Todd Graves, founder and CEO of Raising Cane's, details the financial crisis the company faced when Hurricane Katrina hit their highly leveraged store base in 2005.
Insight
Graves: Most quick-service restaurant franchisees operate at 65 to 70 percent efficiency
“Our franchisees were about an 85, which is exceptional in the franchise world, because most of them, in quick service food, run at about a 65, 70.”
Insight
Graves: Company-owned restaurant chains achieve far higher valuations than franchise models
“Another advantage of having your own restaurants, company restaurants, is that your valuations are way higher, right? So your sales, your profitability, your EBITDA that goes through as you grow company restaurants, just the company's worth so much more, man.”
Insight
Graves: Limited-time menu offers degrade restaurant customer service and consistency
“I've certainly saved menu for 29 years now, almost 30 years. If I had LTOs, which might spike business for a tiny bit, right, something new at Cain's, my managers would have to, like, then be putting up point of purchase materials, getting training everybody o…”
Disclosure
Graves: Early Cane's Scaled on 15% Subordinated Debt to Protect Equity
“So what I had was angel investors that I would do a 15% interest rate, subordinated debt. Okay. It was a one pager and I personally endorse these. I mean, if I personally signed onto it, so they knew anything I had in the world, which is all just tied up the b…”
Insight
Graves: Adding healthy items complicates operations without driving fast-food sales
“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…”
Assertion Supported
Graves: About 95% of Raising Cane's locations are company-owned
“Yeah, by me, I'm at like 90, I would say 95%.”