Dave’s Hot Chicken investors are betting on Brea with new deal

The restaurant investors behind the success of Dave’s Hot Chicken are making a new nationwide bet on the next hottest trend in restaurants: birria.

Mike’s Red Tacos, a San Diego-based birria chain with just two locations, plans to announce Tuesday a new franchise initiative that will build hundreds of restaurants across the U.S., backed by early-stage backers Bill Phelps and Andrew Figalli, CNBC reported.

The financial terms of their investment, which was made in early 2025, were not disclosed.

“We just saw that this was a brand and a concept that was making a real impact,” Phelps told CNBC. “And what was crucial was that we brought down potential franchisees. … Everyone liked it.”

Phelps said he had never heard of Perea before Feghali introduced him to Mike’s Restaurant.

Traditional biriya is a stew of beef or goat, slow cooked with spices and chili peppers to give the meat plenty of flavour. Birrria tacos, such as those sold at Mike’s, use slow-cooked meat as a filling and usually include consommé on the side as a dip for the taco.

Once known as a regional Mexican food, birria now appears on 3.7% of American menus, according to Datassential. That’s more than four times the penetration of the list four years ago, based on company data, but there’s still a long runway to go before it reaches everywhere.

Mexican-inspired fast food brands like Qdoba, El Pollo Loco, Del Taco and even Taco Bell They released their own versions of Beria. There are at least 478 restaurant operators running birria-focused restaurants, according to Datassential.

Mike’s menu also includes burritos, nachos, fries, and birria ramen.

“It appeals to a very wide range of guests — and it’s not just millennials and Gen Z,” Phelps said of customers at Mike’s Red Tacos. “There are elderly people in the restaurant, and there are young children, so it has a very broad appeal.”

Phelps co-founded Wetzel’s Pretzels in 1994 and became a founding investor in Blaze Pizza, the fast-casual pizza chain founded by Elise and Rick Wetzel. In 2019, Phelps joined Dave’s Hot Chicken as an investor and CEO, using franchising to quickly expand the chain to hundreds of restaurants around the world. Last year, private equity firm Roark Capital bought a majority stake in Dave’s Hot Chicken in a deal worth about $1 billion.

Feghali was one of the first Dave’s Hot Chicken franchisees. It is also one of the largest operators of Little Caesars in the country.

Together, Feghali and Phelps founded Four Wall Partners, a restaurant franchise investment firm. In addition to being early-stage investors in Mike’s, they will serve as advisors and members of the chain’s board of directors.

Vincent Montanelli, who most recently served as CEO of Wetzel’s, has joined Mike’s to serve as President.

Originally founded as a food truck five years ago, Mike’s Red Tacos opened its first location in 2022. Founder Mike Toma plans to open his third location in March; He will remain with the company as a board member and franchisee of the chain’s locations in San Diego.

“We have reached an agreement where [Touma is] “We will retain the rights to his stores and future stores in San Diego, and then we will franchise the rest of the United States and internationally,” Phelps said.

The new team plans to follow the established playbook that Wetzel’s and Dave’s have been using to grow Mike’s Red Tacos quickly.

“We’re going to be very aggressive as we grow this, because we’ve seen that we can do it,” Phelps said.

The taco chain has already secured franchise development deals with multi-unit operators for more than 200 locations nationwide, from California to Texas to New England. Some of those franchised restaurants could open as soon as the end of the year.

Phelps expects stiff competition from national chains and local taco restaurants alike. However, he said he believes the chain’s simple menu, delicious food and aggressive marketing strategy can help Mike’s beat out its competitors.

“We think this could be a winner,” Phelps said.