Raising Cane's: Todd Graves (REPEAT)

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Hey, it's Guy here, and what better way to celebrate the New Year than with one of our all-time favorite episodes? The story of Raising Canes is so funny, it's so full of lessons, and in some parts so implausible that I promise you, you will not be able to forget it once you've heard it. We first ran this episode back in 2022, and since then, Raising Canes has expanded to more than 800 restaurants across the U.S. It is such a fun story, and I think you're gonna love it.

You know, back then, we thought you could actually, this is being naive. You could actually go to a bank to bring a business plan and they lend you money. Here's my plan. I need $100,000.

Yeah, and I thought they would give it to you. Isn't this a great plan? Isn't this a great idea? And did you do that? Yeah, yeah, yeah. Like we bought a couple of cheap suits and went to Office Depot and bought boxy briefcases with a brass combination lock sheet. Yep. Yep. We went and we went and saw every bank in town. I had a briefcase, Craig had a briefcase and we would put it on their desk sitting across from in our chairs and we would open the brass combination lock

like somebody was gonna steal our chicken finger business plan. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I'm Guy Raz and on the show today, how Todd Graves built one of the most popular fast food chains in the US by ignoring the advice of almost everyone and by going through hell and high water almost literally to raise the money.

When you have an idea for something interesting, say a business or a product or an initiative inside of your workplace, you will, at some point, get asked the following question. How is it different from what's already out there?

It's a perfectly fair question, and a question many of us are trained to automatically ask. Because we humans naturally assume that if the idea you're coming up with isn't totally original, well, then it's probably not worth pursuing.

Except that being different or original isn't necessarily a recipe for success. Just look at Google Glass or Heinz Blue ketchup or the short-lived short-form video service Quibi. All of these were very different and very original and very much failures. Which must mean, at this point in my introduction, I'm obligated to quote Ecclesiastes chapter 1 verse 9, there is nothing new under the sun.

Even some of the biggest companies in the world, like Google and Facebook, were originally improvements on existing technology. So in some ways, the right question to ask isn't, how is it different, but rather, how is it better? Because that is the question Todd Graves could easily answer in 1996.

His idea was not revolutionary. He wanted to sell fried chicken fingers. But his execution is what would make his restaurant raising canes one of the most successful fast food chains in the United States. On a per restaurant basis, raising canes earns more money than any other major fast food chain with the exception of Chick-fil-A.

And the entire menu is four simple items, chicken fingers, crinkle cut fries, Texas toast, and coleslaw. You can get a fountain drink, ketchup, and a container of cane's special dipping sauce as well. That's it. And what that means is that if you only have four things on your menu, you better be pretty confident that those four things are exceptional.

Because raising canes doesn't have burgers or frosty shakes or hot dogs or tacos to lean on if the rest of the menu sucks. But Todd's vision, at least at the beginning, wasn't to build an empire of restaurants that now numbers more than 600. He simply wanted a place in Baton Rouge, where students at Louisiana State University could hang out after football games or after a night of partying.

And while lots of people suggested that Todd introduce classic Louisiana Cajun spices or even healthy options like salad, he stayed laser focused on his short, simple, and efficient menu. But going from one restaurant to 600 wasn't a seamless journey. In fact, getting the money to finance his first restaurant required two dangerous detours to an oil refinery and an Alaskan salmon fishing boat.

But before that happened, Todd Graves grew up in Baton Rouge in a family of five. His dad sold warranties for car dealerships, and his mom helped his dad with the business. Todd's dad was actually a former professional football player, too. A lineman for the New Orleans Saints back in the 1970s, and Todd grew up with dreams of playing college football, just like his dad.

I was 61 weight, almost 200 pounds in high school playing to a football, right? And so I was a quarterback and then the defensive end, you know, going both ways. And, um, you know, I didn't realize at the time, but that really made for me having a smooth childhood. You know, I was just really fortunate, you know, I was just one of the better kids, you know, or of the best kids playing sports, which also, you know, you know, at younger ages, you know, makes you more popular, right? And so, yeah.

I was a reasonably smart kid and I worked hard my classes. So I was part of all the honors classes. And then I liked drama. So I did, you know, plays. Oh, you did theater. Yeah. Yeah. I would say I had different groups of friends. You know, I had the real smart kids that were friends, you know, and then sometimes they complained about the jocks.

not being friendly to them, and I'd bridge those together. Then you had the artistic kids, and I would bridge all those along. I didn't really think that was my role, but later on in life, I understood that it was when I look back. I think that made me more well-rounded and made me more empathetic to people, being around different people and different backgrounds, different interests, but also seeing their challenges with the other groups.

So you were, you were the high school quarterback and a pretty good athlete. I think, I mean, Louisiana, I would say, Louisiana, Texas, big football and Louisiana also baseball states. Did you ever, ever like have dreams of playing at the college level? Did you ever think, you know, maybe I can, I can play in college.

Yeah, I did. And I wanted to. I just wasn't good enough to play division one. I wanted to play major college football. So we're talking LSU, you know, a big Southeastern Conference school. And so I wasn't that good. I actually got offered some smaller schools to go play, but

I realized I really wanted that college experience. I wanted the big school. I wanted the party. I wanted to have fun. I'm a kid of the 70s and 80s, man. We grew up with the movies of college being just the ultimate, so I wanted to be able to do that. You actually wound up going to the University of Georgia in Athens. I read that you majored in telecommunications. I started working in a bunch of different restaurants around campus while you were there.

I did. I did. I worked at a lot of different restaurants and bars, everything from more quick service types of restaurants to like, you know, mom and pop grills and bars. You know, it's a great college job. And that's really where I fell in love with the restaurant business. I was always in love with cooking and everything around food. Did you know how to cook when you were in college?

Yeah, I did. You know, I just growing up in South Louisiana, food is so much a part of our culture. And, you know, I grew up cooking in my mother's kitchen and I was always interested in it. So I learned to make intricate cajun meals when I was young. So, but we make a gumbo and, you know, that gumbo really could be made in a couple of hours, but

You know, you want that thing to stretch out all day, and why you want it to is because you're spending time cooking with somebody, and then your family and friends are coming through the kitchen. They're coming in, they're checking on the progress of the gumbo. They want to come in and stir that pot. It's a way to spend time together. It's a way to connect. It's a way to say, I love you. You're doing ruse for the gumbo? Absolutely. Ruse for gumbo. What's the color you're looking for in that rue? Dark, dark, dark, dark, dark rue.

I have to tell you now, most of the time, I cheat. I use Savarazru in a jar, which is almost as good. No shame. No shame. You're a busy guy. Yeah, it's fun, too, because I cook with my kids today, especially my son. He loves it. It's the way we spend time together, like my mother and I spent time together. But all those Cajun dishes, the crawfish, a two-phase, even things just like, look, steak and potatoes. Like, I was a junior high kid, just grilled the steaks for my parents, making gin and tonics for them. You know what I mean? I don't know many other kids in 7th grade that are doing that.

Make me a gin and tonic son. I love that.

Where was your first restaurant job? The first restaurant job I had was actually I function as a kitchen steward for our fraternity. And that gave me great experience. I just signed up to do it, you know, my freshman year. And from there, we had a chef, her name was Martha. And she was, man, she was an amazing cook. She cooked, you know, just great southern food. We're talking mac and cheese and collard greens and fried chicken. And I mean,

She could cook great. So I spent my time in the kitchen with her going over the food, the food quality and learning that way. And then the owner of the business that did this for a lot of alternatives, he taught me things because I asked about food costs. What is your food cost? And he had the real simple answers of, it's a third of what you should sell something for. So if you're going to sell something for a dollar, your food cost should be 33 cents.

And from there, I just went and worked at it differently. I can't even remember all the names of them, just different college bars that other people worked at that I could jump onto. And working for these entrepreneurs and learning about food, you realize, you know, how hard of a business it is. And you also realize you have to love it. And, you know, I loved it. I loved it. I loved the restaurant business. And it was like, I love the team work. I love the immediate gratification of

cooking something and serving something to somebody and them smiling, you know, and saying, well, and that was good. So you are one of these. I mean, I worked in restaurants when I was in high school and I liked it too. You know, I worked at a pizzeria and

even more to the gas station, making the burgers and chopping the onions. And actually, I think that's why I know how to cook today, because I did it back then. But I can't say I loved it, but there was something about restaurants and the intensity of working in a restaurant that you just loved, that you just connected with you. It's two things. One is my mind's always rolling. It's always thinking of ideas. It's always these things. And it's therapeutic to me. If I'm on a fry line and cook, I can focus on

Fry the chicken, do the fries, deliver the box, so you're in immediate gratification. It's like some people, why they like to cut their grass, right? But then two, when you're slammed and busy, you're working with a team, and everybody's high stress, but that teamwork, and when you're just cranking together, servers like, we're slammed, we're behind tables upset, no problem, we'll get it right to you. That intensity's good, and maybe that came from,

That's where sports is, right? Sports is high intensity. You got to make quick decisions. You got to roll and do it if you mess up, make up or keep going. And I think when you get done with your day, you don't have a problem going to sleep that night. And you accomplish something. You accomplish something. Was there a point in college where you thought, I think I want to do this. I think I want to start a restaurant or run a restaurant professionally. Because you were studying telecommunications.

It seems to me that you already in college were thinking, I think this is where I'm headed, restaurants.

Yeah, absolutely was. It was something I knew I could do. And also, what I wanted to do was open a restaurant at the North Gates of LSU. I wanted to be home. I loved LSU. And I was a college student. That was familiar to me. I knew what college students wanted to eat. I knew how much college students could spend. I knew what environment college students wanted to come to. I knew hours of operation. I knew I'd have a late night restaurant because we're up late either studying or going to the bars.

And so i knew all this and so i looked at concepts and you know what kind of restaurant start and at that time boneless chicken was becoming incredibly popular it was just really becoming popular like back in the eighties.

People started saying that red meat was terrible for you. All these studies came out. A lot of people were saying, look, chicken as an alternative, but not just bone in chicken, which is what I grew up on. You started getting boneless chicken, white meat, boneless chicken, strips or fingers or nuggets. You were seeing them on menus from everywhere to national chains like chilies would have it on the menu with a great dipping sauce or mom and pops would have it. I saw it everywhere and we ate it like crazy.

And, you know, I started seeing them like, man, this trend is going. And you had people that specialized in it, like Guthrie's chicken fingers throughout the South, Saxby's chicken fingers and Buffalo wings. And, you know, different concepts like that were opening and doing well with it.

And so I thought that was a really good concept to start. So I call my old buddy Craig Sylvie, a dear friend still today, and told him what I wanted to do in the restaurants. And I talked to him, and he said, hey, this sounds pretty good. You know, let's go and do this. And I said, are you serious? Yeah. And Craig, by the way, Craig, was that LSU? Craig was at LSU. Yeah, Craig was at LSU. And was a high school friend of yours?

And yeah, yeah, actually Craig and I had gone to school since middle school. We're just best of friends. Plus, I just knew I could rely on him. He was the kind of guy that always has your back. He's one of those kind of friends. So when you reach out to Craig with your idea, what was the idea you told him you had? What did you want to do?

Yeah, I told him I want to do a college restaurant at North Gates of LSU. I mean, I knew where the area wanted to be. But, you know, back then too, as you got to realize, I was thinking about just one location. That was my dream. I wanted everybody to say, man, that's the coolest restaurant. That's the greatest place. That's where we eat. That's where we get our chicken fingers. Yeah. And you knew that it was going to be chicken fingers, fries, and drinks.

Absolutely. Absolutely. You know, I mean, if you look at it, our menu is like what Guthrie's originally came back up with, like in the late 60s, you know, it was that chicken finger meal with the sauce and the fries and the coleslaw and the Texas toast.

I wanted to take that to another level, and I wanted to make it better, and I wanted to make not only the menu better, but the operations better, and have a little more character. But I'm curious, because you're 22, and you're thinking, let's focus on one thing, and that's a really smart thing to think.

Okay, that's like a really sophisticated way to think about a business. But usually that doesn't come until many years later of just trying and failing and trying and failing, but already at the outset.

you came to the realization that focusing on one thing is the way to go. And I wonder, I mean, did you come to that realization purely out of working for other restaurants and seeing the way they were doing it wasn't working or was there another influence that led you to that belief in that view? I think

a lot of us just instincts and just part of me. And so, you know, I just always been a focused person, you know, and also too is, you know, I'd worked at different type of restaurants, right? You know, restaurants that served large menu, Mexican restaurants that had so many different menu items, all that that intimidated me.

doing all those different items and doing it well. It is very, very, very hard, you know? Because, yeah, restaurant business is hard enough by doing it, but if you focus on doing one thing, that I knew I could handle at my young age. And look, without having management experience in restaurants, I never managed to restaurant. I just worked there, you know, at these different restaurants. So that was less intimidating to me, saying, I can execute on this.

All right, so you reach out to Craig with this idea, and he says, hey, that seems pretty good. He's still at LSU, right? He's about to graduate, too. At the same time, you're about to graduate.

Well, so no Craig because he changed majors had another year of college, which actually was great because I was able to graduate and come back to Baton Rouge. And Craig was able to enroll in business classes, which he hadn't had before, but to change his major to general studies and get a minor in business. And Craig and I went through the classes he could take and he enrolled in business planning class, which was great because neither of us had a clue on how to write a business plan. And we used that semester

of his class at LSU to write the business plan.

I bartended at night. And while Craig was taking these business planning classes, I was going to use other resources in Baton Rouge area. So small business development center, service core of retired executives. These are retired executives that help aspiring entrepreneurs or people in startup businesses all while Craig's going to class and learning about writing the business plan and we're applying all this stuff during the day when he wasn't in class. But at night, I had to bartings. Look, I had to live, man.

I paid my rent and I had to eat and I had to drink a few beers. So you were going to these free programs that exist in cities all over the country that retired executives, mentors, and so on. And you were saying, have this idea for a chicken restaurant? Yeah, absolutely. I regretted not taking a business planning class, but I was doing a crash course and used every research I could. Not only were these professional organizations I went to, I went to every smart business person I knew.

that started their own business in Baton Rouge and they were always willing to sit down with me and give me their advice and yeah what what I should do I'm curious when you were when because that's the most one of the most exciting times of starting a business when the ideas in your head and it just consumes you and you're so excited and

But what happens sometimes, oftentimes, is you tell people your idea and then you get enough people saying, ah, it's not going to work, or you may not want to go into that industry. And oftentimes that quashes the dream people move on. I have to imagine that you went to some of these business executives and they said, Todd, don't get into the food industry. It's a death trap. You're not going to survive it.

Yeah, you know, unfortunately, when you have an idea, you know, good or bad that you're passionate about, most people are negative towards that good idea, you know? And it's not because they're ill-intentioned people. It's just they want to help you protect you. They want to protect you. You're exactly right. You know, I got encouragement

from the small business development center people, the service core retired executive people, and actually the entrepreneurs that started their own businesses, I got a lot of encouragement from them and great advice. Where I got all the negativity, which was pretty much overwhelming negativity, was telling all the other people about my dream. Who are all the other people? Well, I mean, just people I knew in Baton Rouge, right? And so friends of my parents, they would say, hey, what are you doing? I'm like, oh man,

Craig and I are going to open this chicken finger restaurant and imagine hearing that. They're like, you know, common response to me, didn't you just graduate? Don't you have a, don't you have a degree? And I'm like, yeah, they're like, well, why don't you just go get a job yourself a real job? Yeah. And then if you still want to do this 10 years later, then you'll have enough money. Then you can start your little chicken finger. Very sound advice, by the way, very sound advice. Yeah. But with every, you shouldn't do that.

You know, I used as a fuel. You know, you tell an entrepreneur they can't do it, and they're gonna go and work harder to prove to you that they can. But if you're coming to me and you're 22 and you say, guy, I want some advice, I want to start a chicken place, chicken fingers, I'm thinking, okay, interesting, but I would say, all right, what's hot? I mean...

What makes you think you can make better chicken now with such a limited experience in the industry? And what would you have said? Well, I mean, I did get that, and I got that a lot. You don't have management experience. You didn't learn a lot of these things. I said, well, I was paying attention.

You know, it also is my kitchen steward at the fraternity else. You know, give it to hell funny that it sounded like that's my experience. But, you know, what I would tell him is, is that no, it's now. Two years is too long. You're like, I know what I'm doing right now. I don't have time. I'm going to figure this out. I want to do this now. And they would go, OK, OK, I got you. I got you. Well, here's some advice if you want to do this. You know, you need to write a business plan and you need to take it to banks because you need money to open. And that's the hardest part. They were right.

It's a craigslist class and you say to him, let's do this as our business plan because there's a professional business school professor who can evaluate it. And by the way, I've seen an image of this business plan online. And there's some, there's some names on it that I thought they were made up names, but they're real names. They're like these two Swedish guys.

Like, were they from Sweden, like Sweden, Swedish guys at LSU? Yeah, yeah, these guys were brilliant. It was three of them. I mean, it was Casper. Casper, Oddkrist, Frederick, Norden, and man's home grand. I thought it was, I thought they were made up names. Now, these are real, were they like exchange students?

Yeah, they were. So they were like NBA level Ford exchange shoes or LSU. All right. It happened to get paired with Craig for this project. But I'm just wondering, was, was Casper or Frederick or man's worthy like, wait, who's this guy pointing at you?

How was he in the picture? He's not even in the class. Exactly, right? That's the brilliance of being a college student. You're just more accepting this stuff. They're like, okay, this is cool. Plus, they knew they had a guy that's so motivated about this. Plus, I knew the restaurant business. I knew it. I knew food. For example, I knew exactly what an apron would cost per shift for each crew member.

And I knew that because I met with a sales rep. And so nobody had that level of detail, their business plan, because it's more about ideas and what they want to do. We were going to start this thing, man. So I needed to know every detail for the business. So I basically took my time and during the days when they were in classes, I met with sales reps. I called businesses companies.

and got an idea of everything. So our business plan was really spot on. Plus, I'm a little mildly excessive compulsive. The details were just really over the top. So you were literally going to chicken suppliers and working out those numbers, sourcing the potatoes, or were you going to use flash frozen fry? Did you figure all the details out around the food?

Yeah, so around what we went, yeah, I got general numbers, right? I knew I wanted a crinkle cut fry, right? Does a really popular southern fry plus my bomb cooked us or ride a crinkle cut fries. And so let's say I wanted to do Texas toast, right? You know, meeting with those vendors, I'm like, but I want a better Texas toast, right? You know,

Raising Cane's has this just amazing bread, right? But like other concepts out of Texas toast, they use sliced bread, right? And so it's just take a loaf, it goes through a slicer. And then they either stick it through a toaster or they do, like we do, griddle. It's basically a fat piece of white bread. Right, right, exactly. But I'm like, I want it to be more moist. I want it to be more dense. And what are ways we could do that to where it's not a sliced bread? Well, like, well, we can put dough balls together.

and put them together small dough balls. It'll bake together as a loaf, but it's pull apart bread versus slice, which means it stays more moist and it's more dense, right? That's how you work with your vendors. And so when I was getting information and getting these things, I started initial talks, right? And then it was like, okay, these are things that are in my head I can mull over.

All right, so you build a business plan. And by the way, how many pages was it? Oh, man, I can't remember. 40, 20? Pretty thick. Oh, no, probably 100. We had all kind of different financial scenarios, researching wages and different things. All the information in the industry I could find about why we would be successful, right? You know, articles like I Remember You Know, we're becoming a nation of chicken eaters and finding articles on

boneless chicken popular and, you know, going to places and stealing menus, you know, so I could go back and copy them on the thing to show look. Chili's a serving this, you know, and things like that. And it would be very hard to talk bankers into a concept that was very foreign to South Louisiana, right? You know, very foreign. What was the name of the restaurant in the plan?

Well, we started off with a name called Follies Chicken Follies. Follies chicken fingers. It's a great name. Craig worked construction one summer. He had a guy who worked with the call to everybody Folly. He's like, hey Folly, hey Folly that. So we call each other Folly. And so that's what we thought the first name would be of the rest. What does Folly mean?

That's a good question. He just called everybody Folly. Hey, Folly. He's a really nice guy, you know, funny guy, older guy, you know. All right. So you guys, so you, so you, you help them write this proposal and your name is not on it because you're not in the class, but obviously you're intimately part of this business plan and they submit it.

to the professor and what happens? Well, they went to present it. So we were up all night, finishing the details and the plan. I'm a perfectionist. So it's like, wait, one more time, they're like, Todd, it's good. No, no, no, no, and we're rehearsing it. And it finished a last pot of coffee early morning, whatever time it was, mid-morning.

and they went to go present the class, and I waited. I literally waited, and they went and they did it, and then we all met right afterwards. I said, you know, how did it go? And they were a little bit discouraged, like, oh, you know, I don't think he was that crazy about the concept.

And I was like, what do you mean? What on earth? And he said, well, they said, good business plan, incredible detail, but a concept serving just chicken fingers in South Louisiana. That's known for its Cajun and Creole foods, plate lunches. It doesn't sound like something that's regionally what the taste are of the people, the starter restaurant. That was for one.

You know, and I'm in my head going over all the reasons that's wrong, right? And they said, secondarily, he said that, you know, that the quick service restaurant environment, you know, fast food restaurants, you know, they're going a different way than you're going. You want to do just one, basically one product, one meal. Yeah. And do just that. And look where McDonald's is going. Salad, apple slice. It was two things. It was variety.

is what they were doing. They're saying variety. It's as much variety as you can on the quick service menu, so you don't get a veto vote, meaning somebody in the family says, I veto you, and then also just help the items, grilled items, salads, all those things were becoming. That was the major trend during that point, and we were basically bucking that. And then a couple days later, we got the grade back, and it was actually the worst grade in the class.

But it was only a B minus. It was only a B minus. It's not bad. It was devastating to me. I mean, as far as like, I was like, the worst grade in the class, we put all this into it. This is going to work. You know, you're just like, you know, you're emotional in that. And like I said, it just fired me up. But he was an easy grader. And I think he gave us a lot of credit because the plan was so comprehensive. He just had to ding it because the concept and, you know, to be honest with you, you know, like we talk about faith, you know, it's like questioning.

That belief is good, because I was like, you know, he brings up these good points, but I'm gonna buck that trip. We're gonna make it work. That's why it's going to work. When we come back in just a moment, how Todd sets out to fund his B minus business plan by doing some of the most dangerous jobs in the world. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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Hey, welcome back to How I Built This. I'm Guy Ros. So it's 1995 and Todd and Craig are mulling over the comments that Craig's business professor made about their business plan. You know, about how fast food restaurants need to offer healthy options like fruit slices and salad. And after carefully going over that critique, they decide basically to ignore it. I didn't want to lose focus, right? I could easily said, hey, let's add a chicken finger salad, you know?

But I knew customers didn't want that. If I made the best chicken finger meal, why would you get a salad? You know, go get a salad the next day, somewhere else, for some places, great a salad. You know, like, like, and I do, you know, I'll eat my food one day. I agree. I agree. You know, and you know, hearing that from a smart professor.

It made me think for a second, and I was like, no, we're going to stick with our menu. And if we add healthy items, people aren't going to order that anyway, and it's just going to complicate our system, meaning lettuce is produce. Produce goes bad quickly. That's going to complicate what we're trying to do, and it's not going to equate to sales. And I do this. So now, you were determined to make this happen.

You've got a business plan, B minus business plan, but you got a plan. There's a slight obstacle that you've got to overcome, which is money. Money to start a restaurant. So where did you go? What did you do? Well, we knew the next step was to take that business plan and go see the banks. We needed the money. We didn't have any.

And you guys didn't have any family money or anything? No, no, we had no family money. I mean, our families both, you know, did pretty well. We're middle class and, you know, they did well, but, you know, we were raised the belief that, you know, once you're done with college, you're on your own. And so, you know, back then, we thought you could actually, this is being naive. You could actually go to a bank to bring a business plan and they'd lend you money. Here's my plan. I need $100,000.

And I thought they'd give it to you. Isn't this a great plan? Isn't this a great idea? Oh, goodness gracious. And did you do that? Yeah, yeah, yeah. Like we bought a couple of cheap suits and went to Office Depot, true story, and bought briefcases because, you know, we had seen businessmen and women with briefcases that looked official, right? So, you know, they had those cheesy fake leather boxy briefcases with the brass combination locks. You remember those?

yep oh man they were iconic you know and so we went and we went and saw every bank in town you know we'd walk in and you know there'd be a loaned officer there you know he or she and they were nice enough you know and so we walked in with our suits and I had a briefcase Craig had a briefcase and we would put it on their desk

sitting across from in our chairs and we would open the brass combination lock like somebody was going to steal our chicken finger business plan and look they were all nice enough to us you know they were they were nice we went through it but the common answer was you know this is not something that our bank would would lend towards you know the restaurant business is you know it's ninety percent failure rate and you know you know franchises are the things that work is a proven systems

You both have college degrees. Why don't you go work in the industry and get some management experience and save some money and then come back and see if you really want to do this and really want to start your own business? In the meantime, were you experimenting with chicken finger recipes in your apartment? Were you like frying up chicken for friends and trying out different spices? Because you had the idea for the sauce and the chicken

And the fries are another thing that's crinkle, but the, I mean, were you doing that? No, not really. My focus was getting the money, get the money at that point, work with the vendors to tweak the recipes to get a better product and do that. For example, like doing the business plan, I asked about spices. I thought it'd be just simple, right? I need poultry seasoning. Yeah. I thought to be simple. It's like, well, there's six grades of poultry seasonings.

And one calls $100 a box and one calls $500 a box. And I was like, oh my goodness, I didn't know this. So I knew I'd have to come back later to be able to tweak with the vendors, which I did. So the idea was you would have this kind of recipe that you would come up with, or you would have a flavor that you liked. The third party vendor could make it and then deliver it frozen or something like that. And then you would fry it on site.

No, no, no, no. I knew all I wanted to do everything that I could from scratch in the restaurant. Yeah, 100%. So I wanted to get the raw chicken, right? But I needed my vendors to tell me why that chicken tenderloin was the absolute best part of the chicken, right?

I needed my vendors. I knew I wanted to crinkle cut fry, but I need my vendors to tell me the difference between, you know, a great AAA versus a great A, because I grew up cooking, but I didn't know the fundamentals outside of Cajun cooking, you know, as far as other restaurants. But no, but there was no point when you were building a business plan where you were just like frying up chicken fingers for friends to say, Hey, you got to try my chicken fingers. They're amazing. So a friend reminded me,

A couple of years ago, you remember when you were doing different sauces that came up, cane sauce, and you had us all try the cane sauce, because you had a bunch of us in there, and we were trying the different ways of the cane sauce, and so what I remember going over was, I wanted a flavorful sauce, but I didn't want a Cajun sauce, right? I didn't want this to be a regional Cajun thing. Cajun sauce was gonna have cayenne pepper, for sure, right?

Exactly. We would have cayenne pepper in it. And everybody was like, you're going to put some cayenne in that. And I'm like, no, no, no, black pepper is. And that's no secret because you can see the black pepper fakes in there. And they said, you know, black pepper is going to be that base on that. I don't want this to be cajun. This is a chicken finger restaurant. And they're like, well, man, it's but it's cajun. I said, well, look, when you order your pepperoni pizza, it doesn't come with, you know, with a cayenne pepper. And you know, and doing that doesn't really have a good point. OK, so the banks are saying,

You're not going to get the loan from the banks. You don't have access to family money. So you have to come up with some money to make this happen. How much did you think you needed to raise?

Ballpark was $100,000 to $150,000. What's what in my mind I thought we could start it for? And that's without knowing the location. Craig still has one semester left in college. I'm bartending. We have a business plan, but we just got turned down by every bank in town. And so I'd put the word out there to my friend group. I have to raise a bunch of money to open my chicken finger restaurant. And do y'all know how to make some quick money fast? I'm willing to work hard and do anything.

Luckily, through a friend of a friend, I got to meet a guy, I didn't carry Travis, who was a foreman for Louisiana crews doing turnaround shift work in refineries. And he said, well, that's great. That's great. You go for your dream. Are you willing to do some hard work? Yes, sir.

Are you willing to work 90 to 100 hour weeks? Absolutely. Seven days a week? Absolutely. Okay. You seem excited, seem like a hard worker. We can teach you that business. It takes a certain person that wants to work that hard and those conditions and their finery.

And luck would have it. I got work doing turnaround ship work. The title was Boilermaker and Refineries in Los Angeles. Wow. So what did you do? I mean, you had no idea what this meant. I mean, you grew up in Louisiana. It's an oil state, but it doesn't mean you know anything about oil. What did the job actually mean? What did you do?

Yes, so I had to learn all of it. I had no idea what being a boardmaker was. All I knew was you were going to make a bunch of money in a quick period of time and work my butt off. That was it. And a little bit dangerous. So what happens is when they shut down a certain section of their finery,

to bring it up to date, right? You know, these things have been running for many years and so there'll be to be safety upgrades, technology upgrades, just replacing and doing preventative maintenance. So they bring in Boilermakers, which I love that term, Boilermakers. I thought that was a cool, cool, cool term. You go in and do this work. And look, I learned great things like

You know, cutting things with a torch, you know, like you have this hot rod you're holding with basic battery cables going to a lot of juice and you can slice through metal like butter, you know, and we cut these things out in pieces and then bring them out the tower. It's hot, right? Hot is all get out because you're wearing these complete jumpsuits, right? You got your hard hat on, you got your goggles on.

And if you were in there, like a picture of you lit the whole thing on fire and you're walking through, that's kind of what hell would look like. It's a pretty hard work environment, but at 90 hours a week, you get quite a bit of overtime. This is 1995. How long did you do work as a boilermaker?

Yeah, it was probably about a four-month period of time. And presumably while you were working in Southern California, this is when you first encountered In-N-Out Burger. Absolutely. When I went to In-N-Out Burger for the first time, I'd never even heard of In-N-Out Burger because it's a West Coast thing. I'm a Louisiana boy. When I went out, people talked about, man, you got to go buy In-N-Out Burger. Great. What do they have? Oh, burgers.

Great, what else? Fries. Is that all? No, they got shakes. And I'm like, oh my goodness, that's what I'm trying to do at Cairns. And man, and I saw the lines, the lines, and tasted that burger. And it was amazing. And they could serve it quickly.

and then learned the company history since 1948, they've been doing this. So if you imagine, as all the other burger competitors, they all opened around them and they added everything and did everything, but since 1948, in and out burgers, we've been doing the same thing and doing it extremely well. And it gave me just a lot more confidence on knowing that my concept would work. I wish I had as an example, I wish I could have said, hey, look at in and out burgers since 1948, they're still doing great.

So you spent about four or five months working in refineries. Do you remember how much money you earned over that five-month period? I want to say, going out working in the refineries as a buller maker, I think I made around $25.30 grand is what I made, which is big money for a 23-year-old kid. I guess after four or five months of doing this,

From what I understand, there was a fellow Boilermaker who said to you, hey, if you want to make big money, you should go to Alaska and go to a fishing boat. Is that the story? Yeah, you know, everybody, Boilermakers give each other nicknames. It's actually, there's great camaraderie among the group. This was the first group of people that believed in Madrid. They were encouraging. You would talk about it with everybody. Yeah, everybody. They all knew. All these Boilermakers working as finery knew I was out working

these jobs then because I had this chicken finger dream and they were all encouraging. And everybody gives each other nicknames. And so the group said, hey, have you met Wild Bill Tolar yet? And like I said, everybody's got a nickname. I'm like, no, which one's Wild Bill? And why should I talk to him? He said, well, he's the big guy over there.

And he does Alaskan fishing, and you can make more money there anywhere else. And so I went and talked to while Bill and told him what I wanted to do, and he had hurt my story. But he's like, look, this is real dangerous work. It's commercial fishing for Sakai salmon, yield netting.

in Naknek, Alaska. So about the point when I was wrapping up my buller making career, Craig was graduating from college. And I called him on the road. I said, hey, man, I met this guy while Bill. And he's like, wait, what? And I'm like, yeah, I'll tell you about him later. But he spends his summers commercial fishing in Alaska. And he says, we can make a bunch of money real quick. But it's going to be a really hard work. And it's very dangerous.

And Craig said, OK, let's do that. And so we flew into Anchorage, Alaska. Then we flew to King Salmon, Alaska in a little plane. We hitchhiked to Knackknack, Alaska. And we went to Tint City, where they had a little area where you could was on the tundra, where you could put your tent and then proceeded to go and talk to every boat captain in the whole fishery to get a job as a greenhorn, which is a roofie, which is very hard to do.

Yeah, but you guys both do wind up getting jobs to work on fishing boats at summer. I mean, I should mention, this is super dangerous work, right? I actually look this up because that summer that you were actually on a fishing boat in Alaska, there were six deaths, six deaths. And, you know, among salmon fishermen that summer of 1995, and it's like non-stop work, right? It's like you are all, you are fishing all the time.

Yeah, you know, the salmon fishing trade at this point too was just incredibly lucrative. And what we were efficient for was sockeye salmon, which the Japanese bought, I want to say like 95% of it because of the quality of the meat. So steaks are high and it's very competitive.

So what captains, motivated captains would do is they play chicken. And I don't know if it's still okay to do that, but man, it was back then. It would hit other boats. I saw other boats, ram other boats. You saw their boats sink. Actually, the boat crack was on. The captain rammed a boat and it did sink. Wow. And it's mostly dangerous because

You're so tired. You're so tired so you get careless, right? So someone gets thrown out with a net or someone doesn't get their footing when they're in seas and they break their arm or, you know, we're getting these reportches. Someone gets scalped because a net thing broke off and went over.

Or someone rammed your boat or, you know, that's all two boats getting that's caught up and someone threw a can of pork and beans and hit a guy with a boat. I mean, just crazy stuff. That's totally nuts. But clearly you had a single track mind here. You knew that this is what you're going to do. That season ends and you've got around, I guess around $50,000, right, that you've saved. Yeah, yeah. A lot of money.

and you go back to Baton Rouge and presumably, it's still not enough to launch the business though, right? No, we didn't have enough. We knew we wouldn't have enough coming back, but we knew it could be a great start.

Before we went to Alaska, we had located a great piece of property. I mean, absolutely perfect for our business at the North Gates of LSU, where I always wanted to open up. Actually, a good friend had told me this place came open. And we met with a realtor, a guy named Red Reynolds, rest his soul. I mean, what a great guy. And he bought into our, more than anything, he bought into our passion. And so he said, hey,

I know you boys will work as hard as you can to make this place work. The place had turned over so many different times because these different college entrepreneurs would start something and then it wouldn't work. Then the last tenant was a bike shop that's actually still in business but they moved next door. We had the place. After I finished the commercial fishing Alaska, Craig had went back and I got a job.

uh, real quickly working as a sport fishing guide, which was just amazing work. You know, it was Alaska. It was incredible. The salmon run taking fishermen out, you know, there, and fisher women are women out. There was bears and eagles and it was amazing. And actually Craig called me and said, Hey, uh, Mr. Red says you need to get your ass home. And I was like, are you kidding me? He goes, he goes, yeah. I said, tell him I'm making money. He goes, no, you're not making the same money you did, uh, when we were commercial fishing. So he said, get on back and open this thing up. So, and I got on a plane that day and flew home. Wow.

So this location becomes available. It's, I guess, presumably the fall of 95, right? Or early winter, maybe, when you're back in Baton Rouge. Absolutely. And I knew this site, we had it, but we didn't have the money to get it yet. And so...

Well, we did have, though, we had a year into this project. And I had originally talking to business people about it. Would you ever be interested in investing in this? And people started to listen now. It's been a year. It's been a whole year. And you stayed with it. And now, you went to Buller-Macon Refinery. Craig went commercial fishing Alaska.

Like, I think maybe you'll make this thing work. Two of my investors were buller makers that I had worked with, right? They live, these are just like $10,000 investors, $5,000 investors. One was Mr. Red Riddles, our realtor. Another one was a high school friend that actually worked buller making with me out there. He said, he said, you're going to make this thing work. And then my bookie of all things, my college bookie, Peabake Cash.

So did they get equity? Yeah, absolutely. The first shareholders got equity into that first location. Actually, as we continue to grow, they want to be along for the ride. So we carry them over in a capacity and still have most of the original shareholders. A lot of them got out at different points of growth, but we still have a handful of the original investors. Wow.

And then we were able to talk to an SBA lender. And I didn't know what that was originally when we went to the banks. And they're like, if you raise $90,000, we'll give you a $50,000 loan. And you remember that number I had about $150 in my head. And I'd spent a bunch of the money to live on. I was like, bingo. Wow. All right. So you raised the money. You get the SBA loan. You've got the location. And I think it was been like a former bike shop. Is that right?

Yeah, this location was ideal and cheap rent. I think it was like 1,500 bucks a month. And I ended up getting like after options like 50 years on the deal. It even had a billboard on the location. It was just ideal. Wow. But it was a good deal for the landlords because the old building was dilapidated. The old parking lot was dilapidated. And look, we were going in and doing all these improvements. So you got a 50 or at least? With options, yeah, absolutely.

All right, so you get a bike shop. How do you convert that into a chicken finger restaurant? We've got a fryers. You've got to have a counter. You've got to have a drive-through window. You've got to have not that much stuff, but you still need a bunch of stuff. You got to turn into a restaurant and you've got 140 grand. Was that enough money to convert into a restaurant and also set up a drive-through? Barely. Barely, barely, barely. But this was great. This is the best part about it because, you know,

I didn't know anything about construction, but I could learn, right? And I could do it cheap. I think we originally got a contractor and got a bid and it was like over $200,000. Like, well, we don't have that. And so I finally met a really nice man who said, look, I'll help you. You can do the work you can. I can pull in experts when you need it. I knew a little bit about, you know, industrial construction with working as a bull or maker, enough about regular.

carpentry, electric, plumbing, all that good stuff, but I learned and I learned it. And so, we got a jackhammer and jackhammer at all the bad concrete. We learned how to do plumbing. We learned how to help out electricians. We could save money and get actually a real electrician to do things, but we could be the helper putting the pipes and doing this stuff.

So you're, like, completely gutting and opening, trying to open this restaurant. And by the way, the name was going, still, this moment was going to be Folly's chicken restaurant.

Well, so we kind of got all follies and we kicked around the idea of calling it sockeye's chicken fingers because of the salmon that we fished for in Alaska. Luckily, we were telling a group of friends and one of them told us, hey, we think that's a terrible name. Sockeye's chicken fingers? Yeah, they're like, it makes no sense. I'm thinking salmon chicken fingers? Exactly, right? I don't know about that. I'm like, well, look, we gotta get some signs made for this place. And so, you know, that's the best cracker I got.

You got a better idea and I had a yellow lab then is raising Kane the first. Your dog was called raising Kane the first? Yeah, well, he was just raising Kane. He was he was the first. Was he named after the Brian De Palma film raising Kane?

I didn't know this until I did research, but raising cane is an expression. It means like to cause trouble. Yeah, raising a little hell, having a little fun. She thought that was a good name and the name stuck. Anyway, when we were doing construction, I would have cane out there knocking around, people in the neighborhood knew the dog and I brought it around.

You know, we also, we have a, we have a, not only a good name, we got a good mascot for the restaurant and people in the neighborhood knew the dog and so that stuck. All right. 1996. He finished the renovations. I mean, I'm just curious. You, you were going to make everything in house. You were going to.

have the chicken marinating in buttermilk or tenderizing and then you're gonna hand batter it and fry it in the restaurant? No, we wanted to start with some raw products. So number one being chicken and knowing that the absolute best and most tender white meat part of the chicken is the chicken tenderloin. Yep, under the breast you can cut it off, right? Yeah, you literally put it in, it's a whole muscle product and so it's perfect and we knew what size we wanted and then they'll talk about what size bird that comes from and I always went for the highest quality.

And that paid off because people will pay for quality. Now, I didn't price my menu accordingly, and I didn't make much money until I finally adjusted our pricing, but always went for the higher quality and what we could do in-house, like our sauce. I knew we could make that in-house, our garlic butter. I knew we could make that in-house. And that freshness

of making your sauce in house. We evaluated that versus having a place make it for us and putting in a little packet that's vacuum sealed that you have a peel off was night and day to us. By the way, I think right around this time, you also started to date the woman who would become your wife, Gwen. What I love about the story is that from what I read, she was actually a McDonald's franchisee, is that right?

Yes, she sure was, you know, I met Gwen, although we went to high school together. We didn't really know each other, but I met Gwen and I told her the story about, you know, I'm open this chicken finger restaurant. She lived by LSU too. She goes, oh, you're the guy that's doing that. She's like, good luck. And I'm like, what do you mean? And she was like playing with me. She goes, look, I've grown up. My parents have been Donald's franchisee my whole life. She goes,

I'm going to franchise McDonald's. I mean, she grew up flipping burgers, right? And she's like, and I go with a sure thing. McDonald's franchise, because you're crazy. You're totally different than me. You're an entrepreneur with this crazy idea of a good luck to you. And so I asked her out that night, but I said, I don't know when I can actually take you out on a day.

Because you're busy. You're working all the time. Exactly. And so anyway, I eventually was able to take her out one night. And we really hit it off. And it was fun because I tell you this because we got to talk about things like, how do you salt your fries? How do you motivate your crew members? And we also, she understood the business.

and appreciate how hard it was, you know? And so, so there was never a, why are you working so much or things like that? I mean, look, she would open up for breakfast and we would cross paths when, because I closed down for late night, you know, there'd be weeks we wouldn't see each other. But yeah, she, she had eventually opened her, uh, her franchise in Brooley, Louisiana, across the river here in Baton Rouge and was a really successful franchisee from McDonald's.

Alright, so you got this restaurant. You've got the name. You've got all of things in place. It's 1996. You built it out. You're ready to open. Do you remember what was the date that you opened?

Yeah, August 28, 1996. All right, so hot day in a hot summer in hot, sticky, humid Baton Rouge, Louisiana. Cut it with a knife. And you're serving hot chicken fingers and hot french fries with cold drinks. And you open the door and I'm sure friends and family know. And was it crazy? Was it a mad rush?

No, actually quite the opposite because we had all our friends and family come, you know, the days before opening because we needed to practice, right? We needed to practice, come in and do tweaking final recipes, okay, try this sauce, dip your chicken fingers with this sauce, you know, that sort of thing. And so they've already tried it. They're actually, they've had their chicken finger fill for a while.

And I couldn't tell the LSU community when we were going to open because I didn't know when we were going to get the registers programmed. So literally, I'm like, all day, they're working on these things. And I know, hey, I got the fryers ready, drive-throughs working. You know, when will you open? And so finally, sometime at night, it might have been 10 o'clock, whatever. It was like, we opened. You opened at 10 at night.

Yeah, yeah, yeah. One day, we were just like, let's open. Because we finally got the register for it. No flyers, no advertisements, nothing. No grand opening, no ribbon cutting ceremony. Nothing. And you know how we got people? Nothing. I walked out front and, you know, it's a bustling college area and started waving customers in. Hey, we're open. We're open. So a few customers started kind of trickling in. But when the bar crowd got done at two o'clock. Oh, yeah.

Then people started coming. They're hungry. They're hungry. So you had to be open late because they want fresh chicken. Yeah, so they started coming and mostly died in because there's people walking from bars and they wanted to continue their night, but a couple of people in drive-through.

and then word started spreading, and then we started picking up. And I couldn't physically get out of the restaurant because I had to be frying chicken. You were the guy frying chicken and Craig was at the register. Yeah, and vice versa. We would just kind of work wherever we worked. And we were open from 10.30 in the morning until 3.30 at night, seven days a week. And so we had hired only about a dozen crew members. We were really understaffed. We didn't really know what we're doing.

And they were all working just crazy loads. And we had a nap schedule. I actually got an apartment right behind the original canes upstairs. Luckily, it came open right before we opened. And we would just take different breaks and go nap. And by the time you close the restaurant at 3.30, and you clean everything up, you'll be about 5.30. And they need to get there about 8.30 in the morning to open up again. And so I couldn't get out there and do advertising and things like that. But luckily, it spread around LSU. And our story got out.

about who we were and what we were trying to do. All right. You achieved your dream. You got your restaurant. You got your college hangout, late night, post-parting restaurant. This was your dream. You're like 24. You've achieved it. You're done. But of course, that was not the end of the story.

there was going to be a second store. And when did you come to the realization that actually this was not a one-off one location business?

You know, seeing the popularity with the students didn't surprise me. I knew they loved the concept. I knew they'd love it. I was excited and actually surprised on how quickly that first semester we were open of our volumes. You know, we really did well. I mean, look, our first month we made 30 bucks in profit. 30 bucks in profit. And when I told people they were like, oh, I'm sorry, that's all I'm like,

That's all. I mean, that means I'm positive. I mean, I could pay my crew. I could pay my rent. You know, I could pay my vendors. Like, that's amazing. Like, y'all don't understand, this doesn't happen in startups. You know what I mean? And from there, the next month, we made more money. We made more money. And, you know, this went on for me. It was that first semester. And I just really got the book. All of a sudden, I'm sorry, realizing how to be a better leader, a better manager and I started hiring more people.

And I'm like, wow, we can do one on the other side of campus. It's a different traffic flow, and it's there. And I started thinking of that that second semester. It is now 1997. Early in that year, we had been open three, four months, and then I started thinking about growth. Now, here's a question to have about the quick service restaurant business. From what I understand, if you open up one location, so-called fast food restaurant, mom and pop kind of place,

It's really hard to make significant money from just one location. You actually have to have more and multiple locations to really begin to create an economy of scale and make money. Is that right? That is so right. Yes, absolutely. You know, I mean, quick service restaurants make tiny margins on large volumes. It's just what it is. And look, you can have a whole family working in a restaurant and I know a lot of great family restaurants that do that. So you

You lower your labor cost and everybody kind of lives out of it and you expense things out of it. But it's not the way to garner wealth. When you open multiple locations, you actually get buying power, right? You're ordering more products, so your prices go down, your margins get better. It's a really tight margin business. All right, so you decide to start a second location. And how were you able to do that? I mean, did you have to get another loan to open that up or did you have enough cash flow to take that money and open the next location?

Well, you know, I knew I wanted to design a building and do it. And so I went back to those original SBA lenders that lent us that $50,000. And I told them, hey, I want to do no location on the other side of campus. The numbers were good. And we were able to actually go in and get an SBA loan for the same lenders and actually

By the piece of property, build a building from a ground up and open up just 18 months, just 18 months after we opened the first location. Wow. Yeah. I mean, you can imagine just in short order, I mean, I opened the first restaurant when I was 24 years old. And now here I am out.

open it up when before turn 26 years old. Wow. And look, brand spanking new equipment and brand spanking new furniture and nice landscaping and everything. And I mean, you talk about, you know, feel like the Taj Mahal to me. Well, here's a thing that I did not know until I started doing this show seven years ago, which is

It sounds amazing when you go from one location to the second in the food business. But actually, oftentimes, that's the death knell. That's what kills businesses when they open the second restaurant because they get in over their heads and then it takes the entire enterprise down. Man, it's so true. There has never been a harder growth period at raising canes over the past 25 years. Then going from one to two. Going to one to two. Never been a hard growth period at raising canes and going from one to two. What was so hard about it?

Well, you get excited about it and you're like, wow, we're gonna grow. And then you grow and then you realize, wait a minute, I can't be at two places at once. And so I lived at that first restaurant. Now I got a second location and I have to split my time. I literally was like, holy cow, now I got people and I got new managers. They're not trained well enough. Then all of a sudden I have double the workload. And when I opened that second restaurant, man, it was really busy.

You know, it got frantic. It got really frantic because, you know, a manager would quit. That means, wait a minute, I don't really have any more time of my day, but I have to cover all those shifts until we can, you know, hire a new manager or train a new manager. And I want to say I learned my lesson then, but it took me years to really learn it, to not stretch myself through growth. But I think that's what happens when people grow one to two. Yeah. You know, it's not like the problems double. It like, it multiplies, you know, exponentially.

When we come back in just a moment, how Todd deals with yet another blow, just as he's adding that second restaurant, he loses one of his most important assets, his partner Craig. Stay with us, I'm Guy Raz, and you're listening to How I Built This.

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Hey, welcome back to How I Built This. I'm Guy Raj. So it's 18 months after the first raising canes is open, and Todd is dealing with the growing pains from doubling the business. He now has two restaurants located at opposite ends of the LSU campus.

We were very busy at the second restaurant and the first restaurant was busy. So sales were there. Profitability was there. It was just in the understaffing and with people quitting and not showing up, I would burn out more crew members who we quit and it was this cycle of what was going on. And that's when Craig came to me and said, hey, man, whenever you can, I want you to buy me out of the business, which was

You know, it hit me as a shock. And I'm like, Craig, Craig Craig. What are you doing? Yeah. Yeah. This is working. Like, like, we work so hard. I mean, you've fished an Alaska for this. You, from one to two, you put in all this work and effort and it's actually working. We're cash flowing. And he said, no, no, I know that. I'm very proud of that. But he says, the restaurant business isn't my dream. He was burned out.

It's not my deal. He's burned out. And he says, look, it's just, it's not what makes me happy. He said, I love the starting of the business and all the business side of that. And he said, like, for example, Todd, if I get a night off, I'll go home and read like the Wall Street Journal. Because you'll go home and work on better ways.

to train crew members are better ways to do the schedule. And he says, this is what you love. And Craig says one of those people doesn't measure his success by the thickness of his wallet. You know what I mean? He's like, I want to go do something else. And he stayed with me because he said, I know him, I'd be here a while because we're so understaffed and we got to get it right. But I mean, for months, for months. And then when I got a staff, but he went back and got his MBA,

I was actually able to hire Craig back years later to help us be like CFO and technology and all kinds of other parts of the business he liked. 1999, about two and a half years in, he steps up. He steps away. You buy him out and you're on your own without your partner and friend to run this thing. I think at that point, you had at least two locations and we're looking to open a few more in and around Baton Rouge.

When Craig left the business, I went through a period and I don't know if it was depression or if it's a fog or how to really describe it. It felt like I had a bucket over my head full of water. It was just this, wait a minute, it's just me now. And this might lasted a couple of months and it was like a fog and I go to work, but I was just not really there.

All of a sudden I popped out of it, you know, it was a couple of months in and then I popped out of it. And I was like, you know what, I love this business. And I want to grow it. And the reason I wanted to grow.

outside of just, you know, seeing me grow teams and what we could do in the community. It was the fact that the South Gates of LSU location, it wasn't just students that were coming in. I mean, they'd come in, you know, late night, late lunch and things like that. I was having business women and men come in during lunch. I had like T-ball teams on Saturdays. I had churchgoers on Sundays. I mean, I was like, wait a minute, this concept, I thought was just a college concept.

Everybody's liking it. I mean, this thing can grow. I can be on different corners. You know, I can be like McDonald's, you know? And as luck would have it, again, there was a man, Dr. Hill in Baton Rouge, one of my good mentors. And he has started like a double drive through Burger Chain, like rallies and checkers. Double drive through, meaning you pull up and they come out. Yeah, no dining. It's no dining. It's just like two lanes of drive through going different directions, either side. These little tiny buildings. And then they have like,

Four locations left with their best and with their best crews. And they said, hey, look, we want to be in the rental business. We want to be mailbox money. We're not restaurant operators. You got a great concept. You want to take over these four locations. And at first, I was like, wait a minute. Like, that looks to me like it's like, if you did a movie making fun of fast food, it'd be these little buildings, right? Yeah. It's like, that's not my crew. That's not our culture. But then I was like, wait a minute.

like it absolutely is a great way to grow. So I talked to my team and we did it, and we opened four restaurants in four months. We gone from wow, two restaurants, four restaurants in four months, and then the next month, on the fifth month, we opened a mall food court in Baton Rouge at the mall in Louisiana because I wanted to prove that we could work in mall food courts as well. So that was five restaurants in five months.

So once you're in and around, you're all over Baton Rouge now. At some point, you know, within that sort of first three, four year period, did you get people coming up to you saying, hey, I'd like to, can I franchise this thing? Can I start a location? Yeah, like crazy, right? Because we could see the lines in the restaurants. They love the product. So people love the concept and they wanted to franchise. They wanted to bring it back to different areas. But look, this is my baby. You know, it was absolutely my baby. So I'm like,

Man, I absolutely don't want to franchise to people that aren't operators. If you're not an operator, if you're not in this business, you don't realize how hard it is. But I did see franchising as a great way to expand the concept with experienced operators. Yeah, when did that happen? I mean, we've done many interviews with different industries in the past five guys who did five guys on the show a few years ago.

That model, the franchising model, really is the sort of clearest way to scale a business rather than try to own and operate every single business, every single location.

Yeah, I mean, that's what I thought. I thought that too. That was my original plan, you know, and a couple of things happened and they started some hard lessons to learn when I started all this. So my first expansion, you know, out of the state of Louisiana was around 2004, 2005. So yeah, Dallas and Houston. And this is eight, eight, nine years into it. And we got our butt kicked. You got your butt kicked in Texas.

Oh, yeah, absolutely. Because, look, I just thought, and this was being cocky, that, you know, we'll just open a location like we do in Louisiana, and everybody will come. Yeah, of course. And not the case, not the case. Louisiana had that original LSU.

start. And so people around the state are all fans. They knew about it, right? Well, you open in Dallas and Houston and I'm not open by the campuses here. I'm open up in Louisville and all the Westheimer and expensive leases and also putting in experienced managers. They never opened in new markets. And I put them there. I didn't support them. I didn't have a conference marketing plan. And man, we lost some money. I mean, we really lost some money. Yeah, absolutely. Because people just didn't know what it was. It was just another thing and cars were drive by. People have passed it. They had no idea what this was.

They saw a big fancy building. I mean, we're building nice facilities now with this sign that says Raisin Cane's chicken fingers. And they're like, huh? And, uh, those are some hard lessons learned at that point because, you know, I basically got too confident. And then we had restart over and I had to go into those communities, help the management better actually replace some management because they're different skill sets and bring them back to our other restaurants, build conference and marketing plans and really go after getting those restaurants to where they actually get cash flow and stop losing a lot of money.

Once you started to pursue the franchise model and you've got people paying you franchise fee and then they open a raised in Cane's shop, there's a risk there where you do start to potentially lose control over how they're going to operate the business.

There must have been some tension early on with operators, owners of some of the locations who weren't doing it to your specifications. Yeah, you know, franchisees, it's tough because look, they're putting their money into it, their belief. This is their business that you're franchising to them. And, you know, they have a lot of say and, and, and, you know, if you talk about the entrepreneur that built this from the ground up,

who wants to be done perfect. I mean, I'm a perfectionist on the dealers going to be tension. But yeah, we had some knockdown drag outs, right? And they saw some things different ways. And not on standards, not on quality of food or taking care of our crew and giving back communities. But look, no, we don't need to do it that way. We don't need to be open those hours. And you only have so much say, if you say we recommend this price for your meal, but they're like, no, I like this price better. You can't make them do that. And that's actually good laws in place.

you know, to protect franchisees, but it didn't bode well with me. I loved all our franchisees.

We've since bought most of them out, but anyway, I had a lot of challenges, you know, with not being able to maintain the control that I like and not being able to go fix their problems for you. And so, um, you know, it didn't take that long for me to realize that franchising was not the way that I personally wanted to grow who I wanted to grow with. I realized at that point was I wanted to grow with our internal, which we call general managers. And I'm like, those are the people I want to partner with and those are the people I want to grow with.

Just out of curiosity, what percentage of your restaurants today are owned by the Raising Cane's corporate? Yeah, by me, I'm at like 90, I would say 95%. Wow. So you really are. It's not. This is not a traditional franchise model at all.

No, no, this is a company model. It started off because of all the obvious reasons to be franchising. It just didn't fit with my personality. So as you kind of transitioned from these few restaurants in Baton Rouge, then to Dallas and further out, I have to assume it wasn't banks or financing this anymore. You had to go raise capital. You had to go kind of look for investors, bigger investors.

Yeah, you know, I had to get clever, right? Yeah. So, you know, this is a long time ago and banks were different. And so this is when Craig was CFO of the business. And I was like, Craig, how about this concept? We had some angel investors, you know, namely this guy, Dr. Hill came and mentored mine that had those original fast tracks. But I went to Dr. Hill, I'm like, look, for this location we're going to do.

I don't want any other owners in the business. I don't want to give equity. But I'll give you a 15% guaranteed interest rate, simple loan, one pager that's going to be subordinated to the bank. So if you lend me $250,000 and subordinate to the bank, I'll personally sign a note to you subordinated loan.

at 15%, and I'll sign it. You'll have everything I have. And it worked great for Doc. He thought it was a great investment. Now, what I would do with that $250,000 for that subordinated note, Craig would then take it to the bank, and we go to these community banks. And basically, that subordinated debt was considered equity. So I would do a location.

We'd start off this way and we'd have immediate cash flow because why sales were in, but I didn't have to pay my rent for 30 days. I didn't have to pay my food vendors for two weeks, my crew for two weeks. So we got in a rapid growth. I was creating cash and generating cash to put in the locations and I keep going back to these angel investors, subordinated loans and using, we had a network of so many different community banks all over.

that we were doing. They wanted that business. Now, that is not the proper way to leverage your company, but I was in my 20s and I was stupid. You were stupid, but the flip side is you maintained your equity stake. You didn't have to give up too much of your ownership.

I didn't give up any, yeah, absolutely. Wow. But I got the ultimate lesson on financial security when Hurricane Katrina hit, and we had 21 of 28 late locations go down in the area, and that cash flow stopped. And you owned them all, and we owned them all. And that cash flow I was doing that came, all the expenses came, and we had zero sales. Now, luckily we formed as a team, and we were able to reopen quickly, and we got out of that crisis. But if I couldn't have, I could have really, really hurt our company.

Because you basically took out all these different loans. And so you owed lots of people lots of money. I owed banks and owed angel investors. That's subordinated. Right. It's very low. And you mean debt to equity, you know, you should have proper balances in your business. And that helps you get through tough times like a major hurricane, right? But I'll ever do everything now.

Interestingly enough, I didn't have to go get any capital per se. I didn't have to get any partners, right? Luckily, I lived through that, but that's when I really learned a balance risk.

All right, so about 10 years in 2006, you've got about, I think, roughly 150 locations in the US, mainly, I think, in the south and midwest at that point. I want to ask you about chicken for a moment here, because you had seen, 10 years earlier, that chicken was going to be this thing that was going to explode, that people were going to move away from burgers.

to chicken. That didn't entirely happen. You get the five guys phenomenon or burger places all over. But I wonder, did the Chick-fil-A Popeyes phenomenon that really began in the 2000s also have that same impact on your business? Yeah, I think so.

It rises all ships. So when Popeyes went crazy, the chicken sandwich wars, right? We're not known for a chicken sandwich, but our sales went up 10 and 15 percent because people were talking about chicken sandwiches and they were coming and buying chicken dinners and made people think more about chicken. And the chicken sandwich wars, that was really like KFC Popeyes, right? It was Chick-fil-A and Popeyes when it started, then everybody jumped in.

That's what I'm wondering. I mean, 10 years in, you know, you're, you are currently locations and 10 years amazing, right? But at the same time, you're watching all these other competitors introduce new products on their menus. I'm sure people are saying, hey, just do a Cajun chicken version. Just do, just roll it in Cajun spices and offer that or offer, you know, Cajun fries, like five guys does. I mean, I'm sure people said that to you all the time and how are you able to resist doing those things?

Godly if I could if I could have a dollar for every time someone said ad ranch ad barbecue ad spicy Yeah, you know everything grilled everything else and you know these companies keep adding and changing and different ideas they lose their identity they lose who they are and and

I like to say, if you try to be all things all people, you're nothing to none. You spread yourself in. One thing too that's sad in my industry, it used to be founder driven. It used to be

all the founders of their businesses, and there's very few now. And so when you're a founder, and this is a family business, and you care about your crew, it's a lot of integrity, and so many of these people in the restaurant industry in general, founders get bought up by private equity, and then it becomes a business transaction, and CEOs come and go, and CFOs come and go, and marketing comes and goes, and everybody's got new ideas, and new things, and sales is quarter, and this,

And all those things and it's not really built for longevity, it's built for profit. Profits in five-year turnarounds and selling and all that stuff isn't. So if the reason why I never gave in was I knew it was the right thing for us. You know, it's our one love. It makes us successful and we're going to stick to it. And it holds true. We're the second highest average unit volume in all of quick service. Wow. It's like I ripped from like three and a half million dollars per restaurant.

Yeah, or over four billion average unit volumes. And I guess to put that in context, I think number one is Chick-fil-A. Number one is Chick-fil-A. And by comparison, McDonald's is like two and a half to three million dollars per location. Right, right. I know that you've got something like, at the time of this recording, something like 565, 70 locations, maybe more.

Yeah, I think we're at 613. We actually just opened seven restaurants yesterday. And growing quickly, like in an average year, how many restaurants do you plan to open now? Yeah, we plan to open 100 to 110 restaurants in the next 12 months and then increase that number. And now when you open them, people know what they are. Absolutely. They're lying. It's nice having that. You know, we've been a business now for 25 years, so you have people that have actually been decaying somewhere. You know, we're in like 33 states and they're just fanatical about it.

When you think about it, this journey, I know you were so motivated and you were confident this was going to work. But when you now see what you built, how much of that do you attribute to luck and how much to the work you put into it?

So one, you gotta have a great concept, and then two, you gotta work your butt off to do it, but you need help along the way, and you need luck. So you need people that help you. These angels come about to help you, and I'll have things come along that's luck, and you take advantage of it, right? I mean, naming the dog, right? That was luck, you know? Our logo comes off of a mural I uncovered in the first location, renovating it. That was luck to see that, and these are rich things in Cain's history and lore.

I mean, looking back at your story, I'm not surprised at your tenacity and all the things that you did and your commitment and all the people said, don't do this and you were just committed to this. But on the other hand, it is quite amazing. It is a very straightforward, simple concept. Chicken fingers, fries, toast, coleslaw into a billion dollar business is quite an amazing thing. Do you ever sort of step back and just think,

Wow, how did that happen? How did that happen? Yeah, pretty much every morning when I wake up, you know, I'm so blessed that the restaurant was so hard to start. So when you have that, you don't take anything for granted. Our projections this year will do about $3 billion in sales, right, and open another 100 restaurants. And these are all great things, but it still gives me that little bit in my gut, that little scare feeling in your gut, that little feeling.

that keeps me waking up and working late and working hard and doing this. So I'm always blown away by it. I mean, I think the day this doesn't cease to amaze me would be the day I'd have to get out of it. And that day will never come. What's a great quote when you think you've arrived? It's time to show you the door. I feel like we're just getting warmed up.

That's Todd Graves, founder and CEO of Raising Canes. The Graves family still owns a majority of the company and Todd's wife and kids are all involved in the business. And the family still has a pet yellow Labrador Retriever. The current dog is Raising Canes III. And every year from Mardi Gras,

Cain III, like her predecessor, Cain II, serves as grand marshal of the crew of Muts Parade in Baton Rouge.

Todd, I'm gonna give you, I'm gonna give you my secret ingredient for my fried chicken. I'm gonna tell you, I don't think I've ever told anybody. I'm gonna tell you right now. Okay, wait a minute. My secret ingredient for my fried chicken, ground fenugreek. No kidding. So now that I've told you my secret ingredient, what's in the cane sauce?

I do this is coming. Well, you know the old adage, I could tell you, but then, you know, then you know what happens. What I'd have to do. Fair enough. Only me and the dog actually know everything that goes into it. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. And if you're interested in insights from some of the world's greatest entrepreneurs, sign up for our newsletter at GuyRoz.com or on Substag.

This episode was produced by Liz Metzger with music composed by Ramtean Arablui. It was edited by Neva Grant with research help from Clara Murashima. Our production staff also includes Devin Schwartz, J.C. Howard, Kerry Thompson, John Isabella, Alex Chung, Chris Messini, Carla Estebes, Sam Paulson, and Catherine Seifer. I'm Guy Raz, and you've been listening to How I Built This.

If you like how I built this, you can listen early and add free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at Wondery.com slash survey.