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The [Herman Cain] Papers

Seeing as how the National Restaurant Association's annual show at McCormick Place is kind of the big dog of the local convention industry, I thought it would be interesting - in light of recent allegations - to dive into the ol' database and see what kind of notice Herman Cain received in the local press in and around the time that he was the NRA's chief executive officer.

Truthfully, there isn't much. But he was famously loud during the debate over health care reform during the Clinton administration, which is reflected here. (It turns out Cain had actually voted for Clinton). And at the end, a pre-NRA profile of Cain that ran on the Tribune's front page.

Headline: Health Reform: Restaurateurs Taste Victory
Publication: Sun-Times
Date: February 14, 1994
Excerpt:

Fresh off three major hits to the Clinton administration's health reform plan, restaurateurs are tasting victory.

Herman Cain, president of Godfather's Pizza and president-elect of the National Restaurant Association, was in Chicago last week to rally association members after the Congressional Budget Office, U.S. Chamber of Commerce and Business Roundtable all delivered painful shots to the plan.

"To hear the trade associations take the position we took, it re-energized me," said Cain , halfway through a lobbying tour to two dozen cities.

With passion and pathos, the poor-boy-from-Atlanta-turned-eloquent CEO struck a chord with the entrepreneurial crowd that, like society as a whole, recently survived recession and loathes government bureaucracy.

He likened the president's proposal to cutting off both a patient's arms to cure a hangnail.

"This issue isn't about saving Godfather's. It's about saving the economy of our country," Cain said.

Clinton supporters are cranking up their own lobbying efforts, and the CBO analysis does predict the plan will bring long-term deficit reduction and corporate savings by the turn of the century.

But Clinton is demanding that all Americans be covered, which is a problem to business groups who are lining up behind the Cooper-Grandy proposal, which does not include business mandates.

[...]

Trying to counter theories that companies will simply increase prices to pay for the program instead of firing workers, Cain said that Godfather's would have to boost the price for his chain's most expensive pizza to $35 from $13.99.

"This was frightening. It confirmed what we feared," Liz Hebson said of the meeting. But not surprising to Hebson and her family, which owns the Hackney's restaurants in the northern suburbs.

Hebson has calculated that insuring all of Hackey's 300 workers will cost $260,000 per year, even with a 7.9 percent payroll cap.

Scarier still: Another $900,000 in premiums will be paid by the government for her workers if the caps hold.

"When you look at the fine print, this stinks to high heaven," said Hebson, who has testified before a congressional committee on the plan and who says she was in favor of health reform when first proposed.

*

Headline: Full Plate for Restaurants - Spending Up, But Issues Loom
Publication: Sun-Times
Date: May 16, 1994
Excerpt:

On the cost side of the equation, the biggest issue to grapple with is health care reform, particularly because two-thirds of restaurant workers are part-time employees and not covered by employer programs.

The industry supports various components of several proposals, but says an employer mandate would unfairly penalize an industry that is dominated by small businesses and has a high employee turnover rate.

Cain, for instance, estimates that the 1.5 percent return rate at Godfather's Pizza would be eclipsed by the cost of President Clinton's health care proposal.

Despite the increased complexity of the industry, Cain said he regularly receives calls from entrepreneurs who want to open a restaurant and realize the American Dream. He understands such talk, but he advises against it.

"With the economy going through the infrastructure changes it's going through, people are looking for alternate careers," Cain said. "But every time you see a new restaurant opening, another one closes that you don't see."

*

Headline: Old-Fashioned Views Suddenly in Vogue
Publication: Sun-Times
Date: January 17, 1995
Excerpt:

Cain, a former dishwasher who's now president and chief executive of Godfather's Pizza, said 60 percent of restaurant owners started at entry level.

*

Headline: Rivals Face Off In N.C., Georgia
Publication: AP story in the Tribune
Date: Jul 21, 2004
Excerpt:

Rep. Johnny Isakson, a veteran politician who took Newt Gingrich's old seat in Congress, won the Republican primary Tuesday to succeed maverick Democratic Sen. Zell Miller, whose retirement has given the GOP an excellent opportunity to pick up a Senate seat in right-leaning Georgia.

Isakson is the immediate front-runner in November against either freshman Rep. Denise Majette or businessman Cliff Oxford, who will face each other in a runoff in three weeks after finishing one-two in the Democratic primary.

With 93 percent of precincts reporting, Isakson had 53 percent, followed by former Godfather's Pizza CEO Herman Cain, who had 27 percent. Six-term Rep. Mac Collins was in third with 20 percent.

[...]

Cain was only the second black person since Reconstruction to run for a top state office in Georgia as a Republican. His rock-ribbed conservative message and impassioned delivery style wowed audiences, but it was not enough against Isakson, a longtime legislator who lost the 1990 governor's race to Miller.

*

Headline: Godfather's Gets Well On Some Fatherly Therapy
Publication: Tribune
Date: September 28, 1987

When Herman Cain arrived here on April Fool's Day, 1986, to breathe life back into a bleeding and battered Godfather's Pizza, the company was awash more in red ink than tomato sauce.

The company had been torn by fractious relations between the chain's management and its franchisees. A spate of franchisee lawsuits were pending when Pillsbury bought Diversifoods Inc., the former parent of Godfather's, in May, 1985.

Jeff Campbell, chairman of Pillsbury Co.'s restaurant group, recalled what Godfather's was like:

"We had a desperately sick company, but there were some signs of potential. With so much franchisee litigation, even if we wanted to get rid of it, we might not have been able to. We decided to give it a shot."

That shot was delivered in the person of Cain. When he arrived, the chain, with 900 restaurants, "had one foot in the grave and the other on a banana peel," Cain said.

Sales had been plummeting for three straight years while pizza sales were soaring for the competition.

"We were going south when everyone else was going north," said Cain, 41, Godfather's president.

"All I knew was that Godfather's had a lot of trouble with franchisees, but they had a good, quality product. I did know that pizza was an opportunity."

Indeed, pizza has been growing faster in recent years than other restaurant concepts, pushed by consumer demands for convenience and nutrition. But Godfather's had failed to follow the pack.

"The feeling (at Pillsbury) to dump Godfather's was pretty strong," Cain recalled. "The perception was that the company needed to be in pizza, but it wasn't certain if Godfather's was the right vehicle."

Cain moved quickly.

"We closed some company stores that weren't making it," he said. "Some franchisees didn't have the confidence that we could come back. We didn't take the posture that they should stick it out.

"We only wanted the ones that believed in our inherent strengths and believed we could bring it back again."

The cutbacks slimmed Godfather's down from more than 900 units to 600, about one-third of which are company stores.

Godfather's had had a checkered career before it was bought by Pillsbury. Founded in 1973, it had grown rapidily and merged with Chart House Inc. in 1983 to form Diversifoods Inc., a company which soon foundered amidst executive bickering, lawsuits from franchisees and aggressive expansion.

When Pillsbury bought Diversifoods, it was moving to protect its 377 Burger King restaurants, according to John McMillin, an analyst with Prudential-Bache Securities Inc. in New York.

"The value of Diversifoods was its ownership of the Burger Kings, and the deal made sense without Godfather's," McMillin said. "Pillsbury got Godfather's for nothing, and some said they got what they paid for."

But Pillsbury is to be congratulated for healing a sick company, McMillin said.

"Pillsbury was not afraid to take the time and effort to nurse it back to health," he said. "Not many people want to fix things. If it's sick, get rid of it-that has become the mentality of Wall Street."

But the fixing was not done overnight.

"I sat down with the top 20 people here and asked what they felt could be done to improve things," said Cain, whose background was in Pillsbury's 4,700-unit Burger King chain. "I'm not a rocket scientist, but I can formulate the ideas of others."

That included ideas from outside the company as well.

Aware of the phenomenal success that Domino's Pizza Inc., based in Ann Arbor, Mich., has had with its 30-minute delivery business, Godfather's soon began test-marketing delivery in Seattle, where it has its largest presence with some 55 restaurants.

"Delivery represents one of the major components for growth," Cain said. "Last year we had delivery in 20 percent of our units; now it's about 85 percent."

Cain brought in Charlie Henderson from Burger King to be his vice president in charge of advertising. Henderson had helped Cain turn Burger King around in Philadelphia.

The company blamed the chaotic state of relations with its franchisees for slumping sales. There was little of the discipline needed among franchisees to assure a consistent, quality product.

For instance, there were dozens of companies supplying flour to franchisees. That number has now been pared down and distributors must be approved by Godfather's.

"I told the franchisees that I would be flexible on such things as getting up to scratch to maintain a certain image, to paying back royalties, and to putting in delivery," Cain said. "But I told them there would be no compromise on quality."

Besides instituting delivery, Cain decided to bolster lunch-hour sales with the sale of Hot Slices. Hot Slices are individually boxed pizza slices that sell for about $1.55, with a large combination of toppings.

If the Hot Slice isn't ready within two minutes of a customer's order, it's free. That may sound a bit reminiscent of the five-minute lunch guaranteed by another Godfather's rival, Pizza Hut, the PepsiCo Inc. subsidiary and pizza industry leader with about 5,000 units.

Since its introduction more than a year ago, Hot Slice has boosted sales 10 percent, Cain said.

Godfather's has also introduced a 2-for-1 promotion. That might remind consumers of the 2-for-1 promotion that has made Little Caesars Enterprises the leader in carryout pizza.

Cain points out that Godfather's 2-for-1 pizzas are several dollars more expensive than Little Caesars, but he says greater quality justifies the higher price.

"The customer has to decide if he wants to spend $11 for Godfather's quality or $9 for Little Caesars quality. The 2-for-1 is another tactic, and it's working," Cain said.

Keeping an eye on all the fast-food competition, not just pizza, has led Godfather's to introduce prepackaged salads in some company restaurants.

That move takes a page from McDonald's Corp.'s success book. Oak Brook- based McDonald's has been very successful with its prepackaged salads, while other fast-food operators have stumbled with their salad bars because many customers want to take their salads with them.

The results of Cain's innovations translated into a 10 percent sales increase at the company-owned stores in the fiscal year that ended May 31, he said. Franchisee sales were up just "slightly less," he said, declining to reveal a percentage.

"Godfather's is on a roll and is the one bright spot in a whole Pillsbury network of restaurants," McMillin said.

In addition, the firm has posted 46 consecutive weeks of increased sales.

"We've seen a total turnaround," said Campbell, chairman of Pillsbury's restaurant group. "The (Godfather) group has gotten a little smaller, but we have healthier franchises and the company has turned profitable again. I'm not sure we don't have a growth vehicle there, and Herman gets the credit."

For this year, Cain is predicting another double-digit sales increase. And Cain is talking to Campbell about expanding the company's restaurants next year.

As the godfather at Godfather's, Cain plans to make Campbell a proposition he can't refuse.

-

Comments welcome.



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Posted on November 1, 2011


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