Raising Cane's secures BB+ rating on new term loan as Fitch affirms BB- issuer rating

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Raising Cane's BB+ term loan

Highlights

Fitch affirmed Raising Cane's BB- issuer rating and assigned a BB+/RR1 rating to the new senior secured Term Loan B due 2033, outlook stable.
Raising Cane's will open about 80 company-owned restaurants annually, but is expected to post sizable free cash flow deficits and margin softness until at least 2026.
Fitch projects revenue growth above 10% and high-teen EBITDA margins in 2025, moderating to mid-single-digit growth and mid-teen margins in 2026 as macro pressures persist.

Credit action and expansion outlook

As reported by Fitch Ratings, Raising Cane's Restaurants, LLC has its Long-Term Issuer Default Rating affirmed at BB-, while its senior secured Term Loan B facilities due 2031 and 2032 remain rated BB+ with a Recovery Rating of RR1. Fitch also assigns a BB+/RR1 rating to the company's new senior secured Term Loan B due 2033, and keeps the outlook stable.

Fitch says the rating reflects Raising Cane's strong position in the quick-service restaurant market, supported by its limited-menu model, brand recognition and national expansion. The agency says revenue growth continues to benefit from systemwide unit additions and high average unit volumes, even as the company remains exposed to the risks of operating a single-brand concept.

Fitch expects consumer and macroeconomic pressure to persist in 2026, with growth moderating to the mid-single-digit range as the company maintains a cautious pricing strategy in a highly competitive environment. Even so, Raising Cane's is expected to keep expanding, including roughly 80 company-owned restaurant openings a year, while EBITDAR leverage approaches the mid-4x range in 2026 before improving toward the low-4x range from 2027.

Cash flow pressure and sector credit implications

Fitch expects sizable free cash flow deficits over the next three years as Raising Cane's continues opening stores at a high-single-digit rate from its base of 1,004 units and lifts capital spending above historical levels. The agency also says member distributions should rise with EBITDA growth, which could add to credit pressure if operating performance weakens, although management could slow expansion or payouts to preserve liquidity.

Margins are expected to soften toward the mid-teens in 2026 because of restrained pricing, higher marketing spending and rising food and labor costs. That follows stronger 2025 performance, when Fitch expects revenue growth above 10% and EBITDA margins in the high teens, with margins then recovering as scale benefits improve unit economics.

Compared with larger peer Darden Restaurants, Fitch says Raising Cane's carries a weaker credit profile because of its smaller scale, single-brand concentration, higher leverage and persistent free cash flow deficits. Still, the agency says the chain remains well positioned within the growing chicken segment of the U.S. restaurant market, where its operating model and expansion strategy continue to support longer-term EBITDA growth.

Our earlier analysis of Dutch Bros (BROS) highlighted persistent downside pressure, with the stock trading below key moving averages and technical indicators signaling weak momentum. We noted that resistance near $54 could limit rebounds, while a break below the $51 support area could open the door to further declines.

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