After Hurricane Katrina ravaged the Gulf Coast on Aug. 29, one restaurant chain raised the bar for speedy recovery: Raising Cane's.
By Sept. 16, the chain accounted for five of only 40 restaurants (of the 3,300 in the area) that had reopened. Also, notable under even less severe weather conditions, is the chain's exclusive product: chicken fingers. Always fresh, marinated chicken fingers. Oh, and you can order a side of French fries, cole slaw and Texas Toast, too. But as for protein: Chicken fingers it is.
“Raising Cane's was pretty much it for awhile,” says Bill Newton, CEO of the Slidell (La.) Chamber of Commerce, referring to the restaurants. “They were the only place to eat unless you had MREs (meals ready to eat) or had stored food in preparation. We were glad to have them there.”
Located on the northern banks of Lake Ponchartrain, Slidell, La., suffered a nine-foot tidal surge, damaging 90 percent of local homes and completely knocking out power. Of the 28 Raising Cane's stores in the area, 21 were damaged or destroyed.
How was the chain able to regroup so quickly when others couldn't? The key was having a comprehensive emergency response strategy in place.
The chicken-finger chain has dealt with hurricanes for years and had a plan called “the perfect safety box,” after their “perfect box” of chicken fingers. The gameplan included call-in numbers and employee phone lists so that managers could account for their staff.
The company's management hadn't even waited for the storm to hit, closing its area stores on the threat of the levees breaking. Two days before Katrina was to slam into New Orleans, Raising Cane's shuttered seven area stores, and another 13 on Sunday, Aug. 28. They allowed employees time to evacuate and accounted for all through an 800 call-in number, phone tree and text messages. As a result, 450 employees evacuated; no one was injured.
Once Katrina had turned on New Orleans, plywood vanished from lumber yards. Cane's wasn't able to board store windows, but did wrap all equipment in expectation of water damage. After the storm, Cane's Real Estate division assessed all stores for damage and assigned operational crews for repairs. Broken windows and signage were the most common problem, along with mold, generated from rain water and the extreme heat. Crew members, often from differing locations, then opened individual stores in short order.
The day after the hurricane passed, management and some employees, known as “crew” members, regrouped in Baton Rouge at the only store left untouched by the storm and sorted out their approach to recovering.
With area hotels either closed or commandeered for relief efforts, local employees housed out-of-town co-workers or the displaced. With three vans, Cane's shuttled employees from Baton Rouge to New Orleans and Gulf Port locations, which was a five-hour round trip at times.
As they reopened stores, Cane's found itself feeding the wave of rescue crews and volunteers that descended upon the region.
“We were first response in some cases, feeding men and women from the National Guard, and relief workers,” says founder and CEO Todd Graves of the Baton Rouge, La.-based chain. “It was a great thing to be able to do in a terrible time.” By operating the business on generator power, the founders watched as their sales peaked daily.
Chicken fingers might be a unique food of choice, but the partners approach was more sophisticated. But then this is the day of Cereality, which serves breakfast food all day, and the founders' role models, In-N-Out Burger from California and the South's Chik-fil-A, which, they say keeps its focus on its core product.
To be successful in the game, it helps to have a gimmick. And a solid business plan.
Even though Bennigan's and Chili's were making a mint off chicken fingers in the early 1990s, Graves and co-founder Craig Silvey couldn't immediately get investors fired up on a chicken-fingers-only eating establishment. But they were so convinced of their concept that they set off to raise funds by fishing for sockeye 20 hours a day on boats in Alaska. In 1996, after returning to Louisiana with fistfuls of cash, the two opened their first store near the gates of Louisiana State University.
Opting to run some of the stores themselves and carefully selecting franchise partners in other areas, Graves and Silvey have built the chain up to 39 stores, with 14 more on the way. The pace of growth is accelerating, with 10 to 12 new stores planned each year, according to president and COO Kathleen Wood. By the end of 2006, the chain expects to be in 12 states. Most are company-operated stores in the Gulf Coast region, with carefully selected franchise partners in Colorado, Oklahoma, Nevada, Ohio, and, eventually, Nebraska and Virginia. The stores average $1.7 million in sales per location, all at $6.53 a pop for a box of five fingers, fries, coleslaw, sauce and a 22 oz. drink.
The company posted an 80 percent growth in total sales in 2005, despite the hurricane closures, and is projecting another 80 percent jump this year, according to Wood.
Like most fast-food operations, Cane's target audience is between 17 and 34. Combine wide appeal with high-density traffic and the results aren't hard to imagine.
Most stores are 3,000 to 3,700 square-foot, stand-alone, dine-in/drive-through locations. Sixty percent of the business is drive-through. Cane's has one mall location and an in-line store, but prefers to create drive-throughs on busy roads or near giant retail developments. Stores are typically built on 30,000 to 45,000 square-foot lots that Vice President of Real Estate, Design and Construction Brad Sanders prefers to lease. “Fifty to 60 percent of our deals are ground leases, mostly because we won't sacrifice a location over a purchase.”
“Our strategy is to always have a local market broker with their ear to the ground who is feeding us sites,” Sanders says. “We develop all our own stores, and do some creative financing as well.” Cane's looks for locations with a minimum of 50,000 people within three miles and traffic of 35,000 cars per day.
When it comes to design, they concentrate on what they like least — and build from there. “I was more inspired by what I didn't like in the fast-food business than by what I liked,” says Graves. In other words, lose the florescent lights and plastic seats. “We wanted to create more of a dining experience. We prefer nice finishes and fabrics, wood and metal. We just don't want to look fast food.”
The founders have no plans for taking the company public. Cane's is experimenting with franchising partners who demonstrate a good organizational and cultural fit. In addition, they sometimes award general managers with the opportunity to own their own store through their Pillar program. “With our approach to franchising and an eye on depth of expansion, we should never have to do that,” Graves says. “If I had a fiduciary responsibility to shareholders, I might not make the right decisions for my crew and my concept long-term. I don't want to have that pressure.”
Graves admires other fast-food outlets. Privately owned Chick-fil-A is “the best quick service concept out there on a large scale.” Graves and Sanders also like In-N-Out Burger, a family-owned burger chain, operating on the West Coast. “They're not trying to be all things to all people,” remarks Graves. “They're burgers, fries and shakes, and they're better at it than anybody else.” He's careful to give props to icons Ray Croc of McDonald's and Dave Thomas of Wendy's for their innovation, but politely leaves the differences unsaid.
So whence the name? One might say Raising Cane's is aptly titled for a Louisiana-based company that survived the worst natural disaster in U.S. history. But, in fact, it's named after Graves' yellow lab, Cane.
That moniker replaced the previously conceived concept: Sockeye's Chicken Fingers, named for all those salmon they caught while raising the investment capital to fulfill their chicken-finger dream. But, in the end, Sockeye's sounded a little too much like another Louisiana institution — Popeye's — not to mention it's a type of fish, not poultry. The second choice name stuck and the pooch's mug graces every store.
Cane's has carefully maneuvered around the worst aspects of factory-inspired fast food. Employees, known as crew members, are mandated to have fun. Poke a manager and they will respond with Cane's mantra, “quality chicken fingers, a great crew and a cool culture.”
While Burger King and other fast-food chains had to offer $6,000 signing bonuses to attract workers to New Orleans, Cane's has had few difficulties staffing its stores post-Katrina.
“I've never been around a group of employees who have more love for a company or who enjoy their work as much as the people at Raising Cane's do,” claimed Matt Bear, a partner at Venture Development Group, who is working with franchising partners to open 12 stores in Nevada and Arizona over the next three years. “It's a very high-energy operation with lots of color. They make you want to come back.”
Raising Cane's is also benefiting from the chicken craze, where chicken fingers, fries and a diet soda can sometimes pass as a healthy alternative to hamburgers, pizzas and other fast foods. The average American now consumes 87 pounds of chicken per year, while beef consumption has dropped 15 percent.
However, the westward creep of Avian flu has some worried about a poultry panic. Cane's is working with suppliers to stay ahead of the threat and allay concerns. Major suppliers have adopted techniques, such as enclosed shelters and Tyson's “all-in, all-out” farming to isolate a flocks' exposure to other birds in the production process. Regardless, the U.S. Food and Drug Administration claims that a risk remains for all poultry products.
“Avian flu has been on our radar screen for a long time,” Wood notes. “We are trying to be as pro-active as possible, just like we did with the hurricane.”
Given Raising Cane's performance following the hurricane, the Gulf Coast seems ready to stand by this local favorite. When asked, Graves suggests that, “…there will be a long-term benefit from our response. I think we earned it. When you go through hard times together, then you really know what someone's about.”
LAUNCHING A FRANCHISE
A monster hurricane could hit the Gulf Coast region where Raising Cane's Chicken Fingers has 29 stores. Do you wait and see, or close down your operation early, allow employees to evacuate and plan for the worst?
Raising Cane's closed seven New Orleans area stores on August 27 and 13 on the 28th. Plus, the company leased refrigerated trucks in the event of power outages and distribution disruption. Katrina hit New Orleans August 29. By September 14, 2005 only 40 of 3,300 restaurants in the greater New Orleans area were open; five of them were Raising Cane's stores.
Raising Cane's might be the future of fast food: quick service, simplicity, higher quality produce, and upscale ambiance with a “cool culture.”
Raising Cane's is one of the fasted growing restaurants in the U.S. with 80% growth in 2005, despite hurricane closures. Currently, they operate 39 stores, based primarily around company-owned stores in Louisiana, Texas and Mississippi, and project opening 10 to 20 stores annually. Store sales average $1.7million per year.