Bill Phelps co-founded Wetzel’s Pretzels in 1994 and grew it to 400+ units before selling in 2022. He was an early investor in Blaze Pizza, which scaled to 350 locations. He and Andrew Feghali, Dave’s Hot Chicken’s first franchisee, backed that concept in 2019, one year after its first brick-and-mortar opened in LA. Roark Capital acquired Dave’s for $1 billion. Nearly 400 units worldwide.
Now Phelps and Feghali, through their firm Four Wall Partners, are putting significant capital into Mike’s Red Tacos, a two-unit birria taco concept born in San Diego.
Two locations. Two hundred in development.
If you’re a restaurant operator in San Diego, this is worth understanding, not because you’re going to franchise nationally, but because it reveals exactly what sophisticated investors look for when they write checks.
From Food Truck to Franchise Pipeline
Mike Touma launched Mike’s Red Tacos as a food truck in 2021. The concept was tight: birria tacos, a rich consomme for dipping, and a tagline (“the dip is worth the drip”) that stuck. The menu expanded to burritos, quesadillas, nachos, and birria ramen, but the core identity never drifted.
Today there are two San Diego locations with a third opening in March. A company-operated prototype in Pasadena will serve as a training center later in 2026. And the franchise pipeline already has over 200 locations in development nationwide.
That’s a familiar trajectory in this space. Dave’s Hot Chicken followed essentially the same path: parking lot pop-up to brick-and-mortar to institutional capital to national franchise. The investors aren’t guessing. They’ve run this playbook before.
What Makes a Concept “Investable”
Phelps told Restaurant Business Online something that every restaurant owner should hear: “Entrepreneurs have a sixth sense for business that corporate businesses don’t… but they don’t know how to scale them.”
That one sentence captures the entire dynamic. The concept creator builds something with soul. The scaling team brings the systems, the franchise infrastructure, the site selection playbook, and the capital relationships to take it national.
What these investors screen for isn’t complicated, but it is specific:
A clear, ownable identity. Mike’s Red Tacos is birria. Not Mexican food broadly. Not tacos generally. One thing, done distinctively. The tighter the concept, the easier it replicates and the harder it is to dilute.
Cultural momentum behind the category. Birria mentions on restaurant menus increased over 17% in 2024, according to Technomic data. Grubhub ranked it among the most-ordered delivery items that same year. Investors want to ride a wave that’s still building, not one that’s cresting.
Proven unit economics in a small footprint. Two locations generating enough signal for institutional interest means the per-unit numbers work. Investors at this level aren’t betting on hope; they’re looking at ticket averages, food costs, labor ratios, and four-wall returns before they commit.
A founder willing to step sideways. Mike Touma is joining the board and will continue operating his San Diego franchises, but he’s not running the national buildout. Vincent Montanelli, former CEO of Wetzel’s Pretzels, steps in as president. That transition, founder to board, operator to executive leadership, is where most concepts either level up or fall apart.
What This Means for San Diego Operators
This is the second major signal in a week that institutional capital sees San Diego as a serious food market. Zuma, the global luxury Japanese brand, chose San Diego over LA and San Francisco for its first California location. Now the Dave’s Hot Chicken investors are pulling a franchise concept out of San Diego for national scaling.
The pattern is clear: San Diego has graduated from “nice regional market” to “place where investable concepts originate.” That’s a meaningful shift for anyone building, buying, or selling a restaurant here.
For operators thinking about their own exit, the Mike’s Red Tacos playbook highlights what builds enterprise value beyond the four walls:
- Concept specificity over menu sprawl
- Repeatable systems that don’t depend on the founder being in the kitchen
- A brand identity that translates across geographies
- Clean books and clear unit economics that survive investor scrutiny
Most restaurant owners aren’t building to franchise nationally. But the same qualities that attract a Four Wall Partners (tight concept, strong unit economics, transferable systems) are exactly what make a single-unit or multi-unit restaurant attractive to a local buyer paying 2-3x SDE.
The difference between a restaurant that sells for a premium and one that struggles to find a buyer usually isn’t the food. It’s whether the business can run without its founder in the building every day.
That’s the question worth sitting with, whether you’re building toward a billion-dollar franchise or a clean exit on your neighborhood restaurant.
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