'I didn’t feel good about what was going on in the industry': Raising Cane's CEO on COVID-19 impact to restaurants

Todd Graves, Raising Cane's Chicken Fingers Founder & CEO joins Yahoo Finance’s Alexandra Canal and the Yahoo Finance Live panel to discuss rolling up his sleeves to help struggling restaurant owners recover from the COVID-19 pandemic in his new series Restaurant Recovery on Discovery+.

Video transcript

- So that's the way that some people have been operating in the pandemic working out at home. Of course, there's also the other 18 hours of my day spent mostly eating. If you're like me, drowning in fried chicken. Which is the perfect thing to be discussing right now with our next guest. Todd Graves, the Founder and CEO of Raising Cane's Chicken Fingers joins us right now. Alongside Yahoo Finance's Ali Canal. And Todd, we've joked about this in the past but seriously there's a Raising Cane's literally down the block from where I'm at right now. So it's been a lot of self-control not to get over there every single day.

But you've obviously been busy with that in this recovery, but you also have a new series on Discovery, called Restaurant Recovery, where you're helping other restaurant owners out there in their own recoveries. But talk to me about maybe what you've seen first as we've navigated this pandemic. Because you guys were quick to really lean into drive-through support and helping your workers out there. So what have you seen.

TODD GRAVES: Yeah, we actually did better throughout the pandemic because of our drive-through's. And that was good for our company and our employees but I didn't feel good about what was going on in the industry. I was watching all these independent family owned restaurants either struggle or even close, and so I knew I had to do something about it. And that's where we came about created these this Restaurant Recovery show to be able to help out these different independent family owned restaurants in need.

ALI CANAL: And Todd, COVID's impact on the restaurant space has been pretty astounding. Sales down $240 billion in 2020. A loss of three million employees. You have over 110,000 restaurants that have either permanently shut down or temporarily shut down. When you worked with these restaurants for the show, what support did they need the most, was it strictly financial or was it more adapting their business model during this time?

TODD GRAVES: It was several things. And so all of the restaurants we helped-- we were able to help 10 different restaurants in 10 different markets, very diverse group-- and they're all successful restaurant owners, and none of them could have seen this pandemic coming on. So their sales dropped to almost zero overnight. And when that happens, as a small business you just try to keep the doors open. You're trying to keep your head above water, so you don't really have time to think about ways to expand their business, to alter their business.

So when I went in it was the first thing with my team was let's help them get better COVID safe, and then let's get some of those sales back they immediately lost. So that's three different mechanisms. It was anything from marketing, to social media campaigns, to let people know they're out there or the different formats. We had to take primarily dining room concepts and turn them into to-go machines, and we did that through a number of really interesting ways.

ALI CANAL: Todd, having said that I'm thinking back to the conversations that were happening a year ago about just the worst case scenario for a lot of these small businesses, restaurants, what have you seen over this last year? I mean, are you a little more optimistic about the bounce back that we're likely to see in this sector given that you've worked directly with these businesses, or is the damage much worse than you expected?

TODD GRAVES: Well, you know it's sad. But just a lot of these restaurants are never going to come back. And we're going to lose a lot of great cultural centers, character. These restaurants has a soul. But for the ones that are able to survive it, I feel very bullish about how the market's going to recover. There is pent up demand to go to these dining restaurants, these independent family owned restaurants that people have not been able to go to, and I'm already starting to see with the restaurants I helped and in my network around the industry, restaurant demand is huge. I think they're going to come back stronger than ever.

ALI CANAL: And Todd, I have to ask about some of the celebrity cameos that are in this new series. You have Snoop Dogg, you have Shaq, and Nelly. What was it like working with them, what did they bring to the table?

TODD GRAVES: Well, they're all my friends. It's crazy. On my chicken finger adventures I've just met some really famous, great people. And the ask was easy because they're all good family people and want to help out their community, and their answer was an immediate yes. And so it was great to have their star power come in. And it's also exciting that these friends of mine they're also smart business people. I mean Shaquille O'Neal is a great business mind and he helped us out there. Rob Snyder helped us out in Phoenix with a restaurant down the street from his house. Snoop Dogg has great ideas. And so it not only lifted their spirits to have these superstars come in as a total surprise, but the business advice they gave I was able to use that with my team and make their businesses better.

- Yeah, just the casual friend-drop with Snoop Dogg and Shaq. No big deal there. But you also put your own money behind some of these recoveries as well, right, when you're helping these restaurant owners out. It might not seem like much, right, that that might be a big boost to some of these local restaurants. But anything I'm sure in this pandemic, would have been welcome. But talk to me about maybe some of the transformations you were able to complete with the effort from you and your friends.

TODD GRAVES: Yeah, I put in a budget of $100,000 per restaurant, which is about a number it takes to really reopen the restaurant well, especially with COVID-19 and changing format. A million aggregate, but I ended up blowing my budget because there were just needs and it was even greater than I thought, and so I was able to even do things like take care of high-interest credit card debt and just terrible things. These families just having the weight of the world on their back. They don't know how they're going to support their kids. And it felt good to be in a position to be able to help them with that.

But we're streaming on Discovery Plus today and an example of a restaurant in Burbank, California, Chilli Johns. It's legendary restaurant, Walt Disney used to go there. And it's owned by veteran couple that we're just trying to keep their doors open. But me and my team are able to go in and convert their business. We put a car-hop style pickup which is perfect for COVID-19, in their parking lot they weren't using. And that's one that Snoop Dogg rolled up in his cool car and really launched it well. But immediately they got sales back.

I was able to expand their dream of having a Chilli Johns tap room to get them more dining space. And I was able to also get them more equipment to expand their menu to Chilli Burgers and Chilli Fries, which are real relevant menu items right now. And also help them out with credit card debt and massive social media campaigns utilizing the stars like Snoop.

ALI CANAL: And Todd, you've said before how the competition for labor is the highest it's ever been. I think that's one of the reasons why we're seeing this rise in Ghost Kitchens. Do you see Ghost Kitchens as a direct competitor to your business and maybe the more traditional restaurant industry at large?

TODD GRAVES: No. I think Ghost Kitchens are a great way to expand your concept I mean, we've looked into several different Ghost Kitchens to put Raising Cain's in there. It can be executed really well. We're actually talking to a few of the big groups now and looking at other places. I'm actually helping Snoop with maybe his Ghost Kitchen in Inglewood. So I think it's a good format for us to grow. Now, if I have street-side locations, I love people to see my crew and interact with my team. But in areas that we can't do that's a good way for us to expand.

- All right, Todd Graves, Raising Cane's Chicken Fingers Founder and CEO. You can catch more of him in that Discovery series, Restaurant Recovery. Appreciate you taking the time here to chat with us alongside Yahoo Finance's, Ali Canal.