Raising Cane's founder on restaurant revival: They'll 'come back stronger than ever'

Todd Graves, Raising Cane's Chicken Fingers founder & CEO, is lending a helping hand to restaurants in need as they dig themselves out from under the COVID-19 crisis.

The chicken finger chain saw sales drop almost 30% at one point in the pandemic, but has quickly recovered — and even thrived — despite ongoing coronavirus headwinds. So far this year, Raising Cane's says it expects to exceed traffic estimates by almost 10%, and expects to finish the year with over $2 billion in system-wide sales.

"We actually did better throughout the pandemic because of our drive-throughs, and that was good for our company and our employees, but I didn't feel good about what was going on in the industry," Graves told Yahoo Finance during a recent interview.

"I was watching all of these independent, family-owned restaurants either struggle or even close, so I knew I had to do something about it," he added.

In response, Graves recruited members of his Raising Cane's team, in addition to celebrities like Snoop Dogg, Shaquille O’Neal and Nelly, to help 10 independent (and pandemic-stricken) restaurants in a new Discovery+ series titled "Restaurant Recovery."

In each episode, Graves, who invested over $100,000 per restaurant of his own money, assisted with everything from billing and delivery infrastructure, to menu expansion and social media campaigns.

"These families just have the weight of the world on their backs," he said. "They don't know how they are even going to support their kids, so it felt good to be in a position to help them with that."

Over 10% of U.S. restaurants have closed permanently since the start of the pandemic, according to Datassential research. That amounts to a whopping 79,438 shuttered eateries out of the 778,807 that were in operation before the onset of COVID-19 in March 2020.

"It's sad but a lot of these restaurants are never going to come back. We're going to lose a lot of great cultural centers and character. These restaurants had a soul," Graves expressed.

"But for the ones that are able to survive this, I feel very bullish about how the market is going to recovery. There is pent-up demand to go to these dine-in restaurants," he added.

"I'm already starting to see with the restaurants I've helped and in my own network around the industry, restaurant demand is huge and I think its going to come back stronger than ever," Graves said.

Ghost kitchens 'great way to expand'

According to a new JPM note focused on restaurant recovery, "sales and employment in food services and drinking places fell sharply early in the pandemic [but] have been recovering since."

Yet, despite a recent surge in spending (March's retail sales were up 9.8%, the most since May 2020), the note added that employment in the sector has yet to fully rebound — a particular pain point in the battered restaurant space.

In 2020 alone, the industry lost over 3 million employees. Despite easing restrictions and increased openings, many industry workers are questioning their return, leading to a tight labor crunch in prominent U.S. markets.

To continue operations with a limited staff, restaurants have pivoted to "ghost kitchens," virtual eateries which operate solely to serve delivery efforts as more consumers adopt platforms like DoorDash (DASH), Grubhub (GRUB) and Uber Eats (UBER).

"I think ghost kitchens are a great way to expand your concept," said Graves. He explained that he does not view the new format as a competitor to Raising Cane's, or the more traditional brick-and-mortar food hubs.

In fact, the chain has been "looking into several different ghost kitchens," Graves said, adding, "It's a great format for us to grow and [in areas where we can't have street-side locations] it's a great way for us to expand."

The restauranteur revealed he's helping Snoop Dogg with a possible ghost kitchen concept in Inglewood, California.

Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193

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