Lead: Investors behind Dave’s Hot Chicken are moving to scale birria nationally by backing Mike’s Red Tacos, a San Diego chain known for birria tacos. The backers — Bill Phelps and Andrew Feghali — made an early-2025 investment and will support a new franchising push to build hundreds of outlets across the U.S. Mike’s, founded as a food truck five years ago, opened its first brick-and-mortar in 2022 and plans a third San Diego location in March 2026; the deal keeps founder Mike Touma as a local franchisee and board member. The effort aims to turn a regional specialty into a broad national concept while facing competition from legacy chains and local operators.
Key Takeaways
- Mike’s Red Tacos, based in San Diego, has two operational locations and will announce a franchising program to scale nationwide.
- Bill Phelps and Andrew Feghali invested in early 2025 and will serve as advisors and board members for Mike’s expansion.
- Datassential reports birria appears on 3.7% of U.S. menus, more than four times its penetration four years ago, signaling rapid growth but not ubiquity.
- Mike’s menu includes birria tacos, burritos, loaded nachos, fries and birria ramen, broadening appeal beyond trend-driven diners.
- The chain has secured development deals with multi-unit operators for more than 200 franchise locations spanning California, Texas and New England.
- Vincent Montanelli has joined Mike’s as president; Mike Touma will retain rights to San Diego stores and remain a franchisee and board member.
- Phelps and Feghali helped scale Dave’s Hot Chicken via franchising; Roark Capital bought a majority stake in Dave’s for roughly $1 billion in 2025, illustrating investor appetite for fast-casual rollouts.
Background
Birria is a traditional Mexican stew—typically beef or goat—slow-cooked with chiles and spices; birria tacos use that shredded meat as filling and often come with a consomé for dipping. Once concentrated regionally, birria entered U.S. mainstream menus through street vendors, pop-ups and fast-casual concepts, fueling a wider industry interest in modular, shareable Mexican formats.
Bill Phelps co-founded Wetzel’s Pretzels in 1994 and was an early investor in Blaze Pizza; he later invested in and led Dave’s Hot Chicken as it scaled by franchising. Andrew Feghali was an early Dave’s franchisee and is a major Little Caesars operator; together they formed Four Wall Partners, a franchising investment firm focused on rapid rollouts. Their track record provides the operational playbook they plan to apply to Mike’s Red Tacos.
Main Event
On Tuesday, Mike’s Red Tacos is set to reveal a national franchising initiative supported by Phelps and Feghali. The funding round closed in early 2025, though financial terms were not disclosed. The plan calls for recruiting franchisees and leveraging multi-unit operators to deliver more than 200 development commitments already across multiple U.S. regions.
Vincent Montanelli, previously CEO of Wetzel’s, has been hired as Mike’s president to oversee operations and the franchise rollout. Founder Mike Touma will retain the rights to his San Diego stores, remain on the company board and act as a franchisee for the brand’s hometown locations. The team says the model mirrors the one used to scale Wetzel’s and Dave’s Hot Chicken rapidly through franchising.
Phelps described taking prospective franchisees to Mike’s as a critical validation step, saying the visits produced strong interest. He also noted that birria’s appeal at Mike’s stretches beyond younger demographics to families and older customers, which the team views as a growth advantage. Some franchised units could open as soon as late 2026, according to the company, though timelines will depend on buildouts and operator readiness.
Analysis & Implications
The move represents a common evolution: investors who succeeded scaling one concept seek the next category ride. Franchising reduces capital intensity for the parent company and accelerates footprint growth when multi-unit operators are engaged early, but it also shifts execution risk to franchise partners. For Mike’s, locking multi-unit commitments for 200-plus locations signals strong initial demand from operators who want to capture birria’s momentum.
Market data show opportunity and risk. Datassential’s 3.7% menu penetration means birria is still far from restaurant ubiquity, leaving room for chains to expand. At the same time, major Mexican-inspired chains (Qdoba, El Pollo Loco, Del Taco, Taco Bell) have rolled out birria variants, and dozens of local operators specialize in birria, creating a crowded, competitive landscape.
Menu simplicity could be an advantage: Mike’s concise lineup—focused on tacos, burritos and a few signature items—helps streamline training, supply chains and unit economics, which franchisors emphasize when selling territories to operators. However, maintaining recipe consistency and quality across a fast franchise expansion will be critical to preserve the brand’s appeal and avoid dilution.
Comparison & Data
| Metric | Value |
|---|---|
| U.S. menu penetration (birria) | 3.7% (Datassential) |
| Operators focused on birria | Approximately 478 (Datassential) |
| Committed franchise development deals for Mike’s | More than 200 locations (company disclosure) |
| Dave’s Hot Chicken majority sale | ~$1 billion to Roark Capital (2025) |
The table contrasts birria’s current footprint and specialist operators with Mike’s stated development pipeline and an example of a comparable fast-casual exit. While menu penetration has climbed quickly—roughly quadrupling over four years—it remains a small slice of total menus, implying both runway for growth and time pressure to secure market share before larger chains scale competing offers.
Reactions & Quotes
Company leaders framed the move as a validated concept with broad appeal.
“We just saw that this was a brand and a concept that really had legs to it,”
Bill Phelps, investor and Four Wall Partners co-founder
Phelps described touring prospective franchisees through Mike’s as a decisive step in securing operator buy-in.
“Everyone gave it the thumbs up,”
Bill Phelps
The founder emphasized continuity in the brand’s San Diego roots while enabling national growth.
“We put together a deal where [Touma is] going to keep the rights to his stores and future stores in San Diego,”
Bill Phelps, describing the agreement with Mike Touma
Unconfirmed
- Exact financial terms of the early-2025 investment by Phelps and Feghali have not been disclosed publicly.
- Timelines for opening the first wave of franchised Mike’s locations remain tentative; company guidance says some sites could open by late 2026 but precise dates depend on operator approvals and buildouts.
- The depth and exclusivity of the 200-plus development deals (e.g., whether they are binding versus letters of intent) have not been fully documented in public filings.
Bottom Line
Investors who helped scale Dave’s Hot Chicken are betting that birria can be the next fast-casual category to support a national franchising play. Mike’s Red Tacos brings a compact menu and early operator interest, plus leadership with franchising experience—ingredients that can accelerate rollout if execution holds.
Yet the path is competitive: national chains have introduced birria items, nearly 500 specialist operators exist, and rapid franchising requires rigorous quality control, supply-chain management and franchisee training. For consumers and potential franchisees, the next 12–24 months will reveal whether Mike’s can convert early momentum into durable market share.
Sources
- CNBC (news report)
- Datassential (market research on menu penetration and operators)
- Roark Capital (private equity firm disclosure on investments)