Cain: The Godfather's years

Godfather's Pizza of Omaha started with rapid growth, head-spinning profits and a $300 million buyout.

But then profits crashed. Franchise holders were in revolt, complaining that they had been abandoned, weathering three different presidents in four months. Bigger competitors, especially Pizza Hut, woke up to diners' preference for thicker pizza. Bankers got nervous about loaning money for new locations, stifling the chain's once-rapid expansion.

By 1986, Godfather's was a troubled, minor division of Pillsbury Co., losing money, bloated with unprofitable locations, facing an uncertain future.

That's where Herman Cain begins his Omaha story, a key part of the inspirational background that today appeals to those supporting his campaign for the Republican nomination for president. And his pizza franchise experience, he says now, shaped his political views.

Cain's speech-making was his most visible role at Godfather's, which today is a steady performer with 620 locations in the tough restaurant franchise business.

Some of those who worked with Cain during his 13 years in Omaha say he was a hands-on leader of a team of managers and shares credit for stabilizing the company, particularly for his inspiration and his focus on marketing strategies that worked.

Of course, not all of Cain's plans for Godfather's turned out. In 1987, he predicted that the chain would have 1,200 locations by 1990, but that never happened. And some involved with the company think Cain's role was less significant when compared to the executive still leading Godfather's.

When he arrived at the company, Cain said in a telephone interview while campaigning in Virginia, there were low expectations, economic dangers and a lack of leadership.

He said he assessed problems, put together a management team and pursued solutions. As a national candidate seeing a nation with the same problems, he said, he has assessed problems, set priorities for solutions and, if elected, would form a team to put them into effect.

In interviews and speeches in Omaha as early as 1988, Cain said Godfather's was close to bankruptcy until he and his management team turned it around, and he repeats the statement during the campaign. "We turned it around with common-sense business principles."

Yet today, he said, he hears people saying, "He gives a good speech, but is there any substance there?"

"I have to tell them that there's more between these ears than pepperoni and pizza sauce," he said. "People who say I was just going out and giving the speeches and smiling, they have no idea how I manage and lead. I dipped down into the (Godfather's) organization just enough to make sure I got my fingerprints on what's going on."

Charles Henderson, who runs coffee kiosks in Pennsylvania and was director of marketing under Cain at one point, told the Atlanta Journal Constitution that Cain not only was a mesmerizing speaker but also succeeded by immersing himself in the business. He said Cain baked pies on a weekly basis in Omaha.

But Tim McMahon, who was Godfather's marketing director under founder Willy Theisen, told The World-Herald that Cain, though charismatic, "simply doesn't register as a significant force" in Godfather's success.

McMahon, now an associate business professor at Creighton University, said that Theisen built Godfather's into a national restaurant chain and that it was longtime executive Ronald Gartlan, now CEO, "who provided the operational stability and focus on customer satisfaction over the long haul."

Omahan Rick Ellis, whose advertising agency worked for Godfather's under Cain, said Cain and Gartlan each had a role:

Gartlan "was closely tied to operations, making sure everything was right, the bricks-and-mortar stuff. He wanted to make sure the franchises were on a firm financial footing, food costs were in line, rent, labor. He was really good at tightening up that part."

Ellis said Cain worked directly on marketing strategy, a key ingredient for franchise success. He brought back the original "godfather" character, tough-talking Omaha actor J. William Koll, for its TV commercials.

Cain worked with Godfather's product development people to add the "Big Deal," a pizza with cheaper ingredients, and a "Hot Slice" to compete with similar products of the other chains. Godfather's Jumbo Combo pizza, a five-pound mound of cheese and toppings, chased Pizza Hut's rectangular "Bigfoot" pizza into extinction.

"He was a great leader," said John Chisholm of Omaha's Rigel Corp., a large and early Godfather's franchise holder. He said pre-Cain leaders had gotten away from restaurants and food, instead focusing on finances.

"Herman helped very much as far as getting us back to the basics," Chisholm said, and recognizing that some franchise holders "shouldn't have been in that business."

Godfather's the company issues only a fact sheet and statement: "Herman Cain was president of Godfather's Pizza from 1986 to 1995. We appreciate his contribution during that time. ... Godfather's Pizza takes no position on political candidates, but we do make great pizza."

Cain came to Omaha as a 40-year-old Pillsbury executive, fresh from turning around the company's lagging Burger King restaurants in Philadelphia but with few instructions from higher-ups. "I deduced that they had given up on the company," he said, because he couldn't even get money to upgrade Godfather's corporate computer system.

That's as close as he gets to providing evidence that Godfather's was about to go bankrupt.

In fact, in an interview after his first week on the job in Omaha, Cain told The World-Herald, "Some of our competitors are starting to act like Godfather's is on the ropes, and it's time for them to move in for the kill. Godfather's is not dead. We're alive and well, and we're going to come back in a very strong way."

He fired some managers, hired some new ones and promoted others, including Gartlan.

"Herman did some good things, but other people contributed to that as well," said Gary Batenhorst of Omaha, who has been an attorney for Godfather's since the Willy Theisen days. "Ron obviously had a very significant amount to do with things getting back on track. Herman made contributions as well."

Gartlan came to Godfather's as an accountant brought in from the firm then known as Coopers & Lybrand to prepare for a public sale of stock in 1982. By the time Cain arrived in 1986, Gartlan already had solid franchise experience,

In the recent interview, Cain called Gartlan "my key guy."

"He knew the history. He knew all the players, especially when it came to franchisee relations. Also, he's a good thinker and a good businessman."

Cain said he wouldn't spend advertising dollars on out-of-date restaurants with poor operations, so he told franchise holders to renovate their restaurants and bring operations up to date. "If they didn't make that investment, upgrade their operations, I didn't have to shut them down. They shut themselves down."

It was the pizza version of what Cain calls the "wagon speech" that his grandfather used to give family members when he was going into town: "Them that's going — get on the wagon. Them that ain't — get out of the way."

By 1988, the company had stabilized its sales and trimmed the number of restaurants from 725 to 520, cutting thousands of jobs but bringing back profits.

Today, Cain says Pillsbury scotched the chain's expansion plans by deciding instead sell to a management group headed by Cain, using future profits to pay off the debt.

The buyout energized franchise holders, said Ellis, the former advertising executive. No longer was Godfather's a minor piece of a food conglomerate, but independent and owned by local people with "skin in the game."

By 1994, Cain was gaining some national attention, becoming a board member of the Federal Reserve Bank of Kansas City, Mo., and his political interests showed.

"It wasn't until I actually became president and CEO of a company that I realized just how much government legislation and regulation was negatively impacting our ability to turn the company around," he now says.

When President Bill Clinton held a "town hall" meeting, Cain, as a regional business leader, got to ask: How could Clinton support health care reform that would hurt Godfather's business and employees by raising costs? Cain got some credit for the plan's defeat — a point in his favor among Republicans today.

Cain left his executive job with Godfather's in 1996 but remained chairman and part-owner as he became CEO of the National Restaurant Association, which is based in Washington, D.C. The three-year lobbying job yielded relationships with important Republican figures.

Cain kept a home in Omaha until 2000, when he moved to his hometown of Atlanta. He ran unsuccessfully for the Senate from Georgia in 2004. By 2006, he had sold his shares in Godfather's.

Cain, 65, has spent time as a radio talk show host and serves on some corporate boards. Financial disclosure documents, according to the Daily Caller website, show Cain's net worth at between $2.9 million and $6.6 million, with income in 2010 and 2011 combined between $1.1 million and $2.1 million.

Cain said in 1995 that when he arrived at Godfather's, the company had "one foot in the grave and the other on a banana peel." He now says today's situation in the United States is "exactly the same thing. The nation is in a funk. ... People want to be proud of the United States again, not only who we are but what we can be."

Contact the writer: 402-444-1080, steve.jordon@owh.com, twitter.com/buffettOWH

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See Herman Cain's performance in the 1991 Omaha Press Club show:

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