Like countless others, Bill Phelps wanted to get rich when he was younger. Now, the 69-year-old CEO of Dave’s Hot Chicken and former CEO and co-founder of Wetzel’s Pretzels says he gets fulfillment out of helping others find financial success.
In the last two weeks, 19 Dave’s employees became millionaires after private equity firm Roark Capital acquired a majority stake of the Pasadena, California-based chicken finger chain in deal worth “close to” $1 billion, Phelps said on CNBC’s “Squawk Box” on June 2.
Creating that many millionaires was intentional, Phelps tells CNBC Make It.
“I had some investors who were like, ‘you’re giving away too much money, this isn’t right,'” he says. “They were absolutely right as investors to stand up for other investors. They have a fiduciary duty, but I have a duty to the people that created this business and I was true to taking care of all of those stakeholders in this deal.”
As part of the deal, every Dave’s corporate employee, store manager and assistant manager received a bonus roughly equivalent to their yearly salary, president and COO of Dave’s Jim Bitticks told Nation’s Restaurant News.
Dave’s Hot Chicken got its start in 2017 when three childhood friends pooled $900 in savings to open a chicken finger stand in a Los Angeles parking lot.
Phelps, a franchise business veteran who founded Wetzel’s Pretzels in 1994 and sat on Blaze Pizza’s board of directors until 2020, became CEO of Dave’s in 2019 after an investor group Phelps was a member of acquired a stake in the company with plans to franchise the brand, the company told NRN in 2019.
Giving credit where credit’s due
In 2024, Dave’s co-founder Arman Oganesyan told the “How I Built This with Guy Raz” podcast that the friends were courted by many investors looking for a stake in the company in the early days of the business, but Phelps and his co-investors stood out because they were willing to give Oganesyan and his fellow founders credit for their work.
“A lot of people came in with this energy of, ‘you guys got really lucky and you don’t know what you’re going to do with this,'” Oganesyan said. Phelps and his co-investors seemed to understand that it wasn’t all luck, he said.
Nearly six years later, giving credit where credit’s due continues to be a driving factor in Phelps’ leadership style, Phelps says. As leader of Dave’s corporate operations, he doesn’t micromanage because he trusts his employees to do their jobs well, he says.
For the same reason, he also pays them “generously.”
“I was told by one of my investors that I had no concept of what management compensation should look like,” Phelps says with a chuckle. “And he’s right, because I don’t look at them as management. I look at them as my partners in this journey, and I compensate them as partners in the journey.”
Making millionaires
Phelps isn’t the first CEO to turn his employees into millionaires through the acquisition of a company.
Billionaire investor Mark Cuban makes it a habit to give employees bonuses with every company he sells, he said on social media platform X last year. When he sold Broadcast.com to Yahoo for $5.7 billion in stock in 1999, 300 of the company’s 330 employees became millionaires, he said.
When Jay Chaudhry, billionaire founder and CEO of cloud cybersecurity firm Zscaler, sold his first company, SecureIT, to VeriSign in an all-stock deal in 1998, at least 70 of his employees became millionaires after VeriSign’s stock price surged two years later, he told CNBC Make It last year.
“People were going crazy in the company, because they had never thought of so much money,” he said. “A lot of them were buying new houses. They were buying new cars. They could do what they wanted to do.”
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