Lacing up his shoes after passing through airport security last month, Todd Graves looked up to find he had been approached by an elderly woman.
It’s not an uncommon experience for the Raising Cane’s founder, who has made it a point to be the very public face of one of Louisiana’s most high-profile restaurant chains. Nine out of 10 times, someone just wants to introduce themselves or say “Thank you” for the company’s involvement in a local charity or its sponsorship of the city’s dog park.
But after a quick ‘Hello,’ the woman got to what was on her mind.
“‘Tell me why you sold out Baton Rogue and moved to Dallas,’” she said, a reference to the company’s 2008 decision to move a large chunk of its administrative functions to the Texas city.
Graves said he explained that the company’s headquarters is still in Baton Rouge, and all of its revenue still comes through and is taxed by Louisiana. He said he explained that the company’s growth in the last three years — including a couple hundred new jobs in-state — wouldn’t have been possible had it not taken advantage of the restaurant management-heavy work force available in Dallas.
The conversation was cordial, though Graves said he’s not sure how much he changed her mind.
“It’s good people are passionate about it,” he said, though he added some of the emails he’s gotten are a bit over the top and “hateful.”
Graves said he knows he’s put himself out there as the face of Raising Cane’s, and the company’s active community involvement makes any reaction intense, deserved or not, to moving some of the company out of Louisiana.
Over the years, Graves said, he’s learned not to let people’s perceptions bother him.
Still, the blowback from “opening the Dallas office, I did take personally.”
Graves recounted the story recently while discussing Raising Cane’s passing the 100-restaurant milestone (the 101st has since opened in Frisco, Texas) and the company’s five-year plan is to hit 250 locations and total sales of $500 million by 2016.
“We never really have been about numbers,” he explained, noting the only goal for the company has always been active involvement in the community, a “cool culture” and opening as many high-quality restaurants as possible.
“Our growth plan in the past was always, ‘How many restaurants can we get financed?’” he said, particularly of the years after opening the first restaurant in 1996 just outside the North Gate of LSU.
But as the company came up on its 100th restaurant, Graves said setting a loose goal seemed like a good idea, if for no other reason to have something to aspire to. He said he’d love to far exceed that number, but “I don’t want to grow ourselves into a Krispy Kreme scenario,” a nod to the doughnut company that almost imploded last decade after growing too aggressively.
“I want to remain opportunistic and optimistic,” Graves said. “We’ll divert off that plan if we have an opportunity. We’re going to take advantage of opportunities.”
The company’s next growth spurt will be in Texas, moving west from there. Its highly successful franchisee in Las Vegas will open Raising Cane’s in Phoenix, and the company will open in New Mexico and California.
Given the burst of the housing bubble, real estate is cheap in many markets out west. And California is a great opportunity for the fast/casual segment because of its population density and, despite its reputation for health food, “it’s the land of Fat Burger, In And Out Burger and burrito stands,” Graves said.
Graves said locations in new markets always lose money the first couple of years, but the key is to build up the brand. A store in an area where the Raising Cane’s brand is known has a one-year maturity, compared to four or five years in a new market.
Cane’s also will add stores in Minnesota, Ohio, Kentucky, Virginia and South Carolina.
Graves said 25 of the locations are owned by franchisees, with the rest corporate-owned. With such a strong emphasis on in-store culture, Graves said he can’t just franchise with anyone. They have to be people he knows well and feels comfortable with, people who understand the community involvement commitment.
“Serving a good product … that’s really the easiest part,” he said. “But having that cool culture, being active in the community — those are the things that you have to bring together. That’s the hard part.”
Graves said his franchisees are people he’s met through networking throughout the industry and have worked out agreements only after a bond is formed.
“We haven’t done active recruiting of franchisees, really ever, in the company’s history,” he said.
Graves said this will probably mean the 25 percent franchisee mix won’t be able to keep up as the company adds locations. “I don’t know how many more friends I’ve got out there,” he joked.
But Raising Cane’s will use the multi-unit concessionaire model, partnering with companies such as Aramark to open locations in airports, colleges and even possibly military bases, particularly in Virginia, Boston and Newark, N.J.
Having a presence in places where people spend time and then move on will help seed the brand nationally, Graves said.
As an example, he cited a recent trip with the store’s mascot, Graves’ dog Raising Cane II, to a store in Charlottesville, Va. Graves met a customer who came in for the first time after hearing fellow soldiers from other cities rave about Cane’s while they were all stationed at a U.S. Air Force base out west.
Today, Raising Cane’s employs 4,000 people in all its markets, 750 of them in the Baton Rouge area.
Raising Cane’s may no longer be a small entrepreneurial company, but is now “a large organization with an entrepreneurial spirit,” Graves said.
The company is in the final stages of moving its Baton Rouge headquarters from One American Place on the north end of downtown over to II City Plaza on the south end.
That office has a staff of 25 people and space for more, he said.
The Dallas office has 65 employees and is home to the company’s marketing, human resources, accounting-finance, development and operations management divisions.
In the lead up to the decision to open the Dallas office, Graves said he was out of town four or five days a week for a year-and-a-half and realized something had to change if Raising Cane’s was going to move to the next level.
Graves said the company looked at Orlando, Denver, Los Angeles, Houston and other cities. It found Dallas, with more than a thousand restaurant-related companies, has more national and regional headquarters for restaurant chains than any other city.
“I needed to bring in great restaurant professionals,” Graves said. “I needed to get a base and have another office … and Dallas made the most sense.”
Baton Rouge may be known for its restaurants, Graves said, but outside of Piccadilly Cafeterias, it “isn’t a corporate restaurant town.”
For example, Graves said, he could find someone in Baton Rouge for marketing, but the person probably wouldn’t have marketing experience specific to the restaurant business. In Dallas, he has his pick of people with 10 years of experience with two different restaurant chains.
With Cane’s expanding, it is able to recruit from other companies that have slowed down, luring employees who want that feeling of being in a growth company again.
Graves said Raising Cane’s has seen revenue triple since opening the Dallas office, growth it could not have experienced without moving those divisions there.
He said that outside of some concerns about schools, he’s never found Louisiana to be that hard a sell in recruiting.
“People just don’t want to move,” he said, noting 95 percent of the hires in Dallas have been from the Dallas area.
He said Raising Cane’s advertising agency is here in Baton Rouge, as is all the printing, commercial production, food buying and other functions.
“All of that is local,” he said, adding that the lion’s share of the company’s employment is out in the field.
And he added that with the kind of growth Raising Cane’s has set its sights on, other regional offices, possibly in Los Angeles and the northeast, could be in the company’s future as well.