Houston’s Hot Chicken has been backed by Savory Fund, becoming the firm’s 11th brand.
When Savory Fund Co-founder Andrew Smith met Edmond Barseghian, founder of Houston’s Hot Chicken, he “fell in love with his story,” Smith said. The story wasn’t the only attractor, either, as Smith was impressed with the average unit volume of $3 million to $4 million.
HHC, as the brand is often called, is the newest investment for the private equity firm. The 11th brand in the firm’s portfolio, Houston’s will expand via corporate and franchised locations.
“It’s a food segment that has been on our minds for about five years,” said Smith, who also serves as Savory’s managing director. “What we do at Savory, we look for brands that have the ability, the brand, the flavor profile and the sales and economics at the store level to be a scalable brand.”
Founded in 2021, HHC has grown to 11 locations—six franchised and five corporate—in two years. Already in several states, Savory contacted HHC to bring the brand to new heights in the coming years.
HHC focuses on Nashville hot chicken, which Savory sees a niche market to fill.
Savory invests in upcoming restaurant concepts like HHC and drive-thru soda brand Swig. Savory CEO Shauna Smith and Andrew Smith have worked in the industry for 15 years. Andrew Smith discovered HHC in 2022 and was immediately interested.
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The deal was in the works for a few months before really taking off in the last month of negotiations. HHC plans to sign more franchise agreements, capping at 250 signings. While chicken is a huge segment, Nashville hot chicken is a niche that still needs to be filled, Smith said. He plans to take advantage of Savory’s experience and HHC’s success to grow.
“There’s nobody who has got the franchise system built like HHC,” said Smith. “There aren’t a lot of places growing corporate and franchise stores.”
The investment required to open a Houston’s Hot Chicken ranges from $529,450 to $1.02 million.
There is enough white space to expand Houston’s Hot Chicken in the states the brand already has a foothold in, plus a few new ones such as Colorado, Iowa and Indiana. Once those stores are built, expanding in those markets will be the main focus before jumping into more states, Smith said.
Savory will be utilizing corporate and franchise locations to ensure brand success.
To saturate those markets, Smith said HHC is set to open 30 to 40 stores, corporate and franchised, annually.
“We don’t want to do as many as we can as fast as we can,” said Smith. “We want quality store openings so we’ll try to keep it at a slower pace.”
Slow and steady growth is to ensure a good guest experience. Instead of a burst of interest in the first few weeks, Smith wants to see HHC have consistent customers from the start.
“The difference between this process is we’re going to be in the trenches with our franchisees,” said Smith. “When you have a business that has franchisees and corporate-owned stores, they can pay for their own stores, which is how it should be.”