cool guy. And he's like, hey, guys, like, you know, I heard, you know, you guys have a really popular restaurant.

• 1:00:46Speaker 01

  I really want to come out there, and I want to like, meet you guys in person and talk to you guys. We kind of did research on him, and we found out like, you know, all the things he had done. And we saw that he had a lot of experience in growing restaurants. So, fast forward, he comes in, again, really nice guy. He meets all the founders. We give him a little bit of a tour of the restaurants and, you know, of the kitchen. And we bring him out some food, and he eats it. And I'll never forget, dude, like, he was like, he was eating this food, and he was saying things. So it's like, he's like, this is, this is, this business is gonna be huge, guys. I'm gonna get The Rock, I'm gonna get Kevin Hart. He was like, throwing out all these celebrity names and stuff like that. And I, again, I remember thinking, either this guy is... Exactly who we need in life, or he's just really crazy and this is just too good to be true.

• 1:01:29Guy Raz?

  Yeah.

• 1:01:29Speaker 01

  Right? And then after he finished, like, look, guys, like, I want you guys to meet Bill Phelps, right? He's like, he's, you know, he's like, he's a guy I've worked with. He's very experienced in restaurants. He's like, why don't you guys meet with him tomorrow? He's like, I'd be really interested to see what he has to say about it, right?

• 1:01:44Guy Raz?

  And this guy, Bill Phelps, this is the guy who co-founded Wetzel's Pretzels and Blaze Pizza. So clearly, super experienced, deep experience in franchise businesses.

• 1:01:53Speaker 01

  Yeah. So the next day, we meet Bill. And again, we loved his vibe. We loved their energy. They... What we loved about them versus other investors that we had met is we felt like they actually really... They gave credit to the founders, you know? Whereas a lot of people came in with this energy of like, you guys got really lucky. And, you know, you guys don't know what you're gonna do with this. They kind of understood that it doesn't seem like they got lucky. It seems like they knew a little bit of what they were doing, right? So we really appreciated that energy from them. And I remember that time, um, on social media, if we ever posted that we didn't have a line, we'd get like hundreds of people coming in because we always had a line. So I fake posted that we didn't have a line just because I wanted to be extra packed up. So when they came in, there was like 150 people in line.

• 1:02:37Speaker 01

  And they were like, what the hell is going on? So we knew pretty early on that, you know, they had the right energy to work with.

• 1:02:44Guy Raz?

  So in September of 2019, this investment group, led by these guys, they took ownership over, I think, 49% or 50% of Dave's Hot Chicken.

• 1:02:57Speaker 01

  Uh, I think it's 42.5, I think, around there, like 40s, yeah.

• 1:03:02Guy Raz?

  And, I mean, you had two locations by this point. So they basically, they, they came up with a valuation. And they bought 42% of it. And, and this is...

• 1:03:14Speaker 01

  Yeah, kind of.

• 1:03:15Guy Raz?

  Yeah? Sorry?

• 1:03:15Speaker 01

  No, so what we kind of did was we, um, instead of like buying the company, because, again, we kind of had like Rafi to help us out. Like, he was a friend of ours that was a lawyer that we trusted.

• 1:03:25Guy Raz?

  Yeah.

• 1:03:25Speaker 01

  So he kind of like advised us that it might be smarter to just like kind of, you know, just create a new franchise company, right? Like Dave's Franchise Co., instead of just selling the company. Because we knew that, like, as the founders, we, we weren't ready to give up the company.

• 1:03:39Guy Raz?

  Yeah.

• 1:03:40Speaker 01

  You know, the only way we wanted anyone to be a part of it is if they were gonna continue to let us do things the way we wanted to do them. And we're just gonna help us grow it versus take it off our hands.

• 1:03:50Guy Raz?

  But basically, this was also an opportunity for the four of you guys to earn some upfront cash, but also to retain ownership.

• 1:03:58Speaker 01

  Yeah, but we earned no upfront cash.

• 1:04:00Guy Raz?

  No upfront cash?

• 1:04:01Speaker 01

  No, no, we just, the money we raised kind of just went to, um, you know, hiring, you know, operations people and, you know, our head of sales and...

• 1:04:11Guy Raz?

  So you didn't have like a, you didn't have like a payout at all?

• 1:04:14Speaker 01

  No.

• 1:04:15Guy Raz?

  No, but you now had, and you retained, so you've got this franchise business that they own a big chunk of, you guys retained the majority ownership over. And now, from what I understand, you guys, you, Dave, Tommy and Gary, become franchisees, basically.

• 1:04:32Speaker 01

  Yeah, so along with being franchisors, we continue, because the stores were very profitable and because it was our source of income, um, one of the causes of the deal was as the founders, we, we wanna continue to open more stores, right? So we didn't wanna take any territories that were too far away from us, so we just took the Los Angeles area, and then we eventually took the Las Vegas territory because we felt like it was close enough for us to operate. So we kind of bought the territory of like Los Angeles, and with the founders, we own like, I think, 11 stores now.

• 1:05:03Guy Raz?

  So clearly, this was the direction you guys were heading in, and it was a risk, right? Because you could have given, I mean, there, it could have, you had this brand, you had this product that you believed in, and franchising is risky because you're putting your brand into the hands of people who are gonna run the stores, right? But at the same time, if it works, it could be hugely profitable.

• 1:05:30Speaker 01

  Yeah.

• 1:05:31Guy Raz?

  I mean, was there any doubt in your mind that this was the direction you should go in?

• 1:05:35Speaker 01

  There wasn't a doubt in our mind because that's kind of like what we had built the business to be.

• 1:05:41Guy Raz?

  Yeah.

• 1:05:41Speaker 01

  Obviously, like talking to Bill and John, even just from the first couple of conversations, we learned a lot. Like, a mistake they had made with Wetzel's is they franchised to anybody that wanted to buy a store, right?

• 1:05:55Guy Raz?

  Anyone, mom and pops, anyone.

• 1:05:57Speaker 01

  Mom and pops, anybody, which was a big mistake. And it's something that they did differently with Blazes. They only sold to experienced franchise groups that bought big territories. That's actually a much better idea is you only franchise to groups with multiple other stores that are running really good operations where this is exactly what they do. Where when you give them the store and the training manuals and everything, they're going to know exactly what to do with it.

• 1:06:23Guy Raz?

  Yeah.

• 1:06:25Guy Raz?

  I'm curious about some of the people who got involved in investing were celebrities. Maria Shriver and Samuel L. Jackson and Michael Strahan. And I get pitched this all the time. People like, "Our company has all these celebrity investors." And to be honest, my reaction is, "Okay." I mean, a celebrity is a celebrity. Like, it doesn't make them a good investor because they're famous. It just makes them, it just means they have money to invest. And then eventually Drake became a significant investor. You're obviously in LA, the center, world center of celebrities. But, I mean, how critical is having celebrities as investors on board to the success of Dave's?

• 1:07:04Speaker 01

  It's, I think Drake was the more critical one. You know, I think what it really helps with is franchise sales, right? Because as you're going after these really big franchise groups that own hundreds of stores, you know, they don't want to take a risk on a one-store or two-store concept. You know, as popular as they might be in Los Angeles. So, you know, having investors like, let's say, Samuel L. Jackson is an investor and Drake is an investor, it gives them a little bit of assurance of like, "Okay, so maybe if they've invested, like, maybe there's something here." So, we would really use that to try to sell stores initially. Until the stores would open up and then they would kind of, you know, the numbers would speak for themselves. So, you wouldn't necessarily have to use Drake's name as much or Samuel L. Jackson's name as much.

• 1:07:48Guy Raz?

  Yeah.

• 1:07:48Speaker 01

  So, then they eventually, over time, just became investors. But at first, they were pretty key to us selling stores to big groups while only having one or two stores open.

• 1:07:58Guy Raz?

  So, all right, now, I think... How many, how many locations are there now of Dave's?

• 1:08:06Speaker 01

  It's, I mean, we had like, there was a point where the growth went crazy. So, you know, there was a time where there was, it was like 10, 15 stores and out of nowhere it was like 50, 60, 70, and now we're like 200.

• 1:08:16Guy Raz?

  200 stores. And it's mostly in the US, but you've got some locations in Canada, which I've been to. And then Dubai?

• 1:08:23Speaker 01

  Dubai, Qatar. And I think we're pretty close to a UK deal.

• 1:08:28Guy Raz?

  And I read that, it was amazing, I did not know this, that fried chicken, like basically the biggest market for fried chicken is not the United States, it's Asia.

• 1:08:39Speaker 01

  Yeah, dude.

• 1:08:40Guy Raz?

  People are crazy for fried chicken in like Korea and Japan and China and all over Asia. Are you guys, is that like the next frontier?

• 1:08:50Speaker 01

  It's funny, because that's, we're, we're talking about that a lot lately, you know, we're talking about, is there potentially a partner out there that, you know, we can talk to that is, you know, obviously at the quality we want, that's willing to franchise Dave's out there. So we're, we're definitely in talks now. I think we, we kind of underestimated our international abilities. It's not something that we really wanted to do.

• 1:09:12Guy Raz?

  Yeah.

• 1:09:13Speaker 01

  But kind of looking at how Dubai, Qatar, and Canada are performing, it seems like, you know, international could be a great market.

• 1:09:20Guy Raz?

  And now you've got, as you mentioned, about 200 locations. And the, and I think you've sold, how many franchises have you guys sold?

• 1:09:27Speaker 01

  I think 900.

• 1:09:28Guy Raz?

  900?

• 1:09:30Speaker 01

  Yeah.

• 1:09:30Guy Raz?

  Wow. So there, this is going to expand. And if it expands according to the, to the plan, when, like, how long before there are 900 Dave's, Dave's fried chicken?

• 1:09:40Speaker 01

  Like four, four or five years, four years?

• 1:09:43Guy Raz?

  Wow.

• 1:09:44Speaker 01

  Yeah. We, we opened pretty fast.

• 1:09:46Guy Raz?

  I read that, um, at the end of 2023, Bill Phelps, your, your CEO, said in an interview that on average, each Dave's location does about 2.8 million in revenue a year.

• 1:09:58Speaker 01

  Yeah.

• 1:09:58Guy Raz?

  To put that into perspective, like a Subway sandwich chain probably does in the hundreds of thousands in revenue.

• 1:10:06Speaker 01

  Yeah, like 600,000, maybe 700.

• 1:10:08Guy Raz?

  A Taco Bell, probably between 1.8 and 2.

• 1:10:12Speaker 01

  Yeah, which is great.

• 1:10:13Guy Raz?

  You know, McDonald's probably does 2.2. Chick-fil-A is a different category, that's probably closer to like 9. But, but almost $3 million per restaurant, um, that's a lot of money. That's a great business.

• 1:10:26Speaker 01

  Yeah, it's very high AUVs for a franchise, franchise concept.

• 1:10:29Guy Raz?

  Yeah. Arman, I wonder, I mean, now that you are a bigger company, you have 900 locations in the next couple of years, and you guys have, how many franchises do you guys own, the four partners?

• 1:10:43Speaker 01

  I think 11 stores.

• 1:10:45Guy Raz?

  Wow. So that's a full-time job right there, and you're also sort of the brand manager. But, I mean, what do you think, I mean, you're so young, you're like in your early 30s, right? Are you 30, 31?

• 1:10:58Speaker 01

  31, I just turned 31, yeah.

• 1:11:00Guy Raz?

  Amazing. I mean, you were broke and trying to like break into comedy when you were like not that long ago, like, and here you are, like, sitting on top of this incredibly successful empire of restaurants. What do you think about your future? I mean, you know, as Dave's gets bigger and bigger, it is going to get more corporate. That corporate is not, it's not a bad evil word.

• 1:11:22Speaker 01

  No, it's not.

• 1:11:23Guy Raz?

  I mean, corporations can do great work, but it means there's more bureaucracy, there's more hands in, you know, there's more cooks in the kitchen, so to speak. So do you imagine you kind of staying in that corporate role long-term?

• 1:11:38Speaker 01

  Yeah, so at least for like the foreseeable future, Dave's is a pretty like corporate company, but at the same time, we're very also mom and pop, right? Like, you have Bill and John, who are these really experienced people that have done it a million times before, and then you have these four young guys that are like high school dropouts that, you know, are more consumers. So we, you know, you combine those two things, and there's this really good balance of understanding that goes on between the partners, right? And it helps the company be really healthy. There's like 30-year-old high school dropouts, and then these guys that have done crazy huge franchise concepts.

• 1:12:16Guy Raz?

  When you think about, you know, this journey you took and where you guys got to and where you are now, I mean, you're so young, you're going to make a lot of money over the course of your life, even if you drop out and just are passive and, you know, owner. How much of where you got to, to this point, do you think has to do with the grind and the work you put in? And how much do you attribute to just the luck of timing with hot chicken and, I don't know, and just, just the luck?

• 1:12:45Speaker 01

  I think it's, we got lucky that, you know, hot chicken started to trend in Los Angeles. But at the same time, if Dave hadn't dedicated half of his life to studying culinary, it wouldn't have really helped us, right? And then even when it came to, you know, the marketing, you know, yeah, we were lucky that I had a little bit of, you know, marketing knowledge from doing the comedy and stuff. But at the same time, like, you needed the skill, right? So everything is a little bit of the skill and luck, and you kind of need the little bit of luck to show your skill. But I think it doesn't matter how lucky you get, and it doesn't matter how many people write about you. If your product is not good at the end of the day, none of it matters. And if your product is good, then somehow you're always going to end up

• 1:13:30Speaker 01

  getting lucky somehow, right?

• 1:13:34Guy Raz?

  That's Arman Oganesian, co-founder of Dave's Hot Chicken. By the way, their spiciest chicken recipe is called "The Reaper", and it's so hot that people who order it actually have to sign a waiver. It says, "Eating The Reaper can cause you harm, including bodily injury, property damage, emotional distress, or even death." One Reaper eater who did not die said, quote, "I felt like a small grizzly bear was inside me trying to claw its way out."

• 1:14:08Guy Raz?

  Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And of course, it's free. And don't forget to sign up for my free newsletter at guyraz.com. This episode was produced by Sam Paulson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Katherine Seifer and audio engineering by Robert Rodriguez and Patrick Murray. Our production staff also includes Casey Herman, J.C. Howard, Alex Chung, John Isabella, Elaine Coats, Kerry Thompson, Chris Messina, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.