Pillsbury Assigns Cain His First Management Job of Managing the Philadelphia Region's 400 Burger King Stores. Note the information in the last paragraph that Burger King had 3500 stores and was doing $2.8 billion in sales when he arrived. Cain says he did great as a Philadelphia Region manager. The numbers tell a different story.

The culture at burger king was intimidation, fear and screaming, tactics to which I do not subscribe. I believe in telling people when they do something right[1].
Herman Cain in This is Herman Cain

This article examines the publicly available statistical evidence to judge Herman Cain’s oft-repeated self proclamation that he was a great and successful manager at Burger King. It finds the available evidence contradicts this claim. The Philadelphia region was doing quite well when Cain took it over and not as well versus other regions when he left two and a half years later.

Herman Cain often portrays himself during his time as accomplishing a turn around of a poorly performing region. He puts it forward as evidence of his being a masterful businessperson. This recent lame bombast from a puff piece in the Minneapolis Star Tribune is typical of the hagiography that substitutes for information about Cain’s career :

 The Philadelphia region of Burger King ranked near the bottom among Burger King’s 12 groups. Cain brought analytical strengths and energy. He fired and hired. He praised and exhorted the survivors. He turned the region into a top performer within two years[2]..

Or this on his campaign website:

 Herman was assigned to lead a low performing region of 450 of their restaurants. Within three years, it became the best performing region in the company[3].

This “ideomeme” of success appeared in interviews Cain starting giving as soon as he arrived at Godfather’s Pizzas. In an article in Nation’s Restaurant News in April 28, 1986, just four weeks after Pillsbury assigned Cain to manage Godfather’s, it appears in this simple but deceptive form:

But for the past several years he has been one of the top performers in Pillsbury’s restaurant division, as vice president and general manager of Burger King Operations in the Philadelphia region, which once posted the poorest results in the system.

Note that it does not say that Cain was responsible for the change in Philadelphia’s fortunes. It only says that Philadelphia had “once posted the poorest results in the system.”

There is much variation of the wording on the thousands of conservative blogs, recent mainstream newspapers, old interviews and general information websites which repeats this boast without any evidence. Some say the region went from worst to first, some say from one of the worst to one of the best, some say from low numbers to first, and some say from one last to one of the highest. All repeat the single note designed to prove that Cain was a successful manager, but none gives any facts or numbers to back it up.

One reason that no numbers are ever given is that Pillsbury never released to the public any regional data on their Burger King districts. This policy makes sense. Regions are different and managers face different problems in them. Specific categories may not reflect management ability but specific and unique conditions of regions.

Cain, likewise has never released any data to back up this constantly repeated claim. The lack of specificity is troubling. Why not be specific and use real numbers and say the company was losing $300,000 a year for three years and it made $800,000 each year I was there, if that is the case? This would make his claim more substantial.

It is not certain that Cain ever had any data to back this up. His recent biography suggests that he does not. In his biography, This is Herman Cain, he writes,

 After a year and a half as RVP, and despite my region exceeding its performance goals, a conspiracy to get me fired was hatched in the company’s corporate headquarters. He conspiracy failed…. After my reassignment to Philadelphia, my new boss, Bill Deleat, a true CEO of self, paid my region a visit and spent three days intensively examining its operations. He then told me it was one of the best, if not the best performing region in the country[4].    

[Note: I have been unable to find any information on Bill or William Deleat. I suspect that he is a figment of Cain’s imagination. I hope somebody will send me information about him. For the purposes of this article, I will assume that he is a real person]

Cain knows only that he is exceeding his performance goals. He does not know how he is doing versus the other regions. He relies not on any statistics, but on his new boss, Bill Deleat to tell him that Philadelphia is “one of the best or best performing regions in the country.” The language is ambiguous here. Bill Deleat’s visit may have been after a year and a half at Burger King, but Cain also tells us that it was “after my reassignment to Philadelphia.” This suggests that the information may have come when Cain first arrived in Philadelphia. Deleat (or someone else) may have told Cain that Philadelphia was “one of the best, if not the best performing region” to reassure Cain when he first arrived that he was getting a good region to manage.

This is suggested by facts that Cain himself gives in an interview published in a Dec, 1983 issue of Computerworld. He seems proud of his region and doesn’t suggest that it is a low performing region at all. He says,

Right now, the position of general manager of the Philadelphia region encompasses all Burger King activity within a seven-state area. That represents $325 million of Burger King sales a year, which I am responsible for overseeing. It represents 400 Burger King restaurants, some 1,600 direct employees. My profit contribution represents about 14% of Burger King’s total profit for the year[5].

The Afro-American article announcing Cain’s coming to Philadelphia notes that Burger has over 3500 units and does 2.8 billion a year in sales. The Philadelphia region of 400 stores represented 400/3500 or 11.4% of all the stores in the United States.  Take away Philadelphia’s 400 stores from the 3500 total and that leaves 3100 stores for the other 10 regions or a 310 stores average. Philadelphia was clearly one of the largest regions.

While having just 11.4% of the stores, Cain tells us that Philadelphia was bringing in 14% of the profits. That would make it one of the best, if not the best regions in the country profit-wise. If Philadelphia brought in 14% of the profits, that leaves 86% for the other regions or 8.6% average profit for the other regions. It was one of the most profitable regions, or possibly the most profitable.

In doing $325 million in sales out of Burger King’s $2.8 billion total, Philadelphia was doing 325/2800 million of the sales or 11.6%. Again, if we subtract 325 million from 2.8 billion, we get  2.475 million left for the other ten regions or an average of 247.5 million per region. Thus, while Philadelphia did $325 million in sales, the other regions averaged 247.5 million. It is clear that in sales Philadelphia was also a leading region.

To summarize from Cain’s own statistics, we can say this about the Philadelphia Region:

Table 1. Philadelphia Region When Cain Arrived Versus 10 Other Regions

Category Philadelphia Other 10 Regions Average
Number of Stores 400 – 11.4% 310 – 8.9%
Profits 14% 8.6%
Sales $325 million or 11.6% $247.5 million  or 8.8%

We can say that as far as number of stores, profits and sales went, the Philadelphia region that Pillsbury placed Cain in was one of the best performing regions, if not the best performing region in the country. Cain had never managed any stores and had no educational background in store management. According to his own writings, all his store management experience amounted to nine months of a “fast track” training program. Cain was assigned to this region just after Jessie Jackson’s PUSH organization had signed a broad Affirmative Action Agreement with Burger King (April, 1983) which included the promotion of blacks to top management spots[6]. It is easy to see that some of the resentment that Cain admits to having encountered as regional manager of Burger King came from him being an inexperienced black man who was placed ahead of hundreds of experienced white and black men in his job on the orders of Burger King President Win Wallin. Wallin had promised Cain a regional management job when he went into the “fast track” training program.

Cain talks about how much he was hated as a Burger King regional manager in his biography:

 The resentment came from the fact that, as a former vice president with the parent company, Pillsbury, I was going to deny a Burger King veteran one of the coveted regional vice president positions. Never mind the fact that Burger King’s top management wanted to broaden the experience base of its regional vice presidents or that tenure alone was no guarantee for success[7].

Cain’s claims that he was resented because management wanted to “broaden the experience base of its regional vice presidents.” This is absurd. Who would object to an executive who had experience in math or computer info management? He was resented became the president of the company needed to broaden the race of its regional vice presidents due to a threatened boycott by Jessie Jackson PUSH organization. It was only due to being black that Cain got the position at that particular time and that, as well as Cain’s extreme inexperience in the field, triggered the resentment.

Cain notes that the hatred towards him continued during his whole two and a half years that he was a regional vice president in Philadelphia:

       The plot to get me fired played out during my tenure as vice president of the Philadelphia region. It involved my Pillsbury background, a direct report, a franchisee, and a higher-level officer of Burger King who felt threatened by my performance. Following a reassignment of region reporting relationships, my new boss Bill Deleat, then an executive vice president of Burger King Corporate, came to visit my region to determine firsthand how things were going. The financials were all exceeding our annual targets, but as Bill put it, “There are a lot of people in Miami [corporate headquarters] who do not like you and want you fired.”

     I felt crushed since after only a year and a half as regional vice president, my region was exceeding its performance goals. After spending about three intensive days in my region, Bill also told me that it was unquestionably one of the best regions, if not the best region, in the company.

    Bill started a campaign in corporate to correct the unfair and inaccurate perception of my performance. Bill DeLeat was one of those angels for whom you can only be thankful, especially when things are so unfair. Since the corporate attitudes towards me were personal and not performance based, they did not change much, but Bill provided strong support and watched my back while I kept doing my job. If handled differently, the entire episode could have ended my corporate career. Period[8].

It is sad that nobody in the corporate journalism media has investigated this alleged plot against Cain. It involved “a direct report,” “a franchisee,” and “a higher level officer of Burger King.” A lot of people at corporate headquarters “wanted Cain fired” and their attitude “did not change much.”  Whatever Cain did it, according to him, it required the intervention of an executive vice president to save his job. We should remember that Burger King was still under pressure from PUSH. Firing the company’s first black regional manager after a year and a half for incompetency would not have looked good in the press. Cain himself could have filed a discrimination lawsuit. The hatred that Cain engendered at Burger King was a possible cause for Pillsbury’s decision to move him over to Godfather’s after just two and a half years at Burger King. Hiring someone to take over 700-800 Pizza Restaurants who had never had a single day’s experience managing a pizza restaurant was another inexplicable corporate decision regarding Cain. It is more likely, Pillsbury was desperate to get Cain out of Burger King where he was failing and causing trouble, than Cain’s story that the transfer was motivated by his success at Burger King.

Let us return to the numbers and statistical facts which Cain has not revealed to learn more about his performance as regional manager of Burger King. As we saw, when Cain came to Philadelphia; it was a large region representing 11.4% of Burger King’s stores, while the other regions averaged. 8.9%. While having 11.4% of its stores, it was responsible for 14% of its profits. Based on this we can say it was one of the best, if not the best region of the country for Burger King.

There was one statistic where it appears to lag. While having 11.4% of the stores, it produced 11.6% of the sales. We can calculate the per store average of sales. The sales of $325 million divided by 400 stores gives us a per store average of  $812,500 annual sales per store. We can calculate the other store averages by subtracting the Philadelphia’s $325 million sales from the total $2.8 billion to get $2.475 billion. We subtract Philadelphia’s 400 stores from 3500 stores to get 3100 stores outside the Philadelphia region. Dividing $2.475 billion by 3100 stores, we get $798,387 per store. The Philadelphia store was averaging $812,500, while the other stores averaged $798,387 per store. We can add this statistic to our  first chart.

Category Philadelphia Other 10 Regions Average
Number of Stores 400 – 12.3% 285 – 8.8%
Profits 14% 8.6%
Sales $325 million or 11.6% $247.5 million  or 8.8%
Sales Per Store $812,500 $798,387

The only category where Philadelphia appears not to be doing great before Cain arrives is in sales per store. It is only doing about $14,000 or 1.7% more than the average store. Why? According to an August 17, 1983 article, in the Philadelphia Inquirer, a few weeks before Cain was assigned his Philadelphia region position, Philadelphia had 108 Burger Kings[9].  This means that over 25% of the 400 Burgers King restaurants were in one of the poorest cities in America. In 1983, Philadelphia was 33% black. The poverty rate had reached a 17 year high under the Reagan administration in 1982. The poverty rate was 12% among whites and 35.6% among blacks[10]. Given the large number of Burger Kings concentrated in a city with a large and impoverished black population, executives at Burger King must have expected lower sales per store figures from the region. Since it was providing profits way above the average region, executives could not have been very upset that sales per store was only slightly above average. The Reagan Recession of 1982 gave way to a slow economic recovery in 1983 and by 1984, around, the time Cain started, September 1983, the economy was doing better. This economic boom led to Reagan’s re-election with 58% of the vote in November of 1984.  Poverty rates, which had been worsening in 1981, 1982, and 1983, improved substantially in 1984, The Philadelphia Inquirer reported the good numbers for 1984:

  “The poverty rate – the percentage of the population below the poverty level – dropped to 14.4 percent, from 15.3 percent in 1983… More than a third of the nation’s blacks are still in poverty, but the percentage declined “very significantly,” said Green, from 35.7 to 33.8 percent. The percentage of whites below the poverty level showed a smaller decline, from 12.2 in 1983 to 11.5 last year.

With an economic recovery in 1984 and 1985, one would expect that per store sales in the Philadelphia region would be doing better too. Cain was fortunate to come on board as the economy was heating up. It is time to figure out how Cain really did

Again, Pillsbury and Cain released no actual figures for the Philadelphia area, but statements by Cain and national sales figures for Burger King help us to answer the question of how the Philadelphia Region performed. One week after Cain arrived in Omaha to take over Godfather’s, Cain gave an interview and claimed this:

The region’s sales and profits were below the division’s standards, he said. By the time he left, Philadelphia was near the top in profits, sales and new store growth.
The 470 Burger King restaurants in the region had $440 million in sales a year, more than the entire Godfather’s chain.

Assuming Cain is telling the truth, we can say that in his two years and seven months at Burger King, from September 1, 1983 to the end of March 1986, the number of stores increased from 400 to 470 (+17.5%) and sales went from $325 million to $440 million or up 115 million (+35.4%). The annual per store sales average went from $812,500 to ($440 million/470 stores) $936,170, an increase of $123,670 (+15.3%). If we divide these numbers by 2½, we still get some impressive annual statistics for Cain:

Annual Number of Store Increase: 7% per year

Annual Sales Increase: 14.2% per year.

Annual Sales per Store Increase: 6.1% per year.

While these numbers seem impressive, we need to remember that the economy was doing pretty well in 1984 and 1985. How did the rest of the Burger King regions do?

Burger King was going through a major boom period when Cain arrived. On May 21, 1984, about eight months after Cain began, the National Restaurant News reported[11], “Average same-store sales at company-operated and franchised restaurants are now $965,000, up 15% from the $839,000 reported a year ago by the Pillsbury fast-food subsidiary. Burger King has not raised menu prices in 30 months.” Thus Cain arrived in the middle of a middle of time where sales were rising 15% nationally. The article notes, “In the first three months of this year, Burger King’s sales gains remained strong. Real sales were up 17% in January, 16% in February and 12% in March compared to the same months a year earlier, according to Restaurant Industry Trends’ figures.” If the sales increase was 15% nationally and Cain increase sales 14.2%, he was certainly not doing anything much different than any of the other regions.

The article does not give credit to the improving economy, but to a successful ad campaign in which Burger King had distinguished itself for its flame-broiled burger versus the competition. It noted, “Burger king’s 19-month-old comparative advertising strategy, which is continuing with a new $40 million television and radio effort, has helped boost average unit volumes close to the elusive $1 million mark.”

Overall, Burger King had approximately 3500 stores and sales of 2.8 billion when Cain took over in September of 1983. How many stores and how much sales did it have in March, 1986 when Cain left?

Five months before Cain left, a November 23, 1985, NY Times article tells us[12], “4,600 stores worldwide and sales last year of $4 billion.” An article nine months later in the LA Times dated July 21, 1986 tells us[13], ” Burger King and its franchises had annual sales of more than $4.5 billion at 4,743 restaurants worldwide this year, Morse said. Sales rose 13% and the chain added 518 outlets in the past year.” The boom in sales and store expansion continued right through and after Cain left.

Over this ten month period, November 23, 1985 – July 21, 1986, we can assume Burger King added about 143 stores (4,743 – 4,600) and sales rose $.5 billion ($4.5 – 4 billion). Since Cain left in March, 1986, we are looking for sales and store data from a time about midway between November and July. we can add half the 143 stores, 70 to the 4,600 in the earlier article to get 4,670 stores and add about half of the .5 billion to the earlier total of $4 billion to get $4.25 billion. This should give us a reasonable estimate of how Burger King was doing when Cain left, give or take a few hundred million dollars and a few dozen stores. Burger King was making approximately $4.25 billion from 4670 stores when Cain left at the end of March, 1986.

We can take out the Philadelphia’s 400 stores from the 3500 beginning total to get 3100 stores outside of Cain’s region. We can take out its 470 stores from the 4670 end total, when Cain left, to get 4200 stores. We can say that Burger King Stores under Non-Cain management grew from 3100 to 4200, a total of 1100 stores, or 35.5% over 2½ years or 14.2 % per year.

Using the same procedure, we subtract Cain’s sales in the beginning $325 million from $2.8 billion to get $2.475 billion. We substract Cain’s ending sales of $470 million from the total $4.25 billion to get $3.78 billion. Non-Cain sales grew from 2.475 billion to 3.780 billion, a total of 53%. We divide this by 2½ years to get an annual growth rate of 14.2%.

Sales per store in the beginning, when Cain comes in September,1983 in non-Philadelphia stores is $2.475 billion divided by 3100, stores or $798,387 per store. At the end, sales per store is $3.78 billion divided by 4,200 stores or $900,000 per store. This is an increase of $101,613 per store or 12.7%. Taken over 2½ years, this works out to an annual increase of 5.08%.

We can now put both Cain and Non-Cain Burger King management figures together into one table:

Table 2 Cain’s Management Over 2 1/2 Years Versus Other BK Managers

Category Cain’s Philadelphia Burger King Region All Other Burger Kings
Stores Increase 70 (17.5%) 1100 (35.5%)
Annual Stores Increase 7.5% 14.2%
Sales Increase 115 million (35.4%) 1.325 billion (53%)
Annual Sales Increase 14.2% 21.2%
Sales per Store Increase $123,670 (15.3%) $101.613 (12.7%)
Annual Sales per Store Inc. 6.1% 5.08%

We can say that Cain did poorly in increasing stores versus other managers (7.5% vs. 14.2% annual average) and we can say that Cain did poorly in increasing sales versus other managers (14.2% vs. 21.2% annual average). However Cain seems to have done better in increasing sales per store 6.1% vs. 5.08%.

Regarding Cain’s good showing on annual sales per store, increasing sales per store at a rate 1% more than the average manager, we can find a number of reasons for it. Cain took over when an economic recession was just ending that hit predominantly black customers in Philadelphia quite hard. It kept per store sales around the average. He was fortunate that the economy recovered well during the time he was a regional manager and per store sales rose as a result of the good economy. Secondly, only 70 stores opened under Cain. New stores tend to have much lower sales per store than established stores. This helped to raise his per store average. Thirdly, as new stores open, they tend to lower sales at other stores due to cannibalization or taking customers from established stores. It is probable that if  Cain had kept pace with the other managers in store openings, his per store sales would have been lower than average managers. It seems reasonable to assume that it was the good economy and Cain’s poor performance in store openings that made his performance in per store increase about 1% above average. We should note that it was 1.7% above average (see second chart above) when Cain came to Philadelphia, so at best we can say he maintained the slightly above average sales per store that he found.

In an interview given on July 20, 1986 to Restaurant Business magazine, Cain is as specific as he has ever been about his performance numbers[14]:

Cain has already proven that he has what it takes to turn bad into good. At Burger King, he was responsible for taking a region that ranked ninth and tenth in most categories including profits, sales, and new store growth, and positioned it first and second within the last four years.

It seems probable that when Cain came to Burger King, the Philadelphia region was first or second in profits, sales and new store growth. It is equally probable that in sales and new store growth the Burger King Philadelphia  had slipped to rank ninth and tenth by the time he left. There is no way to determine from released figures if Philadelphia slipped from its high position in making profits under Cain. Cain told us the profits it was making when he came, a very high 14%, but never told us the profits when he left.

The improvement in Philadelphia area sales can be attributed to the improved economy and a successful ad campaign. The failure of Philadelphia to keep up with other regions in sales and expansion, regions it had led when Cain arrived, can only be blamed on Cain.

Please ask reporters to demand to see Cain’s quarterly or annual profits and loss statements for the Philadelphia Burger King region from September 1983 to March 1986. One wonders why he has not produced them until now if they are really so outstanding as he says.  If he does not reveal them, please ask reporters to stop repeating ad nauseum that he turned the region around when the only available statistics show him to have been a generally less than average performing manager.

The bottom line is that Philadelphia region was one of Burger King’s best regions when Cain came and it appears to have been a much worse one when he left. If anybody can show actual numbers to dispute this, I will be in their debt.

To find out how Cain did managing Godfather’s, read Complete Godfather’s Pizzas’ Sales Figures From the Herman Cain Years.

[1] Cain, Herman, This is Herman Cain, My Journey to the White House, Threshold Editions, 2011, pg. 58.

[2] St. Anthony, Neal, Minneapoliss Star Tribune, Herman Cain’s career at Pillsbury is a tale of two turnarounds October 30, 2011, viewed Nov. 5, 2011,  http://www.startribune.com/business/132823328.html

[3] Viewed Nov. 5, 2011, http://www.hermancain.com/about, Herman Cain for President.

[4] Above, Cain, Herman.

[5] Halbrecht, Herbert Z., Computerworld,  Moving Out and Up to Executive Offices, December 5, 1983.

[6] See the Godfather’s Godfather: How Jessie Jackson Launched Herman Cain’s Managerial Careerhttps://jayraskin.wordpress.com/wp-admin/post.php?post=622&action=edit

[7] Cain, Herman, Stroud & Hall Pub, They think You’re Stupid: Why Democrats lost your vote and what Republicans Can do to Keep it, pg 192.

[8] Ibid, pg. 193-194.

[9] Frump, Robert R., Philadelphia Inquirer, Food Chain to Add 1,600 Jobs Here, August 17, 1983.

[10] Schmid, Randolph E., Philadelphia Inquirer, U.S. Poverty Rate in ’82 Reached 17-Year High, Census Bureau Reports, August 3, 1983.

[11]  Nation’s Restaurant News, Burger King ad strategy pushes unit volumes near $1M, May 21, 1984.

[12] Schmitt, Eric, The New York Times, Burger King On Wheels, November 23, 1985.

[13] L.A. Times, President of Burger King Resigns Post, July 21, 1986, viewed Nov 6. 2011 (http://articles.latimes.com/1986-07-21/business/fi-26548_1_burger-king)

[14] Bain, Laurie, Restaurant Business, Herman Cain, president, Godfather’s, July 20, 1986., p84.