Chewing Over Herman Cain's Pizza PastBy
Herman Cain's promise to America is simple: Elect him President and the former fast-food executive will turn the economy around, just as he turned around Godfather's Pizza. Everywhere he goes, Cain recounts how he took over the struggling chain in the 1980s and made it profitable in a brisk 14 months. "I am not a politician," he said at this week's Republican debate in New Hampshire. "I am a problem-solver with over 40 years of business and executive experience."
Cain is being modest here. He is a politician, just one who hasn't held office. And like most politicians' log cabin stories, Cain's oft-told tale of how he rescued Godfather's is kind to its hero and notable for what it leaves out.
The way Cain tells it, in 1986 Godfather's was poorly run, bleeding cash, and getting crushed by bigger rivals like Pizza Hut (YUM) and Domino's. At the time, Cain was a rising executive at Burger King (BKC), another Pillsbury property. The bosses installed Cain as Godfather's chief executive, with orders to rescue it. A charismatic speaker with seemingly boundless confidence, Cain made a big first impression when he introduced himself to Godfather's franchise owners at a meeting at company headquarters in Omaha. "They were the most unhappy people, with arms crossed, and they were all white from small towns, looking at this black dude and going, 'Show me,' " recalls Nick Bothfeld, who worked for an ad agency that made spots for Godfather's. Cain spoke for three hours, without notes, painting a picture of the company's bright future. Bothfeld likened Cain to a preacher firing up the congregation. When he was finished, "They gave him a standing O," Bothfeld says.
Before long, some of those restaurant owners found themselves on the outs with Cain. The new CEO initiated deep cuts to bring down expenses. He closed 20 percent of the company's 640 restaurants and fired 300 to 400 people.
Spencer Wiggins, Godfather's former director of human resources, says Cain had no choice but to shutter some locations. "A lot of people ... had become franchisees when the chain first started who really had no restaurant experience. Everybody was looking to make a fast buck." To reduce costs and increase margins, Cain eliminated less popular toppings, got rid of deep-dish pizzas, and pulled salad bars from restaurants. To lure new customers, he introduced 2-for-1 specials and guaranteed delivery times.
Wiggins said he and Cain would make unannounced visits to restaurants, including one in Seattle where the two of them offered to bus tables. "We took off our coats and worked on the make table, making pizzas," Wiggins recalled. "He took people by surprise."
Cain says that as President, he would take the same uncompromising, sweat-the-details approach to reviving the economy and cutting federal spending. Yet it's not at all clear that Cain's efforts made that much of a difference in Godfather's fortunes. He says the company was losing $8 million a year when he took over and turned a profit of $4 million two years later. You'll have to take his word for it. Cain, who declined to be interviewed, has not released details of the company's performance under his leadership. Publicly available figures show Godfather's sales fluctuated from about $225 million to about $275 million during his time there, sometimes rising, sometimes falling, never surging. Godfather's didn't go out of business; neither did it become a major combatant in the pizza wars, and Pillsbury sold Godfather's to Cain and a group of investors in 1988.
In a November 1987 interview with Restaurant Business, Cain predicted Godfather's would "exceed 1,000" restaurants within three years and take on its larger rivals. It wasn't to be. "We were smaller and we could be nimble," Wiggins says, "but cash flow was the issue for us. Going up against Little Caesars, Pizza Hut, and Domino's—we just found it daunting." By the time Cain left the company in 1996 to head the National Restaurant Assn., the industry's powerful lobbying group, the number of Godfather's restaurants had dwindled to the low 500s.
Today, Godfather's Pizza is the nation's 10th-largest pizza chain by sales, according to PMQ Pizza Magazine. The company's current officials would not reflect on Cain's leadership there—or say whether they are rooting for their old boss in 2012. Godfather's "takes no position on political candidates," the company said in a statement. "But we do make great pizza."
The bottom line: Though Cain says he would revive the economy as he did Godfather's Pizza, it's not clear the chain improved much when he was CEO.