Advice Line with Todd Graves of Raising Cane's
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This advice-focused episode of How I Built This Lab features legendary Raising Cane's founder Todd Graves helping three entrepreneurs tackle critical business decisions. The show explores topics from franchising and financing to staying focused on core business strengths. (03:03)
- The main theme centers around maintaining disciplined focus while scaling a business, with Graves emphasizing the importance of mastering your core offering before expanding into new territories or concepts.
Speakers
Guy Raz
Guy Raz is the host and creator of How I Built This, one of the most popular business podcasts in the world. He previously worked as a foreign correspondent and host at NPR, where he covered conflicts in Iraq, Afghanistan, and the Middle East for over a decade.
Todd Graves
Todd Graves is the founder and CEO of Raising Cane's, which has grown to over 1,000 locations and recently surpassed KFC as the third largest chicken quick-service restaurant in the US. He started the company in 1996 in Baton Rouge after working in oil refineries and commercial salmon fishing in Alaska to save money for his first restaurant. (04:04)
Key Takeaways
Focus Beats Diversification in Early Growth
Todd Graves emphasized that staying disciplined and focused on your core competency is critical for sustainable growth. (06:59) When asked about menu expansion, Graves explained that Raising Cane's has served the same menu for 30 years because adding variety would compromise both speed and quality. He noted that adding spicy chicken alternatives would slow down their cook-to-order process and force them to use heat lamps like competitors, degrading their fresh food promise. For entrepreneurs, this means resisting the temptation to be "all things to all people" and instead doubling down on what you do exceptionally well.
Choose Your Business Model Based on Personal Values, Not Just Growth
Graves provided detailed insights into the franchise versus company-owned debate. (19:38) He explained that while franchisees can accelerate growth and provide local market knowledge, they typically operate at 85% efficiency compared to company stores at 95%. This 10-point difference "drove him crazy" because he couldn't control quality standards as tightly. The lesson for entrepreneurs is that your business model should align with your personality and values - if you're passionate about quality control and building a generational business, company ownership might be better despite slower growth.
Creative Financing Exists Beyond Traditional Banks
When David from Midwest Pasta Company couldn't access traditional financing due to past SBA defaults, Graves and Raz outlined multiple alternative funding sources. (34:54) These included angel investors who provide subordinated debt at higher interest rates (15% in Graves' case), equipment financing companies, strategic partnerships with current customers, and even prepaid contracts from potential co-packing clients. The key insight is that entrepreneurs with proven business models shouldn't give up on expansion just because traditional banks say no - they need to get creative with their capital stack.
Progress Over Perfection Accelerates Success
Graves' biggest piece of advice to his younger self was to concentrate more on progress rather than perfection. (56:56) He admitted to holding back training programs and marketing campaigns for weeks trying to make them perfect, missing opportunities for business progress. His mentors taught him that "nothing's ever going to be perfect" and that version one can always evolve to version 100. This mindset shift allows entrepreneurs to maintain momentum while continuously improving their systems and processes.
Brick-and-Mortar Should Enhance, Not Replace, Your Core Model
When Shane from Vesti considered opening a restaurant, both Graves and Raz cautioned against diluting focus from his successful catering model. (49:29) Shane's chef-driven factory model was generating high margins and growing rapidly with 45 retail partners. Instead of traditional brick-and-mortar, they suggested a "brand embassy" approach - a commissary kitchen with a small counter that builds brand awareness without the full restaurant operational complexity. The takeaway is that physical locations should strategically support your core business model rather than becoming a completely new venture.
Statistics & Facts
- Raising Cane's recently surpassed KFC as the third largest chicken quick-service restaurant in the US, despite only having 1,000 locations compared to KFC's much larger footprint. (04:04) This achievement comes from having some of the highest average unit volumes per restaurant in the industry.
- Evan from Whiskey Morning Coffee reported doing approximately $924,000 in revenue last year with just four full-time team members, demonstrating strong revenue per employee metrics. (14:28)
- Todd Graves noted that typical franchisees in quick service food run their operations at about 65-70% efficiency, while Raising Cane's franchisees operated at 85%, and company stores at 95%. (20:50) This 10-point gap between franchise and company performance was a key factor in his preference for company ownership.
