Venture capital firms investing in fast food restaurants have caused once-beloved chains to give up the things that made them famous, Raising Cane founder and co-CEO Todd Graves said recently.
"It's like death by a thousand cuts," Graves said on the YouTube talk show "Hustle Meals." "Ultimately, if your motivation is money then you're not gonna care. You're going to let those great quality things go down…that's what's happened to fast food."
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Graves was responding to a comment from "Hustle Meals" host Josh Scherer about how fast food is typically seen as successful due to its replicability and consistency. "However, we've seen with so many chains as they expand, that consistency drops," Scherer said.
The investment firms that take controlling interest in fast food chains often value profits over customer service, Graves said. "That's when the CFOs jump in and say, ‘You know what? We don't need to make our sauce in house at every restaurant,'" he said. "We can make it in a commissary and we'll save ‘X.'"
He also said there's a "lack of founders that care" about their restaurants. "I care that everybody gets a good quality, craveable meal in a place that's food-safe, friendly, and we're getting them their food fast," he said.
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Investment firms in fast food
Many fast food and fast-casual restaurant brands have been acquired by private equity and venture capital firms in recent years. Roark Capital has controlling interests in Subway, Dunkin', Arby's, and Buffalo Wild Wings.
Diner chain Denny's was taken private by TriArtisan Capital Advisors, Treville Capital Group, and Yadav Enterprises earlier this month.
“Private equity and venture capital firms are drawn to fast-food and fast-casual concepts because they combine reliable, recurring revenue with scalable unit-level economics," Brian Alas, managing director at investment bank Boxwood Partners, said in a statement to Benzinga. "These businesses operate on predictable margins, require relatively low capital to replicate, and benefit from consistent consumer demand even during economic downturns."
Restaurant-related mergers and acquisitions accounted for more than $25 billion in disclosed deal value in 2024, Alas said, with nearly 70% of those deals involving restaurants with a franchise-based system.
"A clear signal of investor confidence in the category's durability and scalability," Alas said. "The franchised structure also reduces execution risk, since local operators shoulder day-to-day operations while the parent brand maintains system-wide strategy and support."
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Cane's won't sell
Graves is the majority owner of Raising Cane's and is worth $22 billion, according to Forbes.
He worked as a boilermaker in oil refineries and on fishing boats in Alaska to raise the money for his first restaurant, he said during the "Hustle Meals" interview. Graves also received small investments from the people he worked with at those jobs and a Small Business Administration loan.
He and his co-CEO, AJ Kumaran, have both said in various interviews the company has no plans to go public or sell to external investors so they can preserve the chain's culture.
The lack of external investors hasn't stopped Raising Cane's from becoming one of the fastest-growing fast food chains in the US. It made just under $5 billion in total US sales and was the third highest-selling chicken restaurant behind Popeyes and Chick-Fil-A, according to industry publication QSR Magazine.
Raising Cane's opened 118 restaurants in 2024, it said in January. There are plans to add 100 more by the end of the year to bring the total number of locations to 1,000, Kumaran told Fast Company in September.
The company plans to open its first Europe location in London's Piccadilly Circus in 2026, according to media reports. Raising Cane's has opened international locations in the United Arab Emirates, Kuwait, Bahrain, and Saudi Arabia.
All but four US states have a Raising Cane's, and there is one location in US territory Guam.
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