Culver's: Craig Culver

There was an event. A McDonald's event in Madison. And uh A friend of mine. A McDonald's guy.

Came up to me and said Culver. You're as far as you're gonna go. About fifteen, sixteen locations about that time, maybe eighteen. Yeah, that's right. And uh

You know, I wanted to punch him in the nose. I never said anything. But I thought to myself, baloney with that. Did that kind of feeling ever motivate you that that Feeling of like I'll show you.

Did you have some of that inside of you? Yeah. Yeah, I do. Welcome to How I Built This. A show about innovators, entrepreneurs, idealists, and the stories behind the movements.

they built. Guy Raz and on the show today How Craig Culver turned a struggling family restaurant into Culver's. one of the most profitable fast food chains. In the United States.

You've heard me talk about the concept known as the paradox of choice. It was first identified by the psychologist Berry Schwartz. In his book, Barry argues that the more choices we have in life and as consumers, the less happy we actually are. Now apply that concept to a place like Chipotle or In N Out Burger or Raising Caes Chicken.

And you understand what Barry was talking about. Burger, cheeseburger, double cheeseburger. Chicken tenders. Fries. Slaw

Toast. Taco, burrito, bowl. Case idea. Simple and efficient. Restaurants with fewer items can create a better economy of scale because there are fewer menu items to make and thus fewer ingredients to buy. And this is a great way to build a successful business.

Especially in food. Except if you're Craig Culver. He's the founder of a fast food chain called Culver's, and he built it into an empire of now almost 900 stores. with a menu that includes at least fifty different menu items. Burgers, chicken sandwiches, fried fish.

Pork loin, pot roast, chopped steak, salads, soups, cheese curds, and on and on it goes. Culver practically thumbs its nose at the idea that choice shouldn't be vast and abundant. Everyone should be able to get what they want. And that approach has made culverts one of the 10 most profitable fast food chains in America on a per-restaurant basis. On that basis, it's more profitable than Burger King, KFC, and Taco Bell.

Craig Culver started Culver's with his first wife and his parents back in the mid-1980s in Sauk City, Wisconsin. At the time, it was one restaurant, and really that was the goal. In the early years, just Keeping the lights on at Culver's was hard. It stood across the street from two huge competitors.

a Dairy Queen and a Hardy's But over time, people discovered Craig Culver's now famous butter burger. And also his frozen custard. And slowly but surely. Culver started to expand.

First inside Wisconsin, then to neighboring states, and eventually. To much of the United States. Craig Culver grew up in Sauk Prairie, Wisconsin in the 1950s and 60s. His dad was a dairy inspector, and Until nineteen sixty one.

When he came across an opportunity he couldn't pass up. and bought an AW burger restaurant. Yeah, AW Drive In. Exclusively a drive in. Uh The little shack of a building, uh

Had uh the bathroom on the outside of the building, uh gravel parking lot, five and ten cent repair. Fiftecent hot dogs, hamburgers, and French fries. We sold cigarettes of all things, and uh Car hop service. There was no inside seating. It was all car hop service when the cars would come on to our lot. Uh, they literally park around the building with no markings.

On where to park, they just park wherever. Yeah. The car hop would go out and uh She'd put a number on the windshield and take their order and And I shouldn't say she because w we had uh males as car hops as well.

This was I mean, this was like the heyday of the carhop era. I mean people think of the fifties, but really it's the sixties, the early sixties that they're thinking about. Which is like the golden era of going to the heart, car hopping having a a waiter or waitress or on roller skate sometimes coming surfing food. Mm-hmm. You were eleven years old, and I

From what I understand, it was you, you had a brother Kurt, a younger brother and a sister who's older, Georgia and Basically it was a family business. You were expected. to work at the A W From the time you were eleven. Is that More or less true.

That is very true, and uh I compare it to farming. Everybody's expected to go to work. And that's You know, be because our parents uh owned the place, uh it was okay for us to work there, but otherwise it would have been illegal. Would your parents leave early in the morning? You'd you'd make your way to school and then after school you would come to the restaurant work?

Yeah. It but it was a seasonal business. So basically uh Oh April first or so, April fifteenth, we would open And then we'd close shortly after Labor Day. So

After Labor Day, uh my parents then would have to get another job. Wow uh to get through the winter months. What was your dad like? as a I mean'cause f fr from what I understand, he was He can be tough, right, and tough on on on you guys and the and high expectations.

You're right. Uh Dad Dad was a tough guy and um Yeah, he uh he expected a lot of us and we were you know, we were just kids, but One of the things about dad was uh You know he'd get mad at you, he'd react very uh Very quickly and uh

But then it would be ten, fifteen minutes later and he'd he'd have his arm around you. Mm. Um, you know, sounds like through most of your time in high school You are working at the family.

business. Yep. Being in high school and just feeling like I all my friends get to do this and I have to be here. Like maybe even feeling resentful when you were

A teenager working All summer's restaurant. Very much so. We were working when other families were Off on vacations and

Those families were coming to to our place of business, as a matter of fact. We were serving them while they were They were enjoying their friends and stuff. But you know, saying that I mean Still. my parents I don't wanna make them sound like they were driving us crazy with work because

They were good parents. What can I say? They were great parents, so So all right, so I guess nineteen sixty eight. They sell. Uh that restaurant.

And was there a reason behind it? Did did they do do you know why they sold it? No, I you know, I really don't know why they sold it, but uh my dad, uh was an entrepreneur. And um He saw something else, uh that uh

put a sparkle in his eye, and that was the farm kitchen resort. That was in a place called Baraboo which is wasn't too far from where you were No, it was thirteen miles, thirteen miles uh north of us, and it was at the north entrance of Devil's Lake State Park. And it was a Uh sit down restaurant.

Well, it's it's more than a restaurant, it's a resort. Twenty four cottages. Uh swimming pool. you know, the shuffleboard thing, uh, amusement barn. Uh we had miniature golfing, horseback riding, which

The at least. Yeah, dad leased out to other other people. In between the two dining rooms. Uh that uh Basically our living room because we also live there in the winter months. Again a seasonal business.

And then we had a big kitchen and uh Everything was made from scratch. It was a wonderful place. Uh to dine. Huh. And so you would work there during your your college breaks.'Cause I think y this is when you were you were at college, you were at the University of Wisconsin.

And you would go down there and do what during the like weight tables, co cook in the kitchen. What would you do during the summers at at the resort? Whatever it took. Yeah. We'd wait tables. Uh my brother and I We were washing dishes, we'd take care of the lawns, the gardens.

Sometimes we were cleaning the rooms out in the Cottages and I I mean there was a lot of work there. But you know what? I love the place. I did. And I'd usually stick around the place on my

on my day off. Don't ask me why I I guess I just I did like the place. Yeah. And I think While you were there, you actually met a woman named Lee who would become your wife. Uh became a

First wave, yes. Yeah. And and so you were both college students at the time, I guess working there. Mm-hmm. Right. And you studied um you studied biology in college. Was it so uh seems like you were kind of exploring things a little outside of of the restaurant business.

Um, but but I guess around nineteen seventy three, which is when you graduated, um your dad was having I guess he couldn't keep running the farm kitchen and and he I I guess the story is he kinda sat you down and said, Hey would you take over, become the general manager? of the resort.

What what do you remember about that conversation? It's when I talk about a great deal. It's one of the great regrets I have Is saying no to my father. But uh You know?

I watched my parents and so many others in the industry. I mean lots of hours. Lots of hours. And I'll tell you what, seven days a week it I just I didn't want to be my parents. I didn't.

You said no. Yeah. Here I am, a graduate from UW Oshgast with a degree in biology. You know, sending resumes out everywhere, not getting much of a response from anybody.

And uh my dad sat me down, as you said. 'Cause he recognized something in me. Yeah. I didn't know I had. A passion for people, a passion for the

Food industry. So yeah, when dad asked me to take over the farm kitchen be the general manager. What an opportunity thrown right at me. And I told my dad no. We should dad disappointed.

You know, uh Dad and I had arguments about many things and uh I thought for sure. He would blow up. But he didn't. And he he just said, Son, you go find your dream then.

He said, I'm gonna sell the place. And uh I said, Okay, Dad, you do what you gotta do, I'll do what I have to do and uh You know. I love ya. Mm.

And it was a mistake on my part. Yeah. I mean a a mistake I guess'cause it could have given you well It depends how you look at it, of course, because we're talking about I didn't know the future. I well I've gotta say this about my parents and uh

I d I didn't realize this until years later. You know, my dad barely got through high school handicapped. Uh with uh loss of hearing in both ears eventually goes blind. Uh my mom, sure she got through high school, but no college.

And I look at look back at them and It's a wow. Mom and dad were smart people. Mm. And what they were so good at in in the business world was

They were so good with people. People that Know how to say please. And thank you. And my pleasure. And it comes from the heart.

That's who they surrounded themselves with, and that's what any great leader certainly wants to do. He wants us or she wants to surround themselves with people Uh like that. Mm. So

I guess um You decide to pursue your own path. and you've graduated college And nothing's coming through. For you.

You're down in Madison. Uh Wisconsin. And I guess your sister, your older sister in Georgia says, Hey, um I want you to meet my friend Tom. Who works at McDonald's.

Because he might have a job for you. Right. Why don't you meet him? Is that because you just had no You just didn't have a job? You d you didn't know what you were gonna do? Well, Georgia, my sister's Georgia and she knew I needed a job. Uh, Georgia said, Uh why don't you go visit with Tom?

See if you can get a job with a McDonald's. Yeah. And that's what I probably did with Georgia. I just laughed. I and I said, Georgia, you don't I don't wanna work And the

restaurant business and I sure don't want to work for McDonalds. And she said, Craig, you need a job. Get over there and visit with Tom, see if you can get a job. You know, informally we did meet. And eventually they They offered me a job as a manager trainee.

Mm. So you started as a trainee, a management trainee at a McDonalds location in Madison? Yeah. And uh I became a general manager with them within a year and

You know, you think, Okay, McDonald's, big deal. Well, it was a big deal. I mean in nineteen seventy three They were. The King.

Yeah. And I learned a great deal. And uh after almost four years with them I decided I wanted my own place of business and I had all this these years of training with my family and with the McDonalds people. I could do this.

And uh Uh well, I kinda be was becoming my father. I was becoming the the entrepreneur that he was. And I knew where I wanted to go. I wanted to move back from Madison to my hometown of Soc City and Further Sac.

And uh Buy that A and W back. Now for the second time. Wow, the one that your parents used to run. Yeah. But I had no money. Yeah.

That's when I visited mom and dad said, Help me out. You were um this is nineteen seventy six. You're I think twenty six, newly married. You and Lee are n are newly married at the time. And and I I I mentioned Lee because she she will factor prominently in And the rest of the story of Culver's, which we'll talk about later, but Um, you Essentially go back to your dad and say, hey. You remember that A and W that you sold in nineteen sixty eight?

Why don't we Buy it back. And operated? Is that is that essentially what you said to him? Yeah, I I was li we were both living in Madison at the time and I went over to visit and uh the story goes, Mom's on the couch reading the newspaper and

Watching T V and Dad's at the kitchen table playing his favorite card game of Solitaire and Mm. Mom's with an earshot of what our conversation is gonna be, so I sit down with dad. I said Yeah.

Help me out here. Let's buy the A and W back in Socks City. The entrepreneur, uh He immediately said, Let's do it.

Mom on the other hand, not a risk taker whatsoever. She was crying, holy hell, and uh I I tell the joke that uh we took a vote and she lost two to one. So But the AW the original place had burned down that little shack. And the new prototype was built in its place. Yeah.

A canopy off the back with electronic ordering stations. So we bought something different than what we originally had. But we bought it back from the same gentleman dad had sold the old place to. Right. So so you're now operating an AW franchise, it's burgers and shakes and sodas and stuff. And and your dad was essentially retired at that point. He was so was he Basically did he help put up

Some of the financing and you kind of operated it? Or was he also in there running it with you? Uh Mom and Dad were both in there as well. Lee to And uh I didn't put up any money and

You know, eventually Yeah. Sweat equity type of thing. And uh

But uh yeah, Lee and I uh ran the place. But mom and dad were certainly there as well. And how did it do? Did do pretty well. We were successful. We cash flowed immediately and uh

As a matter of fact, the first year we closed for six weeks in the winter months to Take a nice vacation to Florida. And that was the last time we did that. We didn't We didn't do that again.

Yeah. So he this what's so interesting about this is that history kind of repeats itself, right? Because it's a second time That your dad And you are involved. with an A and W, the same one. And then

uh like six years into running this thing, once again, You guys sell it. Your dad d makes a decision, you guys make the decision to sell it to some investors. Why? Was it I mean it's going well, it's doing pretty well. Why did you guys sell? Was it was just the price was was so good that you couldn't say no? We're entrepreneurs. We can buy low and sell high.

That that's honestly that was kind of our mindset. And uh we can go find something else. And we decided to sell to these two gentlemen from Madison. And part of the deal was uh I had to stay on for two months training them in the business. And uh the other part was we sold it on what's called a land contract. And that's where we're the banker in the deal. You're basically giving them the loan.

We're financing it. Yep, we are. And so if something goes awry Well, we could get it back. When you made the decision to sell, I mean you guys had bought it for I mean h roughly how much would it have cost in nineteen seventy six to buy that A and W? Like five hundred thousand?

Oh no no no no no no. I I'm I'm guessing uh maybe we bought it at uh maybe two hundred. When we sold it to these two gentlemen. I believe the number was three hundred and fifty thousand we sold it at. Got it. So a a a nice tidy profit, a hundred fifty grand, you know. six years on, and most of that money was going to your dad, but you had to find an Xing that wasn't gonna be enough to sustain you for

you know the rest of your life. And and I guess again, history kind of repeating itself was you guys with your parents, you you use the profit to buy like a little supper club. Once again in Baraboo, Wisconsin. Is that right? Called the Ritz Supper Club? Yeah, this story is full of circles, and you're absolutely right. Full of circles. It's unbelievable. It's it was called the Ritz, and uh like all the other businesses, even the EW, even the farm kitchen, we always attached Our last name to the business. So it was Culver's Ritz Supper Club. And Wisconsin is famous for

Separate clubs, which basically are independently owned restaurants. Steak restaurants, prime riven Saturday night. Fish fry on Friday night. I'm like a religion here. Salad bars, uh martinis, Manhattan's, and the state drink is a brandy old fashioned suite. But yeah, we bought the the the little writs for the first time and

We ran it again as a family. It was Lee and I and And mom and dad. And uh We did quite well there and but we only had it two years. Mm. Because

The people that bought the A and W from us were failing. And remember this was bought in the land contract. It's our money in there. And eventually one day, uh, we got a phone call. Saying please take this thing back. We don't want it.

Well. And honestly, I couldn't wait. I wanted it back. So so basically what happened was they were paying you Essentially a mortgage fee. Right. You were you were the financer.

And they said we can't pay it anymore. We're done. And y you guys can have it back. So it's it's almost like they rented the business from you for two years. That's true.

You can look at it that way. But when you did take it back, you didn't you didn't want it to be an A and W anymore. I mean you basically Wanted to like, I guess defranchise it, right? To to kinda st start your own place, your own restaurant? Yes. We sure did, and

Uh we didn't think that uh we needed the A and W we We like the idea of doing something different. And uh you know, being independent. And so that's what we did. I I remember we got rid of all the oranges and browns of of the AW and uh Everything became blue and white.

Mm-hmm. I mean this is interesting because on the one hand, of course it worked out well, which we're gonna get to, but Starting a new brand, Craig, is really hard. That is the eternal theme on the show, right? And and you already had a brand. A and W is a national brand. Mm-hmm. So I mean

What was the idea? At the time to start a big brand or were you thinking this is just gonna be our next fun project, our next one off business for the next few years? Or did you have a bigger vision at the time? I'd love to tell you we had a big vision.

That would be a lie. No, it was we're we get to move back to our hometown of Soc City and Prairie Sac and And get an opportunity to Have the business, hopefully. It's successful.

And uh We never dreamt we could fail. That never entered our minds. We're entrepreneurs. We don't fail. Well, yeah, entrepreneurs do fail, by the way. So nineteen eighty four

you decide this is not gonna be an A W A and W this is going to be Your own Restaurant. And it's gonna be called Culver's. And the basis of this restaurant was going to be

Two things. Frozen custard. And Something called the butter burger. I and here I

I gotta tell a little backstory. One day while I was at the Ritz in the s in the afternoon, not much going on, sitting down with a friend of mine and uh He was from Milwaukee, Wisconsin. And he was telling me about when he was a kid.

There was a a little custard stand. Called The Milky Way. And they served the butterburger. And when he said that to me, man a light bulb went off.

And I attach the two together. Custard. And butter burgers. How can you possibly go wrong? When we come back in just a moment.

How things in fact do go wrong after Culver's opens, and how they eventually Start to go right. Stick around, I'm Guy Raz, and you're listening to how I built this. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's 1984 and Craig has just decided to take his AW restaurant and turn it into his own place. His new establishment has indoor dining and a carport for car hop service. And the menu is gonna center on two things. Butter burgers. and frozen custard. So let's start with the frozen custard. F frozen custard is

basically soft serve but with egg, right? Like a custard based ice cream has egg in it. Versus a milk based ice cream. Uh it does have uh uh egg yolk added to it. You're right. There are ice creams as well, premium ice creams that also have egg yolk added to it, but not not too many. But yes, custard is served at about eighteen degrees. Ah has very low.

Air beat into it. Uh so it's denser. That's denser. You're right. If you take a a quart of vanilla custard and a quart of vanilla ice cream. the custer's gonna weigh considerably more because you're right. It it's denser. Doesn't have the air beat into it. I mean

I don't think frozen castor can be beat. Uh I'll call it the the best premium ice cream in the world. Alright, so he had that idea. And then butter burger, which was um

Gonna be Not a burger slathered and butter, basically just a buttered the the bun had like was buttered and toasted, right? That's what a butter burger is? Yeah, that's uh um We buttered the bun. It's a tavern burger is what it is. Yeah. We grill the bun.

We use all fres meat and uh we press the meat. Out on the grill. It's not pre pressed. Uh like padded meat. And uh we got the butter burger. It's become very fashionable in the last ten years, but what is now called a smash burger. You guys were doing it. We did it well before any of those people did it. Yeah. Because it's basically you get the burger the patty really thin, you get it crispy. Anyway. Just out of curiosity, did you have to put a big amount of investment capital up to get the machine for the cr you know, because if I imagine a custard machine isn't that

Isn't cheap and It was nineteen thousand dollars back then. That's a lot. Today it's considerably more, but uh Yeah, we had the we we sold the Rith Supper Club to the same people that had bought the Farm kitchen.

From us uh years prior. So you made a little bit there, okay. Yeah, we had we had a little money there, but we still needed a banker. 'Cause we Remodeled the place inside and out. And you used from what I understand I mean you didn't have a big budget, so you basically kinda used the oval of the A and W right? Like and the oval outline of the A and W in the restaurant you just like poked out the middle and put culvers in there.

That became our logo. You're right. Alright, you were gonna be I guess your mom and Lee would be front of house sort of check out and taking orders. You would be in the you'd be

Cooking. And then your dad would help out too. And then you hired some people, of course. Of course. Restaurant opens july eighteenth, nineteen eighty four, summertime in Wisconsin. Really nice. Mm-hmm. Uh warm. A very busy highway as well, highway twelve. And uh and and that

Fay had a dude was it packed? No. No. Nobody knew what a butterburger was, nobody knew what frozen custard was. So th that was an extreme learning curve.

Right across the road from us was Hardy's Uh nineteen eighty four the fastest growing burger chain in America. Their parking lot is full. Also across the street from us was the Dairy Queen. nineteen eighty four is the year the blizzard was invented. Their parking lot is full. And and I like the joke that, you know, here we sat with Two or three cars and uh

I drive a car, my dad drives a car. And so if you do the math. We maybe had one. One customer. I mean did you think all right, well we're but we're different than hardy's, or were you able to explain to people our burgers are different than hardy's, or our custards are different than Dairy Queens, or Or was it frustrating'cause you couldn't

get that message across at at the beginning. Well we didn't have any marketing funds, so where that came across was if they visited our place. and had a burger or had the custard. Because custard Again, I'll never say anything. a negative about any of my competitors, but frozen custard is not Not Dairy Queen. Clearly it's not Dairy Queen. Yeah and uh you know my dad and I we are

When it comes to quality, we may have to charge more, and we do at Culver's. Uh, but we're not we're not gonna cheapen something. Uh to get to a bottom line easier. And by the way, at the beginning when you opened up and we're gonna I mean the menu today is very extensive, but then

Was it just burgers and custard and fries, or did you have other things in the menu from the beginning? No, we had other things. Uh We had an extensive menu. Um Chicken. Bone and chicken and uh pork tenderloins and uh

course the our cod filet sandwich, which uh uh w really was a carry over from The Friday night fish fries. At the supper clubs that we had. That's a lot of menu items. I mean, we've done on this show we've we've talked to the founders of Chipotle and of um Oh, raising canes and five guys and they don't have that many things in their menu. No you had a lot of stuff and

That's Tricky. I mean that's Where we came from. We're in a small town. Small town in Wisconsin. And

For example, a taco bell you know, has a pretty defined audience. Yeah. Their audience is maybe eighteen to thirty or sixteen to thirty. Well In a small town you've gotta attract

Everybody. Young people, the Middle aged people, the seniors. And coming from the supper club business, we were used to Big menus and things like that.

But Thinking back, I mean, I would have loved to had a simple menu like In and Out or something like that where, you know, it's just basically a A burger. Uh I mean it's so much easier to operate. But

Again, in a town of You know, five or six thousand. We had to attract everybody and including all those people going by in the highway. Yeah. We needed them in the worst way and we needed the townspeople as well to support us. All right, so you open up eighty four.

And you're right across from a Hardy's and a Dairy Queen. Yeah. Which is tough because those are national brands. And so how did you do I mean Were you sustainable by year one? Were you uh making a profit? No. No, we lost uh lots of money during that first year and how did you how did you survive? What how did you pay your employees? And I mean, was it just loans, bank loans?

Yeah, we had a banker that believed in us. He didn't believe in the concept of culverts. necessarily. He believed in the Culver family. He had worked with us in other businesses that we've had, and he knew how hard. Mm.

Our family worked and he knew That we would do whatever it took. Saying that. Midway through that first year. Uh man.

If I didn't have my family around me. I would have throwing up the white flag. And Got out of there and done something else. But my family was there. Uh, and that second year in business is when we started to The business started to work.

What changed? Nothing really changed. It didn't. It what changed was We had a marketing program. And you know what the marketing program was? Our guests were telling people that

About this little place in Soc City with a blue roof that serves butter burgers of all things. And so our business started people were coming from fifty miles around. To have frozen custard or a butter burger. And uh It was the third year when we made money.

Craig, one of the things that I'm I'm curious about was I know there w there was an emphasis on customer service. Like you when when you go into a Chick fil A today Doesn't matter uh where you go, they're they have a reputation for just being incredibly friendly. Same with In and Out Burger. But having great food isn't enough. Like to be treated well and kindly Goes a long way. And how how did you get

Your team. How did you get people to understand that to Welcome when they came in. You know, I'll I'll take that story way back to my mother.

Mom was one of those people. When you walked into our place of business She just made you feel warm and fuzzy. And she made you feel like she Knew you like family. Like she's

She knew you for years and years and years. And what a competitive edge that is. And she set the example for us kids. And for The other team members and like the farm kitchen, the Ritz.

And also the gas. Mm. When you go into a a restaurant and you know who the owners are Don't you watch them? I do totally. I watch it. Totally. What are they gonna do? Do they do whatever it takes? Do they bend over and pick up

You know, some trash that might be on the floor or clean the floor or do whatever. Do they carry bus tubs back to the kitchen? That was my mother. It's also such an easy well, I shouldn't say easy, but it's a fairly simple hack. It's not expensive, right? You can If you have a restaurant That is. in a competitive environment like a pizza place or a burger place.

You can really differentiate it. with customer service. You can really If it's exceptional. And and people come in there and walk out of there feeling like they were treated really well. They'll go back.

Absolutely. I mean I wanna where I'm treated with Respect and kindness and and they fuss about you. Heck, why wouldn't you want to go to that place? But man, if you can add great food With great hospitality.

That's a powerhouse. I don't want to compete against people like that, as a matter of fact. Yeah. But how do you get the people in the restaurant? who are hourly workers, hourly employees. to do that, to believe in that in the same way. It's very hard. When it's yours and you're cleaning the floor, it's yours. It's a little different.

than when you've got an hourly employee who you know, for a variety of reasons may not have the same incentives to Well, the that's why the hiring process is so important. And just to hire bodies.

It's not the right answer. I'd rather go without uh than hire, you know, people that Just don't have a heart. And then once you bring them on your team Do you have a training program in place? Uh not only the operations, but

But also on hospitality. Yeah. And then The leader has to set the example. for everybody around them. Alright, so Sort of a year and a half in.

You start to see the light. Like you're starting to turn a corner. By year three, you start to see a profit. But from what I Um there was a really important a really important decision that you made, which was to right, you put in a drive thru that year.

That was a scary time. And that was something you originally did not want to do. You like the carport idea'cause it was a it was still a a like A and W style carport, right? Like you would go out and Very nice, very personable. a drive thru s seems could be a bit more impersonal.

But right. Was that your feeling about it? It was. Yeah, it was. And uh It was just uh Too difficult. To have The carport.

and a drive through as well, and the inside uh dining. I d I just thought that would be way too difficult. So but a friend of mine who sold us our custard mix at that time Said Craig, if you put a drive thru in this business, we I think we did like six, seven hundred thousand dollars the prior year. He said if you put a drive thru in You'll take this place over a million dollars in sales, and at that time

That was a milestone. They have a million dollar restaurant. Yeah. And so we made that decision. And yes, it was a tough decision. Cause I remember, you know, the local T V stations from Madison coming out and do stories about us of frozen custard and car hop service and all that stuff. And yeah. But we made the decision. And we took it over a million dollars in sales, just like that gentleman said.

And so just to put this in context. a million dollars in sales in in that year, you still had a lot of employees, sixteen, seventeen employees, so still a small business, but A big milestone. Was the I mean I'm assuming drive-thru just infinitely more efficient. Then the

Canopy in the car hops. Is that right? Is it and you can just you can cycle through customers faster. Well, we weren't very good at it, certainly to begin with, and Uh still yet today I mean call we're still in the kind of the car hop service. Right. You don't get the food from the window, you only get the drinks and then you gotta park your car and somebody still brings your food to the car. Today, to this day. So you can call that person a car hop if you want.

Right. But why was it so much more profitable than the canopy and car hops? Was it just because it was more efficient? Oh, we were doing more business. Yeah. play more business and not all through the drive through uh the the dining room became much busier as well. Back then

I mean our drive through was maybe twenty percent of our sales. Today it's uh in excess of sixty percent of our business. So yeah. It energized our business, uh, even more than what it was. And Craig I mean.

Here here's I mean, this really was It was a family business, right? Because it was uh of course it was. It was y your parents were involved. It was you and Lee, your wife, and she was all you also had kids too, and she was also working at the restaurant. Well tell me a little bit about what what Lee was doing at the restaurant. Well Lee was a full time mom and uh also working uh I don't know, thirty, forty hours at least. Wow. In the in the restaurant and

One of the the most difficult things in Probably for any business is Balance of life and uh I mean my balance was too totally out of whack and

Lee's was not easy and uh I got three great daughters and if I wouldn't You know Don't know.

Uh,'cause I wasn't always there. Yeah. I mean as as somebody who who runs a business with my wife, I it can be Really great. But also tough because, you know, everything's integrated. Work, life, it's all it's all the same thing. And um That's right.

Did you I mean From a business. Yeah. I mean, you know, your dad was involved, your mom was involved, you, Lee, how did you all decide who did what? It just fell in place. Um

Dad counted the money in the morning. I'd take care of ordering. the provisions for the restaurant. Lee and I were both involved with hiring uh our staff uh But they had took care of the back office with uh

The financial stuff. And you were ordering, presumably, I know you w weren't ordering like f pre made patties, but probably some things are more m made more sense to have delivered frozen like french fries, I imagine, right? Oh yeah, French fries where uh it didn't make sense to us. We looked at uh Cutting our our onions for onion rings and

flowering and batter dipping th them ourselves. But other than that, I mean You know, as far as the produce and stuff, it all came in Fresh and we sliced and diced everything. We made our own soups. We made the chili. The pot roasts we used to by inside rounds. They're about twenty pounds of

Big chunks of And and we Salt and pepper it, put onions over it. Leave it in the roaster overnight. And then come in in the morning and it would

be at a stage where it literally would fall apart and I mean when you came into the restaurant in the morning and you'd smell that beef roast going, Man, did it smell good. But yeah today it's different. We've got suppliers that probably do a better job at what we were doing back then, uh than What we did. So, Craig, for the first few years it seems like it was clear to you that this was gonna be a standalone Family business covers Great, you know, community restaurant.

And that was gonna be it. That was it. But four years in you did get somebody who was interested in. In opening a franchise, and I guess you agreed. After our third year, Dad and I looked into uh the possibility of franchising. And we hired a company out of Chicago.

And uh they got us license to franchise and uh Few of the surrounding states and Wisconsin. We really didn't do any marketing on that, but Uh family approached us uh

I won't mention the town because one year later it uh Uh, we got a letter in the mail from them saying You know, we we don't wanna be part of this story and They could not make it succeed. I won't say that. Uh they decided uh they didn't

want us involved in it. And uh In other words, they you know, they have to pay a royalty for and Things like that for the name and everything else and They decided they could do this on their own. They didn't need us. So they hired an attorney.

We negotiated out of the deal. And uh I said after that event I'll never franchise again. Yeah. Sounds like you didn't get along you didn't see eye to eye. There was not a lot of chemistry between you and them.

And that's the way it turned out, yes. Yeah. Okay, so you vowed Not But of course

You did. In in nineteen ninety you decided to give it another try. Yes. And and why? What was that because your vision for what culverts could be changed, or were you starting to think it could be a a national business or or or were you still thinking No, it's gonna be, you know, maybe just a a small number of locations.

Yeah, I still wasn't looking uh, you know, in on a grand scale whatsoever. How could you? I mean we we weren't successful in the first one, but now we got a shot at a And a second one. What I did learn is we've got to put a together a formal training program.

If we're gonna be in the franchise business, which we really didn't have before. for the first franchisee, I think we it was two weeks. Well, you can't learn this business in two weeks. Today it's a seventeen week program at Culver's. And the other thing with an extended training period is You really get to know

The franchisees, the trainees. And that's a culture building opportunity. uh for your company. The stronger the relationships are. The stronger your culture.

So but I'm curious, I mean You had a successful business. then you've got the first successful franchise, and after that you really many, about fourteen of them in the next year, nineteen ninety one, ninety two.

But you still weren't I mean What was limiting your ambition and scale of of this thing? Like why weren't you thinking We can be the biggest fashion like today you meet an entrepreneur, right? And I'll say And and they have one shop and and they might say, We're gonna be the biggest taco place in the world in ten years. You know you hear that a lot, right? And of course it doesn't always happen, but You understand the ambition.

But it seems like you were very You you weren't really that interested in becoming that big. Am I right about that? That's true. I and Still yet today. I mean, yes.

We continue to grow and I know growth is important, but You know, I'll never forget uh One of the things my dad said to me early on. He said, Craig, it's not important how many restaurants you have.

What's important is how many good restaurants you have. And you need strong leadership in every restaurant. to make it work. And yeah, you know, so early on, yeah, we did grow by about Fourteen restaurants in in a year's time in the early nineties and And we couldn't handle that growth.

It was too much for us. We didn't have The infrastructure in place, meaning we didn't have the people in place to open those restaurants, to train those people. But so What happened? Is we decided to Closed down franchising for about a year.

to get the infrastructure in place. And what I found out was when you tell somebody that's interested in a franchise that they can't have one, they want it even more. Yeah. So When we finally reopened, uh about a year later, I mean we had a lineup of people. They wanted a a Culver franchise. When we come back in just a moment.

How somebody from McDonald's belittles the business, and how that just motivates Craig to grow faster. Stay with us, I'm Guy Raz, and you're listening. to how I built this. My schedule is pretty busy, so I don't have a ton of time to do the things I want to do, like reading, which is why I love Audible. Audible offers an incredible selection of audiobooks across every genre, from bestsellers and new releases to celebrity memoirs, mysteries, and thrillers, motivation, wellness, business, and more.

All Audible members get access to a growing selection of audiobooks, Audible originals, and podcasts that are included with membership. You can listen to all you want, plus more get added every month. Lately, I've been listening to The Company by Robert Little. I've been listening while I work out and do chores around the house, and it makes the time fly. Mm. Let Audible help you discover new ways to laugh, be inspired, or be entertained. New members can try it for free for thirty days. visit audible.com slash built or text built. to five hundred five hundred.

That's audible.com slash built Or text built. Audible dot com slash built.

Hey, welcome back to how I built this. I'm Guy Raz. So it's the early nineteen nineties, and after one bad experience trying to franchise culvers, Craig decides To try it again.

Franchising is a quicker way to grow and uh It's not all your money going into each location. Yeah. In order for us to grow that way, it w it would have been very slow. And uh eventually we're we would have probably had to go public. To to get more funds. Or take on a lot of outside outside money. Yeah or

and really be leveraged and that wasn't how we thought. And we assumed, or I assumed Back then that franchising is easy. You just find somebody like yourself. And you know, and it'll work. Well that's not

That's not how it works. The first franchise experience we have was went sour. And it isn't as simple as just finding somebody like yourself that's gonna work every frickin' hour of the day, you know. Just doesn't work that way. This is the thing, right? Because you're running your own restaurants at the time and that now you're starting to franchise in Wisconsin and then throughout the nineties more and more even outside of Wisconsin. Now you are the The mayor.

of a city. Right, essentially. You are You've got a constituency of Franchisees. Who

have their own views on how things should run. And now it's just not just you and Lee and your mom and dad. in the kitchen. You got a lot of cooks in the kitchen. You got all these franchise owners saying, you know, down here in our part of the country, people don't want this or the cheese curds don't work here. Or I mean you must have started to get some of that. Early on. And a gentleman from Chicago that uh He wanted to change the name of the butter burger to the better burger. You can't call it the butter burger. My God, what do you think? And he said to me, trans fat butter we're going to be a fashion it at a certain time. Yeah. And I remember that meeting. Finally I slapped my hand down on the table and I said

We're not changing the name of the Butterburger to the b the better burger. It remains and will retain the name Butterburger. And he stormed out of my office and eventually they They sold a short time later and but uh I wasn't gonna change the name. The butterburger. No way. Boy I'm I glad I did. Yeah.

But I mean It requires a lot of hand holding, a lot of management, a lot of presumably a lot of travel, too. Like now you're running a network of culvers, you are in charge of preserving the brand integrity Did you ever go into any of the restaurants early on, you know, in the nineties and and just get frustrated like no, you're not

This is not right. This is you're not doing this right. Of course. Of course. And yes, that's That's very frustrating. But today And I visit a great deal of restaurants and

I'm not going in there to be an inspector. I'm a cheerleader. Mm-hmm. But obviously if I see something Uh that's

Deafly wrong. I'll change it on the spot, but That's not why I visit the restaurants. That's the job of other people in our organization. Uh They're the so called inspectors. But yeah. It's a partnership. It's a collaboration between

Everybody in our organization. How did you um I I've I've read that um you have said in the past that your approach to the business was Early days or earlier.

you know, you focused really on the customer. The customer was king, which is you know, certainly not a bad way to approach it, but but you realize ultimately it was your employees I mean It sounds like that maybe there was a Yeah.

you know, it it it was a hard lesson to learn that maybe you were Not focused enough on your Employees as much as you should have been certainly in the early days. That's correct. Um

And I think that was a mindset of most people. back then, uh the most important person in your business. It's the customer, stupid. It's the custom. No. It's your team members.

And if they know that they're That highly regarded. They're gonna take care of our customers. Or our guests as we like to say. As if my mother was taking care of them.

So yeah, I learned that uh after enough people tap me on the back and said I'm going someplace else to work or Gonna go do something else, uh. I always hated that tap in the back because I knew what it meant. Craig, the business really begins to take off in the nineties, right? And

You know, I wonder when when it started'cause You know, now we think of Chipotle or Five Guys or Shake Shack as just these ubiquitous brands that have been around forever and they haven't. Mm. But I wonder if it's a little bit more. As you were expanding in the nineties,

Do you remember ever getting any skepticism from the bigger players in the industry, you know, the kind of thinking or maybe kinda signaling to you that like, hey, don't you know Don't get ahead of your skis here. You're You're still small potatoes.

Yeah, there was an event. Uh it was uh a McDonalds event in Madison, uh fundraising event for them. Ronald McDonald House and I went and As I was exiting that evening, uh A friend of mine. A McDonald's guy.

Came up to me and said Culver. You know, you're as far as you're gonna go. And when was this, roughly? Probably ninety three.

Three ninety four, something like that. Yeah, that's right. And uh You know, I wanted to punch him in the nose. But I I never said anything. But I thought to myself, baloney with that. We'll be just fine.

And uh I'll never forget that. I I'll never will. Did that kind of feeling ever motivate you that that feeling of like I'll show you. Did you have some of that inside of you?

Yeah. Yeah, I do. Yeah I do. So Craig W did you have a a particular strategy about

how you expand it. I mean, presumably you start in Wisconsin'cause it's you're known there. And then was it okay, and then we'll go to the next state, and then we'll go to Minnesota, and then we'll go to Illinois, like or or or was it just whoever wanted a franchise. We did have our our philosophy. on how we were gonna grow. And it was kinda like uh within the Fifty miles of the last

restaurant that we open. And uh We stuck to that. Until We opened in Texas.

And my sister wanted to open a restaurant in uh the Dallas area and another gentleman who was originally from Chicago, was living in Austin, he wanted to open a culverse there. And uh Me forgetting how big Texas was said okay if I got two

Two. We can do this. Well It's so Difficult. When you don't have any scale. Uh so I made that mistake many years ago, but

We continue to grow in concentric circles. So we take our brand along with us. And that's very important because that takes a lot of the risk out of out of it for the that operator opening. Just outside the last restaurant. Um As you really

we start to expand rapidly, right, in the nineties and in the two thousands. I imagine you were on the road all the time. Did you go to pretty much every new franchise opening? I did. I I know that by tw twenty twelve you had something like four hundred and seventy Locations, twenty states.

Mainly in the middle of the country. and of the United States. And And this is important, Craig. You know, we talk about everything on this show because what happens in business has an impact on personal life and professional life and and oftentimes are intertwined. And I wonder I know that you and and Lee split around this time. And you know, she helped you build this business up for sure. And I wonder if

I mean There are always personal sacrifices that happen when you when you pursue your work, right? And I don't know. I mean w were you on the road all the time? W w w did it mean that you in some way, some senses couldn't focus as much on family.

Yeah. Balance of life was very difficult for me, uh, because My life was culvers, culvers, culvers, culvers. And uh you know I wasn't the best spouse and uh Probably wasn't the best. Father either. Uh

In order to was it Probably as good to myself as I should have been. And I also talk about spiritual life as well. Yeah. I believe it's very important to find time for your spiritual life and

I'm not saying don't work hard. Yeah. But yeah, I I find if you can find more balance in your life. You're gonna be better at all walks of your life. I believe that and so

I probably should have stayed home. More than what I did. Um I should have told my wife I loved her. Uh more than what I did.

I should have gone to more uh uh the volleyball games and soccer and stuff Uh with the children. Yeah, I Can't take it back, however.

But I can be a better person going forward. Yeah, it's interesting'cause the way you talk about your dad Right. I mean your dad was always working. And he was not around all the time, but you talk about him with incredible fondness. He was tough on you, he's tough on your brother. But it's also uh almost as if your memories of him

have changed and shifted as you've gotten older and you've kind of seen Life through the your prism and understanding his better. Am I right about that?

Yeah, yes, uh I mean dad and I and and Mob too, I mean We were business partners, they were my parents. But we were also great friends. I mean, we'd get together at least. Once a week, uh

So we've You know, dad mellowed as he got older. Mom was always as sweet as she always was and uh A lot of A lot of great times together. Craig, you eventually um

got remarried. And and then major change in in your life in twenty fifteen you step down. as CEO of Calverse. Meaning I know you're still involved. with the company. But but how much? I mean have you

Have you slowed down or or is your day still kind of focused around covers. Ask my wife that question. Okay. Yeah.

She says uh I've failed miserably at retirement. So I guess that's the answer there. This was a entirely family owned business and By the way. Over the years you must have gotten a lot of offers.

Or to just take it over or private equity coming in, seeing the success of this business kind of happening under the radar. Yeah, we've had many, many offers and People calling and Where you're going as we sold thirty percent of the business.

To work capital. Right. Minority share. Family still has seventy percent, so We truly own the company. But you decide to sell a percentage of it in twenty seventeen, and that was because

I guess w you couldn't really take money out of the business. U up until that point. Well it was it was taking some money off the table. Not that We needed to do that, but

I'm glad we've we did it and uh I'm glad that we did it with Rourke. Mm-hmm. They own a bunch of uh I think they own parts of Jimmy Johns and they have stakes and Arby's a lot of our competitors, as a matter of fact. But I'll tell you what They're a silent partner.

And they're a great partner. Hm. Um, the pandemic happens, right? Comes down you're not obviously the CEO, but still very much involved. Mm-hmm. I'm assuming the anti y y you were anticipating this is gonna be like two thousand nine or worse.

Didn't know what to think. Nobody knew what to think and uh I think the first thought that went through uh many people's minds was we gotta lay everybody off. And I thought about that for a day or two and I said, Wait a second. We can't do that. We gotta keep our people.

We have to. For one, we gotta keep'em working. But the other is we've got a drive through. And let's take care of our guests going through our drive through. As if they were Coming in into our dining rooms.

In other words. Hospitality. Let's keep our hospitality. Going strong. And uh

Like most people in the QSR segment. Uh we had positive years. We we were up uh During uh the pandemic, we opened a hundred and one restaurants. And we were up a combined uh uh like twenty six percent in comp sales

Wow. And um I think I think most of our Most of our competitors would probably tell you similar stories. Craig over the years you've seen other chains. I mean, Hardy's was a huge threat to you earlier in a career and I don't even know where Hardy's is today. I'm I mean

steak and shakes or disappearing um There's a bunch of'em, right? The Burger Chef used to be one of the biggest chains in America, doesn't exist anymore. So taste Tastes do change, right? I mean of course there are McDonald's around, Burger King is around, but tastes do change and uh chains even big chains can go out of business.

How do you make sure that you guys are innovating and and staying competitive, especially when you see I don't know, people moving for example to like chicken's really taken off in the last fifteen years, right? With sure is with racing canes and Chick fil A. It's a huge He I mean even Taco Bell now has chicken, like everyone's doing chicken.

So how do you how do you stay Innovative and and make sure that that doesn't happen to you. It it certainly is. Uh innovation is is very, very important. But Just because you bring in a new product doesn't make Your business necessarily stronger,

New things. I mean it it's great if you hit a home run and it's on your menu board forever or whatever, but the Usually give it six to eight weeks and it loses interest. So Innovation is important.

But being a leader in the business, that's far more important. And continuing to attract the right people to your organization, that's far more important as well. All right, Craig. So Culver has I think they're like eight hundred fifty of more than that locations in in twenty five states in the U.S. eight eighty three. eight eighty three, okay. As of this recording. Probably more once um

True. You Started this business with your Your dad you know really nineteen seventy six sort of

And you know, it came from a tiny place in Wisconsin. And uh here you are. the guy who's started this business with eight uh almost nine hundred locations. One of the most profitable

quick service restaurants in in the US on a High demand open new ones. And it's made you very wealthy, you know, w whether you had anticipated that or not. I mean it's it's a pretty pretty remarkable, right? Especially given that you came from a tiny place and some butter burgers and frozen custard and turns in turns into a national chain. Yeah.

How much of Of that, of of everything we've talked about. do you think has to do with just how hard you worked and how much you grinded away and how how much of it do you think is connected to just getting lucky and just the world being what it was at the time and

And it kind of Bringing your business to cruising altitude. There was a lot of work, a lot of hard work, a lot of care, a lot of love. Uh Lucky, I'll take lucky any time, but You know, as the golfer says.

You know? The more I practice, the luckier I got. It's the same thing in the business world. Yeah. I take our business so personally because I do love it.

Uh so so much. I I think uh If you don't take it that way. You may not care as much about it. So I can't just let it go. I can't. It's

Who we are, who I am, who my family is, and And yeah. I have sleepless nights. I had a sleepless night last night, as a matter of fact. I always have a fear of it going in the wrong direction. I will.

That's Just who I am. That's Craig Culver. Co founder. of covers.

By the way, the restaurant's fans are pretty serious about their cheese curds. Last year as a joke for April Fool's Day? Culver's announced a new menu item called the Curter Burger, and the response was so huge that Culver actually made it a reality. For one day only at Culver's, you could get a burger topped with a massive fried cheese curd, and they sold a hundred and thirty-six thousand of them. And most culverts sold out of Kerter Burgers?

Before lunch. Hey, thanks so much for listening to the show this week. If you enjoy our show and want to show your support, please spread the word. Tell a friend about how I built this or send out a message on social media. If you want to contact the team, our email address is h-i-bt. at id.wondery.com

If you want to follow us on Twitter, our account is at How I BuiltThis and mine is at Guy Raz. On Instagram or at how I built this and I'm at guy.ros. This episode was produced by Alex Chung with music composed by Ramteen Arablui. It was edited by Neva Grant with research help from Sam Paulson and technical assistance from Patrick Murray. Our production staff also includes JC Howard, Casey Herman, Josh Lash, Liz Metzger, Carrie Thompson, Katherine Cypher, Elaine Coates, John Isabella, Chris Massini, and Carla Estevez.

I'm Guy Roz and you've been listening. to how I built this.

What you see above is a preview of the first minutes. One unlock costs 3 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.