How I Built This with Guy Raz - Advice Line with Todd Graves of Raising Cane's

Episode Date: December 25, 2025

Raising Cane’s founder Todd Graves joins Guy on the Advice Line to answer questions from three early-stage founders who are each considering a big, next step to grow their businesses.First, Evan in Texas wants to know if he should franchise drive-thrus for his coffee business. Then, David in St. Louis is trying to get around dents in his financial history to secure financing for his pasta company. And finally, Shane in Los Angeles is weighing the pros and cons of opening a brick-and-mortar restaurant for his focaccia sandwich retail and catering concept.Thank you to the founders of Whiskey Morning Coffee, Midwest Pasta Company, and Vesti for being a part of our show.If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [e-mail] or call 1-800-433-1298.And be sure to listen to the founding story of Raising Cane’s as told by Todd on the show in 2022.This episode was produced by Alex Cheng with music by Ramtin Arablouei. It was edited by Andrea Bruce. Our audio engineer was Jimmy Keeley.You can follow HIBT on X & Instagram and sign up for Guy's free newsletter at guyraz.com or on Substack.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with a place with a new space. all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com host. Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on this show who will help me try to help you.

And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Leave us a one-minute message that tells us about your business and the issues or questions that you like help with. All right, let's get to it. Joining me today is Todd Graves, founder of Raising Cain's Todd. Welcome back to the show. Hey, guy. How you been?

Great, great to have you back. You were first on the show a few years ago in 2022. A lot of people asked me, What's your favorite episode of the show? And I don't have one because I love all my kids. But I do cite yours often because it was so funny and fun. And I think you remember that. Do you hear from people about that episode now and again?

Oh, I do. All the time. Yeah. Of course, it was so funny. And if you guys haven't heard that episode, go back and listen to it. It's so good. And we'll put a link to it in the show notes. A story about how you had this dream of starting a fried chicken joint in Baton Rouge where you grew up and you couldn't get alone.

So you worked in oil refineries. and in commercial salmon in Alaska, and you basically saved enough money to open the first restaurant and then, you know, it took a while. But of course, today it's just an unbelievable story. I think I read that this past summer of 2025, Keynes surpassed Kentucky Fried Chicken

as the third largest chicken quick service restaurant in the U.S. Yeah, you know, I grew up with KFC chicken. Right. Buckets a chicken. In the kernel, in the red and white striped buckets. And you're just all of a sudden, you're like, wow. You know, it just blows you away. You're bigger than the kernel.

It's also really interesting, too, our unit count. You know, we only have a thousand restaurants. And looking at the average unit volumes, it's kind of a different way to grow, right? We're just not having this mass volumes, but having the highest of the highest average unit volumes per restaurant, that really adds up. So anyway, sometimes that stuff hits you. And I told the team, let's enjoy it. You know, let's enjoy it for a minute. I bet.

I mean, you know, one of the things I think that you guys have done well and smartly is you've got kind of a hybrid model. You're not a, I think mainly corporate-owned locations, but you do have some franchises, and I think overseas, they're mainly franchises. That's harder because you've got this quality standard, right? It's easier in a corporate-owned store. But when you've got a franchisee, it's a different ballgame. So what are the ways you're able to or you guys focus on maintaining those standards when it's not you guys who are directly controlling it? Yeah, you know, it's number one is picking a good partner, obviously, right? If you're going to have a franchisee, you're basically, you know, you're licensing the brand package, you know, the know-know-how, the training, the product knowledge, all those things. But it's their business and they're running it. So picking the best franchisee is so clutch, so clutch. So let me give an example, Muhammad Al-Shaya, the Al-Shaya company in the Middle East. That's my partner. Been a partner now for over 10 years.

Yep. I courted. We talked, Muhammad and I talked for two years before we did something. We got to know each other. We mystery shopped or each other. each other's brands, right? Look, I spent weeks at a time over in the Middle East and the different regions seeing all the brands that his team ran. And I saw the same thing I do at Cains. You know, happy people giving good customer service, selling a good product, integrity, brand standards were handled well. And then I had been in business now with this franchisee over 10 years and we've had no problems. Now, it doesn't mean we had made mistakes, but we can work together to make them better because they were the right partner. Yeah. You know, one of the things I'm you're asked this all the time. We are too as a show. So like, oh, well, what are you going to change?

How are you going to, what are the radical things you're going to do? And it's a common question. It's a good question. People often ask. And one thing that I think a lot of people fail to recognize is consistency, especially when you've got a strong brand is critical, right? It's actually oftentimes better to double down on what you do well. And I know you cited in and out in our interview. In and Out was an inspiration for you because they did a very simple thing. They've been doing the same thing for whatever 50 plus years, you know, very minor modifications like the double double, but it's like a menu with three things, hamburger, cheeseburger, double, double, right? And you walk into a canes, it's got the one love, it's got the lemonade and the soda fountain, and it's got a very simple menu. So when people say to you, hey, Todd, what are you going to do next? You're going to introduce tacos, you know, chicken tacos and stuff and you guys going to do like, I don't know, chicken cheese dip things? What do you say? Yeah, I mean, look, I don't get as much as I used to, but, uh, man, just from starting out and going through, even though our sales were of the highest unit volumes.

It was literally us and Chick-fil-A, we blew away everybody's suggestions still kept coming in. Knowing from my core and having, you know, seeing restaurants that do very well off that craveable product, you know, and staying true to that has had so much to do with our success, right? Because the so-called experts will tell you, too, in the food industry, you're going to have to change. You're going to have to add spicy, spicy chicken. Right. They're saying, oh, people are going to get tired of this and you're going to have to, yeah. You're going to get a veto vote.

You don't have the variety. And then look, when the success of Nashville hot chicken, like in Dave's chicken, you know, growing all over the country in the world. And, you know, even bankers would be like, well, you consider it a spicy alternative? I'm like, no, we're not considering spicy alternative. Because our concept is quality food, quality, craveable food served with fast food, speed, and convenience. You know, from speed, if you add choices and you add people thinking in their head, I know, no, you know what?

I do want spicier. I do want this. It's going to add a second or two. Second or two adds up. It adds up to a lot of profitability because as many cars you can get through, there are low, low margins and high volumes, which you do. Now, let's also think about quality. I have a cooked-to-order process, just like In-N-Out Burger, right?

You walk in an out burger, you see that grills filled with those burger patties, and they're selling that product. Now, if it's slow during the day, you might actually see them put that raw beef down and start cooking. Same at Cates, right? If you're the first one of the day, you're going to wait your five minutes. But when we pick up volume, we're at the cooked-to-order process. We don't have heat lamps.

We're selling that food. It's going out hot and fresh, right? If you added the spicy, and I got two things to cook, you would start doing what the other quick servers do. They start cooking food, holding it in warming bids, and assembling it to orders what they do. So my quality and my speed would go down. So knowing I don't want to be all things to all people, because if you try to be all things to all people, you're not really going to serve any of them very well. Knowing that and stay indiscipline to that is what's important. I think that's right. I think in a world where there's infinite choices, having fewer great

choices is actually an advantage. You think of Trader Joe's. You know, they have 3,000 products compared to a Walmart, which has, you know, 200,000 products in their grocery. And I think people see a Trader Joe's peanut butter and it's like creamy or crunchy. They don't need like 15 different kinds. They know that the vetting's been done for them and that's why they're doing 16 billion in revenue a year. Agreed. You know, it's a natural human condition to want to keep changing evolution and growing. It's just in us. Like, if you're doing something, really well. It's, ooh, you know what make it even better? I mean, look, it's just for young entrepreneurs, staying focused is so clutch. It's so key. Knowing what you're good at and doing that

and focusing your efforts on that is what will make you successful. So like, let me just tell you me specifically is like not having all these different LTOs, limited time offers, right? I've certainly the same 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 on how you cook this one thing during this small period of time. And it would wear them all out, then my customer service would go down because the crew members are a little bit frustrated. And we wouldn't be doing what we do great every day consistently by adding different things to that. So we, you know, same menu served

for 30 years, good craveable food and good customer service. I love that. And it's so counter-tutup today because, and we've done brand, we've done awesome brands that do drops, okay, but it's gimmicky. It's like that's a thing that marketers and social media people, that you got to do these drops. You got to be on social media and Instagram. Hey, this week we're going to do raising canes, you know, whatever, chicken rolled in Doritos. But the thing is, you're right. It's like that might get you hype for, oh, a couple weeks, but it's not, it doesn't necessarily bring in the repeat customers. That's what matters.

Right. Actually, that kind of would be great, rolling in Doritos, crispy Doritos. If you do that, I want my name on that. product, Todd. You won't have to worry about that. Anyway, you ready to take some calls? Yeah, it'd be fun. All right, let's bring in our first caller. Welcome to the advice line caller. Tell us your name, where you're calling from, and a little bit about your business. Hey, guy. Hey, Todd. It's Evan Sledge here. I'm out here in Toler, Texas, and I'm the owner of Whiskey Morning Coffee. Evan. Yes, sir. Evan, how are you doing, man? Doing good.

Tell us, yeah, tell us a little bit about the business, just a line. Yeah, so pretty much we're a flavored coffee company that uses non-traditional ways to flavor, such as bourbon barrels, barbecue smokers, things like that. I love that. Welcome to the show, Evan. Thanks for calling in. All right, so do you know, many years ago, we had Howard Shultz on the show, and then I went out to Seattle to the roastery there with him, and he gave me, this is like 10 years ago, he gave me a whiskey-flavored Starbucks coffee. It was so good. I still remember it now.

So I love this idea. How did you get into this business? So I'll be honest, we grew up like drinking Folgers in community. So the last thing we thought we'd be doing is coffee. Folgers at the church, like through the big coffee, whatever, percolators? Yes, sir. But my granddad, he's an old moonshiner, so we have a family distillery. So we grew up making whiskey and bourbon still do that.

And I had to start a business in college at TCU and said I could get a hold of some bourbon barrels. And another kid said he knew how to get a hold of coffee beans. And we just started aging it in our apartments and roasting it out in the parking lot. So how did a guy like you who grew up on Folgers Crystals or whatever in kind of small town Texas get into, did you get into, were you into coffee? Oh, no. We didn't know nothing about it. We drank it every day. That's for sure.

But yeah, we'd made our first coffee roasters, got some barbecue pits from tractor supplies, and welded up a drum, and definitely just learned by failure, that's for sure. How did you know that whiskey barrels was going to make coffee taste delicious? We didn't. We heard from a guy that if they keep the coffee and the burlap too long, it'll start to taste like burlap. So that was the only research we had really done. And yeah, we got, we had 320 bucks as a group from the class. And we bought green beans off of Amazon and aged it. And luckily, people around school bought it.

How long ago was that? That would have been 2018 senior year. Wow. Okay. So tell me where the business is now. Do you guys have a store? Do you guys have a shop in, are you in Toler, Texas, you said? Yes, sir.

So really right now, We're mostly online e-commerce. I'm direct-to-consumer. We do a lot of events and trade shows as well as roast for other coffee companies or coffee shops now. Last year, it's still me and three buddies. So there's four of us on the team full-time. Last year, we did about 924,000, which is crazy. That's amazing.

So what percentage of your business is roasting and what percentage your business is selling beans? So we're about 60% direct to consumer from the website, whether be subscription or just one-time purchases. The remaining 40%, that's either what they consider toll roasting for other people or coffee shops or events. That's a great business. You've got a nice diversified business. Okay, before we dive in more, what's your question for us? So my question is, we seem to be stalled staling at growth, and we kind of looked at what we're good at. and it's definitely the customer service small town deal word of mouth and what we're starting to do is build

these many drive-thru coffee shops in small towns that you know your seven brew and Dutch brothers aren't going to you haven't done this yet this is your idea we're building out our first one right now that'll open in March in Toler Texas in Granbury which is same town pretty much okay I'm looking at the map I see it so you guys are like an hour or half hour out of Fort Worth yes So it's going to be different because, you know, for us to build our stands, it's going to cost about 150 grand for all the equipment and buildings. It's going to be ran by one to two people. And we're trying to figure out as we start to grow, is there an advantage to franchising

and partnering with other influential people in these small towns? Or should we look to grow kind of as our own and grow slowly? Oh, man, you've come to the right place with Todd Graves. Todd, I want to bring you in. Do you have any questions for Evan or thoughts? Yeah, Evan. So when you just said 150,000, that is, that's all in. That's building equipment, everything you need to open up. Yes, sir, besides the land. Got it. And so maybe you're ground leasing the land? Yes, sir. The first one, we purchased it. Okay. So we're going to own that.

And you're building a facility. You're actually building a drive-thru location. Yes, sir. They're kind of like the, these modular buildings you're seeing popped up. Okay. But a lot smaller scale. So it's going to be about 16 by 20. Okay. Okay.

And it drive-through only. And espresso drinks, too, are just like more like Dutch brothers. So it's going to be espresso drinks and it's going to be Tex-Mex. So the only food is going to be tamales. Oh, okay. Food too. All right. All right.

Something different. So actually, it's kind of funky. I kind of like it. It's our espresso drinks and some tamales. For you, what are you estimating your sales will be at this first unit? So at the location, we're hoping to do about, I think we're going to try to get about $1,500 to $2,000 a day in revenue. And we're basing that off of other coffee shops that we supplied beans for in similar locations. That seems a little high to me, Todd.

It is. But he's basing it off of other. drive through sales with other coffee shops that they're selling to. It sounds like there's a lot of coffee drinkers and you're part of Texas, man. Yes, sir. They do early in the morning. And then throughout the day and are you basing of your sales off the tamale sales too or no? Yes, sir. We sell tamales at the distillery. So that's kind of taking information from ourselves at the distillery and in Christmas orders, things like that. Okay. Well, look, it sounds a little high to me too, God, but I think, you know, look, a normal Starbucks would be doing a lot higher than that every, every day,

brothers, et cetera. So I think that could be achievable. And just real quick on your margins, last thing I'll ask you, do you have financial projections and what your cost of good sold margins will be and what you think you'll make on the bottom line? So I don't have all of that figured out. I've got the coffee market's kind of crazy right now. So. Yeah. Oh, yeah. So that part's changing every day. Yeah, it'd be good to do some financial projections, right? You can get those models just look and just Google it. But I would look at that and your labor, your things like that is for opening because you'll know where you're tied about and where you need to work on to be profitable because that's the first thing you have to do is man you got a cash flow because

the quickest thing out there if you bought bought this property you got 150,000 dollars in that. I don't know if you're paying cash or you're financing that but you're going to have payroll. You're going to have vendors to pay. You're going to have all those things and those payments don't stop, right? So being profitable right of the right out of the gates is very, very important. I made 30 bucks my first month. Yeah. Which was which was pretty funny, right? But what that meant is I could pay everybody. And I wasn't going further in the hole. So, and then God, I don't know if you want to answer the franchising question on this perspective. I have some thoughts, but I know, I'd love to hear your thoughts on it. I mean, you've done this. Yeah, I mean, Evan, like,

there's different ways to grow your business, right? And, you know, the first way to grow it is at your mother's ship, which I call the first Raising Cains, right? You're opening your mothership and learning the business inside and out while you do that. That will be your plan. And then if it's something that's profitable can be replicated, then you've got to look at growth. And you can grow, you know, three different models. You could grow all company restaurants. You could grow all franchise restaurants or you could do a mix of both. Now, I wanted to do a mix of both when I started.

So I liked running my restaurants. I felt like I could run my restaurants very well. I like hiring people, bring them to have new jobs. I like teaching them how to become managers and lead and earn people's money. It's a calling for me. And then I went doing that, I wanted to grow quicker. And I couldn't grow quicker without using franchisees. in my mind because, one, I couldn't have that much access to capital. There's only a certain amount of

money I could borrow from the banks. These franchisees had their own money to grow. And it wasn't for me about being debt-averse. I'm not. I would take all the debt on. I could. I just didn't have the capacity. So franchisees served they could grow. And the second thing was, I thought that the franchisees, but I got picked really good restaurant people, that they would actually be better in their community being, you know, right down the road of all the restaurants than I would. And so I went that route and I had exceptional franchisees and we grew company restaurants as quickly as we could, you know, as much money as we can get lent. But over time, I saw that the franchisees didn't run their restaurants as good as I did. Okay. And so we'd say a hundred point scale. If we're running our

restaurants in a 95, which is like just you've got to care so much to do that, run 95, 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. Wow. And so we should be very thrilled about our, you know, about our franchise partners. And I appreciated them because they did care. But that 85 to 95 just drove me crazy, man. I mean, like, it was just like, oh, if you just do this, your customer service will get

better. Or if you just did this, the quality would get better. Now, an advantage about company is you can control that. Second thing that I thought was inefficient about franchising is we needed to change something that we were doing, right? Like, here's a better operational. procedure. There was so much time you had to talk in these franchisees because it's their business and they're like, well, we don't agree with that. We think it should be this. But that wasted time to me that when,

you know, we have company restaurants. We can roll something out three months later. It's adopted and we roll the efficiency goes away. So that's there. Another advantage of having your own restaurants, company restaurants is that your valuations are way higher, right? So your sales, your profitability, your Ibida that goes through as you grow company restaurants, just the company's worth so much more, man, because if you think about it, if you were taking a franchise system and would say you were charging them 6% of sales, right? But that's what you're making. Then you have your GNA that's going to the constant support, systems, branding, processes, etc., etc., you're just not going to be worked nearly as much. So if I were you, if I would think about some things and questions about, am I debt adverse? Because if you are, company restaurant model is not going to be a great model for you to grow because you're going to grow and you're going to take on more debt and grow.

You can do that other franchisees. how much is this a baby? And you'll see that in that first year you're opening this your mother's ship down the road. If this is something where you're just like, you don't even leave your shift that things aren't right, even though you had a great date plan that night, you're not going to feel good with franchisees don't might have that same type of passion as your. So I just would figure out, it's no good or bad to it. It's just a personality thing and really see where you're at. I totally agree. And I would say in your case, again, Evan, it's not, I don't know if you can make that decision now. You have to first prove the model,

Right. You've got to take that store one and just instrument it like crazy. It's just everything is data in that store. And once you figure out how to make that work, then you open two or three more stores and you write everything down because to make it successful as a franchise model, it has to be, you've got to have repeatable unit economics. You've got a training system. There's got to be a brand voice. You've got to have quality control. You've got to have a solid menu. Operational simplicity. All of these things. if and only if it works after three to five corporate-owned stores, then you can start thinking about whether it makes sense. So I think it's a multi-step process. And step one is you've got this great laboratory now in Granbury. And then you can answer the question if and when you get to a point where it does take all these boxes. Does that make sense? Yes, sir. That makes total sense.

I think both of y'all just hit it right on the head because like what you were saying, Todd, with the baby. part in 95 and 85 and 85. We run everything at 105 miles an hour. And if it falls short, that's cool. But as long as you're all out. And I think the franchise model, like you said, people aren't going to do that. And that would probably frustrate us. And this really helped a lot. And I appreciate it. Awesome. The brand is called Whiskey Morning Coffee, Evan Sledge. Thanks for calling in, man. Congrats. Good luck. Thank you, guys. Good luck, Evan. Yes, sir. That's awesome. I have been, I've done some work with a huge quick service restaurant a couple years ago. And I went to their annual convention. And man, the franchisees, they have the power. It's not corporate. You've got a guy who's got 200 franchise locations of this quick service restaurant. Like, he's the guy that everybody's got to talk to, not the CEO of the company.

That is right. What's just the way it should be. Yeah. But of course, it can be like Dave's Hot Chicken as an example. They went franchise right away. And that's one of the ways they scaled so quickly. And it worked out for them, right? I mean, eventually they sold the business. But that was a model that worked for them. It is, right? And they wanted to expand rapidly. They wanted to do it with people that had other concepts and knew how to do it and roll through it. And ultimately, but you just, you nailed in the head right there.

The ultimate thing is they sold the business, right? So what's the quickest to get a scale to sell, right? And so for me is I'm not selling the business. I love the business. I wanted to be generational business and to keep rolling. And the best way to have something I be proud of, for me personally, was to own a company restaurants. We're going to take a quick break, but when we come back, another caller, another question, and another round of advice. I'm Guy Raz. Stick around. You're listening to the advice line on how I built this.

Welcome back to the advice line on how I built this lab. I'm Guy Raz. My guest today is the legendary Todd Graves, founder of Raising Cains. And we're taking your calls. Todd, you ready for the next call? Yeah, let's go. Awesome. All right. Let's bring on our next caller. Welcome to the advice line. Tell us your name where you're calling from and just a line or two about your business, please. I'm David Burrister, Colin from St. Louis. I have Midwest Pasta Company, and I manufacture fresh pasta and frozen pasta for restaurants and grocery stores and farmers markets and the like. Awesome. Welcome to the show, David. I just went to a delicious restaurant in Nashville and had

fresh pasta. So there are restaurants that will sell fresh pasta, but you guys basically are the white label. You make it for them. Right. I make fresh pasta for about 80 different restaurants, about 130 different grocery stores, food distribution, hotels, farmers markets. So with the exception of the farmer's markets, your B2B, basically. Yes. Tell me a little bit about how you got into this business. Have you been in food your whole career? Yeah, yeah.

Well, I grew up in restaurants. And when I was 25, I had $1,000 an idea. And me and some friends bought a restaurant in South St. Louis and had a small pasta-making component. Fast forward 10 years, I had a four-year-old. And at that point, it went from being 40 seats to 120 seats, 3 o'clock bar. Wow. And so we sold the restaurant. and I took the pasta component with me.

And then I had some help along the way, and it's been about 13 years since then. And give me a sense of what you guys are doing in terms of sales a year. Sure. We're going to be pushing 800 grand this year. I hope to be pushing a million by the end of next year. And how big is your facility? 3,000 square feet. Okay, awesome.

All right. Before we dive in further, tell us your question. Sure. So scaling up is something that I'm about ready to do, and I don't have access to traditional capital streams. So I'm trying to figure out how do I finance and how do I get access? to capital without sacrificing my equity. Okay, before we answer the question, tell us why you don't have access to traditional finance. Sure. Well, part of the sale of the restaurant had to do with

some tax liability and default on an SBA loan. So I've been blacklisted by the SBA and I had to take a personal bankruptcy in that transaction. So I don't have bad credit, but I don't have any credit. Right. So you can't get a traditional loan because of this default. And listen, restaurant's tough business even as it's growing, margins are small. And so... Well, we were also hit by the recession. Got it. Okay. So I want to bring in Todd Graves. Todd pasta business, 95% of his businesses is to food services, restaurants. He's looking to expand. Thoughts, questions, concerns. Yeah. So, David, it sounds like you're doing pretty good, my man. I mean, something to be really proud of, 800,000 in sales right now. And you were saying by the end of

next year, you're looking to do $1 million. That's 20% growth right there. that you're just doing organically right now is fantastic, especially at 3,000 square foot. Can I ask you, when you say you want to expand, what does that mean? What is the, how much capital you need to do that growth plan? I've got two different plans. The initial plan is about $1.4 million. The further plan is more like $5.5. What that would do is gain me capacity. So freezer space, for instance, is something that is a premium. I could expand my capacity. I could expand my offerings. I can improve equipment. The industry is very equipment reliant.

Most of my gear has been on for years. I've been rebuilding and repairing, but a lot of my expenses are caught up in keeping that equipment going and producing. So new equipment, better facilities, and also more marketing. I could hire someone to handle more front-end things. My focus is on the creation and the production

and the quality of the product and managing my team, not as much focus as I could have on outward sales, internet presence, these kinds of front of the house tasks. Quick question for you. Does the current demand, David, outstrip your capacity? There is more demand than I have the ability to touch. I've actually been approached by national players asking you to do copacking. Wow.

And I just couldn't, I just don't have the capacity to hold what they wanted. They were talking about 20,000 pounds a week, which with a larger facility, that's, you know, big players in this industry, that's nothing. But for me, that's more than I could take. So for the $1.4 million or the $5.5 million, I mean, just right off the bat, my gut says go the lower amount because of the exposure, right? Get good traction and roll. And, David, if you run through those numbers, $1.4 million gets me X amount of more freezer space, this equipment. And that's going to relate to X amount of sales, which means bottom line, I make this so you can measure that return.

You've done that? Yes. Great. Your challenge is that you can't get conventional financing, which would be ideal, obviously, right? right now. You've got a proven business model and you need to go get, you know, equity types of investments, but you don't want to give up equity. Well, I don't want to lose control. Yeah. That's what I did with the restaurant. And I ended up with a small slice of big pie where currently I have my own, my very own whole small pie. Yeah. So there's, you know, there's lots of different ways to finance a

business. It depends on what your, your appetite for debt is, right? What your appetite is for for how much equity you want to sell. And obviously, it's already non-negotiable for you. You don't want to lose controlling interests of the business, which I highly recommend. This is your baby. You started it. You're making it success. Now, there's other ways that you can do things.

There's, you know, angel investor networks. And these are the people that, you know, love your pasta. They're very passionate about this. And there are people that have enough money put away that they can do investments to be a part of something, right? Be a part of something special. And these are generally more favorable. That's what I call them angels, right? And so I got angel investors to help me as I grew the business because I did not want to

give up equity. I didn't want to give up control. I didn't even want having other equity shareholders just to have that in my head, am I doing a good job for them? Because it took me off my focus of what I knew was the right thing to do for our business. And so generally, these higher interest rate things. 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 endorsed these. I mean, if I personally signed on to it, so they knew anything I had in the world, which is all just tied up the business anyway back then, that I was going to be 100% into this. But there was no equity being done. But it was a 15% interest rate,

but my cash flow could pay for that. So that's why I was asking you about, if you run your numbers and that million four, and you feel real solid for that, I was able to do a higher interest rate, but they were a part of it. I made them feel a part of the business. They got Cain's gear all the time.

They came to restaurant openings, and their family was, thrilled and we went and I put together photo albums of look look at look how great this homa Louisiana new restaurant is and how much the community loves it and then they made a 15% return which actually was really good but as soon as I could pay that thing off I did and that wasn't convertible debt it was just a straight up loan straight up loan and look at banking back then was a lot more lenient I could actually take that subordinated debt and actually use that as equity to get get loans traditional loans but you know for a million four if you had five

to 10 angel investors you know that really want to be a part of this. And everybody could break off. You put in $100,000, put in $200,000. There's plenty of people in St. Louis that do have that kind of money. But subordinated debt, they have no voting rights, no anything. They're just like, hey, look, here's this. I hope you can pay me back my interest rate and do that. It's an idea. Yeah. You know, look at anything from a 10% to up to a 20% type of like that, up to mezzanine type lenders. That's a route you could go. Right. Yeah. There are a couple of options for So as Todd mentioned, there are going to be local angel investors who are focused entirely on St. Louis makers. And you can find them on LinkedIn, but they may have Facebook groups.

A little sleuthing on the internet, you'll find those groups if you don't already know where they are. There are probably even some agricultural or food production grants available in the state of Missouri, I bet. These are ways to support businesses in the state that employ people in the state. And there are probably even some food investment groups in. So those are all really interesting pass where you can do what Todd did with loans or you could basically give away some equity or you could take some convertible debt. The other idea, which I don't know if you've explored, is you mentioned some of these big producers and on the coast want to do co-packing with you. Have you explored some kind of strategic financing from them where they basically, they do a minimum volume contract or, you know, or like they commit to a certain. amount every month, they prepay it. Or you do some kind of joint venture with them for just

one line, right? So they don't own your company, but they co-own one like production line. Or even financing some of the equipment through those equipment manufacturers or they're even equipment lenders. So I think that there are a couple of interesting options for you that don't necessarily rely on traditional financing. Yeah, absolutely. And actually one of the companies that I was talking to is owned by a private equity firm when I did a little digging, although I have a sense that I'm too small to even sit at that table. I know that venture capital, when I looked into that, it was way higher. The floor for that kind of a transaction was way higher than anywhere close to where I'm at. You're too small for that. But you're not too small for, especially for

passionate, committed local. I mean, Todd, Baton Rouge has groups of people who are committed to investing in Baton Rouge, right? I mean, you are probably one of those people today. That's right. They want to see St. Louis exceed and they want to see them do better. And so the community people will invest. I love it. Guy. You said there's plenty of government resources to go into looking at what are grants, what are any of those things going on that you're creating jobs and doing well. You're a proven, hardworking person. And the equipment leasing company, since you have a successful company, look, it's going to be higher interest than if you went in and, you know, you finance it traditionally. But that's how restaurant tours like us grow, man. You can go in and get it. It'll be a higher interest rate. But the equipment lending is another really big one. I love the. the idea of talking to these companies that want you to come in and do all this pasta for them and just saying, look, here's where I'm at. You know, you're just going to be, you're an honest guy, so you're going to tell them, here's where I'm out. I can do this, but I need this. And would you be interested in helping me do that? These are all just creative ways to where you don't have to give up equity. That's right. There's a lot of creativity that you can build into those

conversations. Yeah, great. I don't think you've got a capital problem. I actually think it's more of an opportunity for you to identify those places where you can get the cash from. And I may, may work out ultimately in your favor. Right, right. And look at the restaurants you currently sell to now. I'm sure they're thrilled with your product. I'm sure they love you because you give them good product. Those are those angel investors.

You know, they're doing well and just saying, hey, look, I want to grow. I'd like you to make a good return. Are you interested in this? I'm asking for smaller increments. I'll put together a group of this many people. And look, they start talking. They know each other. They start talking, hey, this is exciting.

This is, you know, have them come out to your plant. And look, this is what I'm going to do. And they feel a part of something. And you can do good for St. I think those restaurant owners you're selling to you right now are a good place to go look. 100%. I agree, yeah. David Burmeister, Midwest pasta company, thanks for calling in.

Good luck. Thank you. Wow. It's interesting because a lot of people think that once you default or something, like you're finished. But it's actually there are all kinds of ways to find. It's not easy. There's no question about it. But there are all kinds of ways to find that cash.

Absolutely. That was a good advice, God. That was some good stuff. Stay with us because after the break, we'll talk to another founder working to take their business to the next level. That's after the break. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This. Welcome back to the advice line on How I Built This Lab. I'm Guy Raz, and today I'm taking calls with Todd Graves of Raising Canes, and let's bring in our next caller.

Yeah, I'm ready. This is fun. Hi, Todd, and hi Guy. I'm Shane Lyons. Longtime listener, first-time caller. Awesome. I'm the co-founder of Vesti in Los Angeles, California. We specialize in delivering chef-crafted snacks and signature sandwiches made on homemade vacacacha to retail partners, offices, and corporate campuses, and direct-to-consumers via web orders all over L.A. and Orange County.

Awesome. Vestie. So you make faccacacia bread sandwiches. You're in L.A. Tell me a little bit about where you're, like, where are you selling your stuff? Sure. So we've been on quite the journey. My partners and I were just about, three years in, and we have 45 retail partners that we work with. So Alfred Coffee being one of our most notable. They've got, I believe, 22 locations in Los Angeles, and we service 18 of them with sandwiches, as well as gourmet grocers and other coffee shops. So you make the sandwiches like a central kitchen and deliver them fresh every day to these different places? That's right. Yeah, we call it like a chef-driven factory model, because we're all chefs,

my partners and I, long time, fine dining, boys and girls, and we love great. We love We also wanted to make a really scalable, profitable business, so we're trying to find the balance of the two, and we landed on sandwiches. And the sandwiches we design actually, believe it or not, get better as they sit because of how we've designed them. They're low moisture, relatively high fat due to the nice olive oil that we use. And so they have a shelf life up to, we say three days, but in actuality, it's four days where you really see almost no degradation in the product.

And just really quick, what you guys are profitable and what's roughly, what are your sales? Sure, yeah. We had our first months of profit in June and July. We are targeting just under a million in sales this year. Nice. And you mentioned you were a fine dining chef. Tell me a little bit about your background. And why did you, I can imagine why you left that world, but why did you leave that world? Sure. I've actually had dual careers my whole life. When I was a kid, I was a kid actor on Nickelodeon and Disney for many years. And then that train stopped. And at 16, I went to culinary school. I went to the CIA, a culinary Institute of America. My mom's also a graduate from there, so sort of in the blood. And then I worked with some really fantastic chefs, David Chang and Daniel Blud.

And then I had the opportunity to open up a restaurant in New York City with my cousin, Nicky Ovikini and legendary restaurateur drew Nipant. We did that for about eight years and eventually sold the lease to other restaurant tours. So after that, I was sort of beat on, you know, done with restaurants. I was working six, seven days a week, back-to-back, lunch, dinner, into brunch, all that sort of good stuff that chefs do. And I was burnt out and then found myself working in film and TV again and during COVID. And like many people during COVID, you know, I was going one direction.

Then I was given a COVID diagnosis. I was supposed to actually star in a TV show. And they recasts immediately. Wow. And so I had to regroup. And I really spent a lot of time thinking about the background of being a chef and as well as an actor and the things I liked and the things I didn't like from the cultures that I was in. And I was just dedicated to doing something with my friends.

So it sounds like you got your weekends back, basically. I do have my weekends. And I've seen what a Friday night not at a restaurant looks like. And it's really nice. Tell us what your question is before we dive in a little more. So our question relates to brick and mortar. You know, should we invest in a brick and mortar? And if so, when.

It comes up often in conversation. We have internal debates about it. We have some active investor interests. and then constant guest inquiries. And our model right now, as a chef-driven factory, allows us to excel at high-volume, high-quality food production, but it's not currently set up for on-demand single-s sandwich orders,

which, as you can imagine, leaves some of our guests really frustrated and potentially turned off from the brand entirely. But given that our model's low fixed costs and high margins, what are the compelling reasons that we should be exploring in investing in a traditional bricks-and-sticks location? Okay, great. Todd, I want to bring you in, former Michelin star chefs and making faccia bread sandwiches to offices and coffee shops,

but they're thinking about opening a brick and mortar. Shane, I'll give you a few things just from my experience. What happens is when you start to have success, you have other influences that come in and saying, hey, you're doing great doing this, but you know what? Maybe you should go do this. And that's where I think this brick and mortar is coming. These people are like, your products are incredible. And why don't you go do this?

And what's worked in my, you know, my passion, my career, doing Raising Cains, it's been being staying focused, right? Focused on when I know what I'm good at. I know what I can do to successfully make money, which you have to continue to make money. So for me, the whole thought of brick and border, and I'm not saying it's a bad one, but it's a, as you know, it's a completely different business. You know, you're still selling your product, but now, now you're the one doing, you know, all the front of house, back a house with people. you're taking on substantial debt doing that. And to me, it's a distraction away from building your current business that's doing very well. You can take that 45 retail partners and you can make a goal to say, we want 90 retail partners. And this is how we're going to go out and do this and double

your sales. So my advice would be go for the goals to keep doing great what you're doing right now, focus on that, make it better. And I would table that brick and mortar thought until after you get that next goal, let's say it's 90 retail partner. Say, hey, do we really want to do that now and change our focus right now? Because this little guy, Todd Graves and Baton Rouge, Louisiana, had a chicken finger dream and stuck with it. And now I got a thousand brick and mortars and we're playing on the next thousand. You know what I try to get into retail line. You know, grocery stores want can't beains frozen in the, in the grocery stores. Retail, they want our sauce bottle. They want all these different lines. If I look at all those different product lines, it's going to take my focus away from doing what I'm really good at. Yeah, it's so interesting. A couple questions for you, Shane. I mean, the first is, do you guys do pop-ups? It's funny you should say that. I'm actually suited up because right now we're working at the Midden Market in Los Angeles, the really cool hybrid concept, which we kind of consider an asset like brick and mortar. Basically, we have a six-week lease. So for us, you know, exactly what you're describing, Todd, it's back. You know, we're there every day. I'm there from 9 a.m. to, you know, 11, 12 o'clock at night. And it's full on six days a week. And it's reminded me of, you know, that I really like my core business. As much fun as it is to interact with guests, we're in hospitality for, you know, reason. We love people. We love to make them feel great. We love delivering on the promise of providing a fantasy, which I think is what restaurants are ultimately there for, is to provide

fantasy to some degree and fulfill on that promise. So it's been really nice to kind of be in a restaurant for this period, but then we'll be exiting. Yeah. I mean, to me, that's a brand building exercise, which is important because a lot of chefs go into catering. It's just more efficient. It's more profitable, better margins. And by doing these pop-ups, right, you're exposing more and more consumers to what you offer. And really, it's the lunchtime, you know, it's at 500 sandwiches or 200 sandwiches for the lunchtime, you know, offices that's really going to be your bread and butter. What's interesting to me about brick and mortar is that, and I totally agree with Todd, it's like, do you want to get back into that restaurant lifestyle that you walked away from?

I think there's a kind of a happy middle there, which is, is there a world where down the road, it may not happen right away, you basically open up a commissary kitchen that is, you basically open up a commissary kitchen that is like an embassy, right, like almost like a brand embassy, where you might have a little counter where you can go in a little bit of a brick and mortar where you do offer maybe a window. But really, it's just about putting your brand out there and just building more awareness, but also having a kitchen, your own kitchen where you're making the product. I think that's right. It makes total sense. And we've talked around ideas like that. And we really love the hub and spoke model.

We've kind of reversed engineered. A lot of restaurants move into catering because they're all-a-cart sales are like. lagging and instead we've started exclusively catering and now there's demand for all the cart. So trying to find that hybridization of the two is really what we're looking at now. And we do know that we would like to expand across the least North America and there's the internal conversation of, well, can you have a brand that can leave L.A. and go somewhere else and not have a brick and mortar presence. Is it even possible? And we don't know. As far as expanding, right? Now you'll have some aspiring goals. It's a dream. You know,

you want to expand across the country. When you're using retail partners, they need good products, right? And I like what guy is saying, some of your product having its own brand. It's a pop-up in the new area, right? You set up that hub and smoke model. You're going to set up your commentary there and do it great. Some pop-ups where people go, man, that's a best fecatia sandwich I've ever had, using influencers to where people know it's your brand.

But I don't think you need to have the brick and mortar. You also run the risk of that brick and mortar not hitting the way you wanted it to hit. And the retail partners are like, hey, you know what? You weren't that successful in your brick and mortar. I don't want to get your product. You have something that's working very well right now, and I would focus you and your team, all that energy on that and growing that side of your business.

Yeah. Yeah, we've been sort of like a slow-growing indie band in L.A., but the words getting out. And we can see that the opportunities are sort of everywhere now, and I'm very afraid of the shiny objects. I've been around enough to say most of them are a distraction. And so it's a little challenging to navigate all the different feedback. You know, we have three lines of CPG goods. I've never had anything on a shelf before,

but I'm learning that I really like selling potato chips, and I love the margins on them, and people really love our potato chips. So I guess this is really helpful, and what I'm hearing is to stay focused and go back to the core product, which is making sure that taste, texture, and temperature on all the things that we create are deliver on that promise, because that's what we can control. Yeah, Todd, they do a muffoletta. Oh. They're doing a New Orleans sandwich. Man, that's not easy to do that right. Oh, we'll take the Pepsi challenge, Todd. We'll take the challenge.

I can't wait to try it. Awesome. Shane Lyons, a brand is called Vestey Sandwiches and Snacks in L.A. Congrats, good luck, man. Thanks, guys. Good luck, Shane. Such a pleasure. Thank you.

Yeah, I mean, it's interesting because do you guys, I mean, do you do, is catering a significant business for you? I mean, your stores are so packed, so I don't know. Yeah, it's really not, you know. It can be up to like maybe 3% of total sales, right? We actually even looked at like when we could different times and experimented, like going out, taking catering to places. And it didn't, you have the extra bandpower to go get that done.

It's a lot. Yeah. It didn't make sense. So now we just make it easily packagedable. You can pick it up at the restaurant. But for us, it's just like stay at our model. Because if you're going after 3% and putting muscle behind that, you're losing focus. You're distracting.

And just like with Shane, like him, like we said that too, he said something interesting. He's like, then I make the great potato chips to go with that. That's still in that same vein. That's a great add on. Your margins are even better on potato chips. But you start doing two different businesses, which it is in that deal. He loses focus. He screws up something that's really working well right now. It is it happens to all success, right? You're doing great. But you can also do this. And when you lose the focus, you mess up with you, what really is your concept. At the end of the day, I call it God, faith, whatever Buddha, divine intervention, it's going to, what it's supposed to happen is going to happen. I think about Stacey's Pita chips. It started out as a Pita rep sandwich place, but people wanted the Pita chips and then it turned into a different business. never know. Potato chips that might become the business. You're right, man. It's cool. Todd, before I let you go, a quick question for you. If you go back to the guy that was

working at the oil refinery on the ship and starting the first canes, right, in down the street from Louisiana State, what advice would you have given him that would have been helpful? You know, I think number one would be concentrate more on progress rather than perfection. And, you know, entrepreneurs, when you start something, it's your baby, right? You just, everything's to it. It's about an expression of yourself. And so I want everything to be perfect, right? So we'd be starting a new training program. But I wouldn't release it because it wasn't perfect yet. Well, you'll give me a couple more weeks. You're like, Todd, we need this program. Two more weeks. I'll get it right. I missed out a lot of progress just trying to make it perfect. And then some

older mentors, they taught me. Look, Todd, nothing's ever going to be perfect. And progress is way more important than perfection. So get that training program out. But it's version one. And you can get to your version 100 that you're going to do and get better. I still use that today, you know, here 30 years into the business because I will literally want something to be so perfect. And what a new marketing campaign and a new thing is? And then I'm like, I can't stop progression in our business. Progress, progress, progress.

Yeah, that's right. Todd, thanks so much for coming back on the show, man. Really great having you. Thanks for having me on. That's Todd Graves, founder of Raising Cains. And by the way, if you haven't heard that episode, it's so good. I swear to God, if you don't like it, simulate. I'll send you a dollar. And if you do like it, you can send me a dollar. Go back, check it out. It's just so good. We're going to put a link to it in the show notes. And here's one of my favorite moments from that episode.

You know, back then, we thought you could actually, let's just being naive, you could actually go to a bank, bring a business plan and they'd lend you money. Here's my plan. I need $100,000. Yeah, and I thought they'd give it to you. Isn't this a great plan? Isn't this a great idea? And did you do that? Yeah, yeah, yeah. Like, we bought a couple of cheap. suits and went to Office Depot and bought boxy briefcases with the brass combination locks. You remember those? Yep, yep.

We went and we went and saw every bank in town. I had a briefcase. Craig had a briefcase. And we would put it on their desk sitting across from in our chairs and we would open the brass combination lock like somebody was going to steal our chicken finger business plan. Hey, thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for free at gairoz.com or on subsdack.

And of course, if you are working on a business and you'd like to be on this show, send us a one-minute message that tells us a little bit about your business and the questions or issues that you're currently facing, because we would love to try and help you solve them. You can send us a voice memo at hibt at ID.wondery.com or call us at 1-800-433-1298. Leave a message there and make sure to tell us. how to reach you and will put all of this information in the podcast description as well.

This episode was produced by Alex Chung with music composed by Rumpteen Arablui. It was edited by Andrea Bruce. Our audio engineer was Jimmy Keely. Our production staff also includes Chris Messini, Jacey Howard, Casey Herman, Sam Paulson, Carrie Thompson, Catherine Sefer, Ramele Wood, Neva Grant, and Elaine Coates. I'm Guy Raz, and you've been listening to the advice line right here on how I built this lab.