The Cain recipe: enthusiasm, stamina and the ‘next thing’

October 23, 2011

The 40-year-old man who arrived at the Omaha headquarters of Godfather’s Pizza to become its fourth president in as many years had never visited Nebraska and knew little about pizza.

Herman Cain had been a rising star at Pillsbury, a computer scientist and mathematician turned executive who had overseen 450 Burger Kings around Philadelphia, turning the under­performing region into one of the company’s most profitable.

Cain’s performance there caught the eye of top managers at Pillsbury, who tapped him in 1986 to take over their newly purchased Godfather’s Pizza subsidiary.

A quarter-century later, as Cain has clawed his way toward the top of the Republican presidential field, he cites his tenure as head of Godfather’s as the central example of his leadership ability. Just as he turned around that floundering business, he suggests, so too could he reverse the country’s sagging fortunes as its chief executive.

Cain’s approach at Godfather’s was one part business basics, one part theatrics and two parts enthusiasm and stamina. In nearly a decade at the helm of the company, he proved himself a charismatic leader and gifted orator. To some employees, he seemed more focused on broad strategy goals than the workaday details of the business, and yet former colleagues recall the frequent sight of him in a busy pizza parlor — jacket off, sleeves rolled up, making pies or cleaning tables.

Cain focused on boosting morale and pursued a strategy aimed at revitalizing the battered company, partly through laying off hundreds of workers. While he had early successes, he later struggled. And then he moved on.

At its peak in the early 1980s, Godfather’s had more than 900 locations and more than $300 million in annual sales. By the time Cain arrived, the growth had halted. Profit was declining. Morale had plummeted.

Cain has said on multiple occasions that the company he found “had one foot in the grave and another on a banana peel.” It’s unclear whether the situation was quite so dire. Cain told the Omaha World-Herald just after he started in 1986: “Godfather’s is not dead. We’re alive and well.”

Nobody disputes that the company faced serious problems.

“Right before Herman came aboard, it was completely demoralized. Culturally, it was devastated,” recalled Larry Uhl, a marketing manager who had arrived years earlier. “Everybody was a little suspicious of him at first,” he added, noting that several presidents had come and gone, and that Cain seemed at first like just another corporate suit. But Uhl said he differed from his predecessors. “He was committed, and he knew how to get other people committed. There was this sense of urgency he had.”

Dishing up spirit

From his first day, Cain gave regular and rousing speeches — peppered with adages that he has revived on the campaign trail — urging everyone at the company to think big and share in his vision of making Godfather’s the No. 1 pizza chain in the world. “If you truly do dream of being a part of that achievement, your creative energies will be unleashed and unstoppable,” he said in a speech to employees and franchisees the month after he arrived.

Charles Henderson, who worked with Cain at Burger King and followed him to Omaha to head marketing, said Cain had a little preacher in him. “He’s very, very inspiring. The guy can convince you to run through a wall,” Henderson said.

Under pressure to produce quick results, Cain recruited more than half a dozen executives he had known at Pillsbury and Burger King.

He hired an advertising firm that had done work for Burger King to revamp Godfather’s image. The new campaign showed people suffering a “pizza emergency” that only Godfather’s could answer. One 30-second spot, for instance, showed an office secretary overcome with a pizza craving just before her lunch break. Everywhere she looks — a pie chart on her computer, the space between the hands of the clock on the wall — she sees pizza. She dashes to a Godfather’s.

Cain had a 100-day plan for turning the company around and carried it with him in a binder. He held a string of one-on-one meetings with employees and collected suggestions. From the list, he plucked ideas such as the “big value” of two pizzas for $12, as well as the “Hot Slice,” a lunchtime product meant to compete with Pizza Hut’s personal pan pizza. He introduced home delivery in certain markets. He tink­ered with the crust recipe.

Cain closed scores of low-performing stores, eliminating hundreds of jobs. He settled pending lawsuits with franchisees who had alleged that the company hadn’t honored its agreements with them, but he also warned some other franchisees to improve or update their stores, or else get left behind. As part of a career-long penchant for acronyms and easily digestible slogans — most famously his “9-9-9” tax plan offered years later — he encouraged even entry-level employees to “S.I.N.” when customers complained: Solve. It. Now.

He and his new team endured brutal hours. More than once on Sunday afternoons, the hallways of the company’s headquarters off West Dodge Road echoed with Cain’s booming baritone, as he practiced gospel tunes while he worked.

“We actually came dressed kind of like Army commandos — green shirts, green baseball caps with a target on it,” recalled Larry Gadola, a vice president of development recruited by Cain. The word “focus” was printed in the center of the target. “We were on a mission.”

Although Cain got rid of some managers at Godfather’s, he came to rely heavily on longtime executive Ronald Gartlan, who had a background in accounting and finance and knew the company inside and out. While Cain became the public face of the company, often traveling to stores around the country and maintaining a high profile, Gartlan watched over day-to-day operations. He focused on the sales numbers and kept tabs on the company’s hundreds of franchisees. He knew their likes and dislikes, their quirks and their complaints.

“Herman had the vision of what the company needed to do to go forward,” said Spencer Wiggins, who headed human resources under Cain. “Ron Gartlan, he was a nuts-and-bolts guy.”

Tim McMahon, now a business professor at Creighton University, was the original marketing director for Godfather’s. He later worked for some of its major franchisees. McMahon said Gartlan “kept the place stable financially, kept the rigor in place, while Herman kept the spirit high.”

Gartlan, who is today the chief executive of Godfather’s and its 620 franchises, declined an interview request for this story, as did Cain.

Cain might have been the big-picture guy, but he was hands-on in other ways. He routinely tried new products in the company’s test kitchen and visited far-flung stores. Several former colleagues recalled times when he slipped a $50 bill into the hands of employees who had been especially friendly to a customer or made a perfect pizza. Once in Minneapolis, Cain walked into a store swamped by customers taking advantage of a new coupon deal. He got to work making pizzas and reassuring customers, Wiggins recalled.

“It was nothing for him to jump back there in the kitchen, take off his jacket, roll up his sleeves and start making pizza,” said Wiggins, who like other executives was required by Cain to spend two weeks a year working in a God­father’s storefront. “He expected us all to do that.”

Cain has said he stabilized the company within 14 months. He had shrunk the company’s size, and with it overall revenues, according to figures provided by Technomic, a research firm that tracks the food industry.

But he had increased average sales and profit margins at the remaining restaurants. The precise figures are unclear;Pillsbury didn’t separately report Godfather’s earnings.

But he got high praise from Jeffrey Campbell, the former head of Pillsbury’s restaurant division, who chose Cain for the job.

“He was off to the races,” Campbell said. “He was a leader who was performing.”

Grabbing the whole pie

Despite the changes at Godfather’s, Pillsbury never showered it with resources, and even Cain, he later recalled, suspected that the chain’s days were numbered at its parent company. In March 1988, the company announced its intention to sell Godfather’s as part of a broader restructuring effort amid rumors that the parent company itself was vulnerable to a hostile takeover.

Cain, Gartlan and a group of other investors bought the chain that September after securing financing from Citibank for a leveraged buyout. The price wasn’t disclosed, but some analysts have estimated it as low as $30 million.

“I doubt [Pillsbury] put much value in Godfather’s,” Campbell said. “The reality of it was by the time Herman bought it, it was nothing like what it had been” at its peak.

Cain had now put his own net worth on the line. In a speech to employees and franchisees in Tampa on the day the deal closed, Cain cited figures including Christopher Columbus, Charles Darwin and Martin Luther King Jr. as he laid out a vision for a bold and prosperous future.

The reality never matched the aspiration. By the time Cain bought the company, Godfather’s had slipped one spot to fifth place among pizza chains, behind Pizza Hut, Domino’s, Little Caesars and Pizza Inn. Cain had cut the number of restaurants by 250. And while the company-owned stores remained profitable, many franchisees were not.

Cain would never build God­father’s into the “great ship in that great big sea of restaurants” that he had once spoken about so passionately.

Cain later wrote that during his tenure, the company never showed a loss and never defaulted on its debts. But sales numbers from the time also show that its revenue plodded along between $225 million and $270 million annually.

The company never expanded to the more than 1,000 locations he once envisioned. Brutal competition from large chains and local mom-and-pop stores played a significant role, and a heavy debt load made it difficult to expand.

“The competition, they had deep pockets. We couldn’t compete with that,” said Wiggins, the former HR manager. “I think it frustrated us all.”

Wiggins recalled how Godfather’s introduced the Jumbo Combo, a massive 18-inch, five-pound pizza that became a big hit. But Pizza Hut soon introduced a competing product and spent tens of millions of dollars in advertising to promote it.

Years after the buyout, Cain acknowledged in an interview with the trade publication National Restaurant News that Godfather’s continued to operate in a “surviving” rather than “thriving” mode, but he added, “Give me boring and profitability any day, rather than losing money and excitement.”

That said, Cain had always craved excitement. By his admission, he had grown bored during his days as an executive at Pillsbury and that had led him to start over at Burger King. Now, at Godfather’s, those who knew him were observing a similar restlessness.

“He began to put his interest elsewhere,” said Henderson, the marketing executive.

McMahon, the former Godfather’s marketing director, said that this was classic Cain. “If you look at his history, that’s what he does. . . . Herman was on to the next thing,” McMahon said.

Cain found that “next thing” in politics. He got a boost after his now-famous town hall confrontation in 1994 with President Bill Clinton, when Cain challenged the president’s calculations and claimed that he would have to lay-off workers if Clinton’s health care plan became law. The standoff made him a conservative hero overnight.

Soon, Cain was traveling the country giving motivational speeches. He became chairman of the Federal Reserve Bank of Kansas City. He began writing books on leadership. He advised Bob Dole’s presidential campaign.

In late 1996, just before he began a full-time job as head of the National Restaurant Association, Cain sat down with a local reporter in Omaha, where he had arrived a decade earlier, eager to turn around a struggling pizza empire. Now, the pizza business seemed far from his mind.

“If you had asked me five years ago if I wanted to run for public office, absolutely not,” Cain said that day, but he acknowledged that his thinking had changed. He was weighing a run for governor or senator.

“I might even run for president,” he said, grinning. “Who knows?”

Staff researcher Lucy Shackelford contributed to this report.

Brady Dennis is a national reporter for The Washington Post, focusing on food and drug issues.
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