Cain’s Cancer: Deceptions and Misconceptions

A Cain Campaign Ad Showing His Campaign Manager Smoking and Asking People to Support Cain. The not so subtle subliminal message was that Cain endorses smoking despite his cancer treatment.

Cain likes to portray his survival from Cancer as a miracle from God. God saved him from cancer so he could run for the presidency. Besides using his cancer to declare himself the New Moses, Cain uses it to attack President Obama’s health care reforms and all government aided health care. This article suggests that Cain’s survival from his cancer was pretty much the norm today and he misinforms when he uses it to proclaim himself holy and to praise the health care system in America.

Here is Cain describing his cancer in a recent Rolling Stone magazine article[1]:

Herman Cain was diagnosed with stage IV colon cancer in March 2006.  “I had it in my colon and my liver — stage IV,” the GOP presidential candidate said in a speech last year. “And to quote my first surgeon: ‘That’s as bad as it gets.'” His second surgeon gave him a slightly rosier outlook, telling Cain: “You have a five percent chance of even being alive three years from now.”

This seriously misstates what Cain’s doctors actually told him. It distorts what Cain said at the time he announced his cancer in 2006 and what he says in his biography This is Herman Cain. In regards to being told “That’s as bad as it gets,” this leaves out that he was also told that his cancer survival chances were very good. Cain found out about his stage IV cancer on April 4, 2006, and this article describing Cain’s condition appeared ten days later on Friday, April 14 in the Omaha World Herald[2]:

Cain , 60, said Thursday that his doctors told him that the cancer , found two weeks ago, can be treated successfully, given that it was detected early and that medical treatment options have advanced rapidly.

“I am totally assuming cure,” he said…

Cain said he has talked with six doctors and learned that treatment for colon cancer , especially chemotherapy, has improved rapidly. Rather than automatically having surgery, tests will determine whether he should have chemotherapy or surgery or both.

“That’s very encouraging,” Cain said. “Detecting it now is always a good thing. I have more than a fighting chance. And you know that Herman doesn’t need but a small fighting chance.”

He said he hopes to continue his weekly talk radio show from Houston and to recover quickly enough to debate Steve Forbes on national tax policy, an event scheduled for May 31 at the National Press Club in Washington.

In a ten day period from April 4 to April 13, Cain had consulted with six doctors and had concluded that he had “more than a fighting chance” and would be able to hold a debate at the national press club six and a half weeks later. He was “totally assuming cure.”

Cain did not say anything about any of the six doctors telling him “he had a five percent chance of even being alive three years from now.” Rather he was upbeat in all his press releases and interviews.

The first public announcement was two days before on Wednesday April 12, 2011, just eight days after Cain’s diagnosis had been confirmed by a cat scan. This is from the Atlanta Journal Constitution[3]:

 Herman Cain, the former U.S. senate candidate and the former CEO of Godfather’s Pizza, has been diagnosed with colon cancer, a spokeswoman for Cain said this morning.

“The guy’s a fighter and he’s going to be fine,” said Ericka Pertierra, his chief of staff. “He’s trying to figure out how to do the radio show from the bed.”

The Nation’s Restaurant News reported this on the ex-Godfather’s CEO[4]:

“The good news is my outlook and prognosis is very optimistic because the cancer was detected early,” Cain, 60, was to start treatment April 24 at the University of Texas’… “No pity parties are allowed,” he said. “I’m very optimistic I’m going to win this fight.”

According to his biography, he was “uplifted” when he first met with his surgeon, Dr. Abdalla, on April 28, 2011:

Doctor Abdalla thought I was in excellent physical condition and didn’t see why I even had the cancer, since there was no family history with mom, dad, or my brother. Sixty percent of the people who use this approach live a minimum of five years or more, and half of these are completely cured[5].

This positive prognosis of a more than 60% chance of surviving five years or more is reflected in Cain’s continued optimism in later press releases. On May 2, the Atlanta Journal Constitution wrote[6]:

 Cain sends word that his prognosis remains excellent. He still plans to keep most of his May calendar, including a May 24 rally in Gwinnett County with U.S. Rep. John Linder and radio talk show host Neal Boortz.

According to SEER Cancer Statistics review, the five year survival rate for males 55-64 of stage IV, Colon Regional cancer was 66.1% between 2001-2007[7]. Since Cain was undergoing his therapy in 2006, when therapies had improved quite a bit from 2001, in one of the best cancer hospitals in the country, (University of Texas M.D. Anderson was ranked #1 by U.S. News and World Reports – (http://health.usnews.com/best-hospitals/rankings/cancer), the survival rate chance was probably above 70% for Cain.

It is hard to imagine that any doctor at that time actually told Cain he had a five percent survival chance when he actually had over a 70% survival chance. The “second surgeon” that Cain refers to in this statement may have been Dr. Cathy Eng of M.D. Anderson Center. However, what she told CNN in a recent interview is nothing like this. Instead, she noted[8]:

 Twenty five percent of colon cancer patients are told they have advanced or stage 4 colon cancer, just as Herman Cain was. The key to a good prognosis is really whether the tumor or tumors can be removed by surgery, says Eng.

The five year survival rate for patients whose tumor can’t be taken out is between 11 and 15%, says Eng, but the percentage goes up dramatically — to between 35 and 65% — for patients who can get surgery.

It is perhaps slightly unfair to blame Cain for the statement about the 5% chance of surviving. Although it had been repeated on many sites in the conservative blogosphere over the past month, it seems to have originated with the Rollingstone Magazine article. Cain used the 5 percent number at a Southern Republican Leadership Conference in New Orleans[9].  I have not found Cain using the 5 percent figure, except here. We may dismiss it as a gaffe on Cain’s part. However Cain does constantly cite a 30% survival rate, as in this article from a March, 2011 interview[10]:

That was nearly five years ago and I only had a 30 percent chance of survival. God said ‘Herman, not yet’.” My question was, ‘Lord why are you keeping me here?’ Now let me tell you why I know God kept me here. Let me give you why I know God kept me here to do something that I never envisioned.

Cain knows or should know that five year survival rates are how doctors judge survival from cancer. He knows or should know that his chances for survival were at least 60% and not 30%. If he is using the lower figure because he does not understand this, he is accidentally misleading people. However, for somebody to have cancer and not understand the difference between survival rate and being cancer-free would be pretty incredible. It is hard to believe that Cain could lack that knowledge. It seems much more likely that Cain does know the difference and is simply lying to make his recovery sound more miraculous than it was.

Further evidence that Cain is purposefully trying to make his rather standard and ordinary recovery from cancer seem to be a miracle comes from his above mentioned interview with CBN:

When I started thinking about running for president, I thought about Noah. Noah didn’t know how to build an ark. I started to think about Moses. Moses resisted going back leading the children out of Egypt. The Bible is full of people. Joshua didn’t want to lead the children into the Promised Land. God spoke to Moses and encouraged Moses, you must talk to our son Joshua, and he did and that gave him the strength.

When I was first detected that I had stage 4 cancer I had to go and get a second opinion. The doctor that was recommended was a doctor in Savannah, Georgia, three hours away from Atlanta. I resisted. I said, ‘why do I need to go all the way to Savannah and I live here in Atlanta with all these hospitals and doctors here. I know I have cancer. I know what we need to get done. Let’s get on with the program.’

You know that business mentality. And so the friend of mine said, ‘I think you want to go see this doctor. His name is Dr. Lord.’ I said, ‘What? L-O-R-D?’ Yes. He was a colon cancer specialist. Dr. Lord gave me my second opinion.

When I went to MD Anderson Cancer Center and I had to go through orientation with my wife in terms of how to navigate through this big medical facility, we went into the orientation office and the lady that was supposed to give us our orientation, she was busy with some other new patients. So the lady at the counter said to keep you and Mrs. Cain from waiting, I will give you your orientation so you won’t have to wait.

I said, ‘Well thank you. How nice I didn’t know they had good customer service at a big medical facility but they do.’ So we go into the conference room and she put all the materials down that we were supposed to go through. And she started to tell us about what we needed to do, how I could get my blood work done the night before. I said, ‘wait a minute. You’ve been so nice. What is your name?’ She said ‘Grace’. I said, ‘Do you spell it the same way as you spell it in Amazing Grace?’ She said, ‘yes.’

A lady named Grace. My wife and I looked at each other and I said, ‘thank you Lord.’ He’s with me on this journey. I’m not done yet. I was randomly assigned an oncologist and a surgeon. The surgeon’s name is Dr. Abdullah. He’s from Lebanon. That made me a little nervous initially but only to find out that he’s a Christian. He’s a Christian and when I went in to see Dr. Abdullah. he was explaining to me how he was going to remove a part of my colon and a part of my liver in one operation.

I’m going, ‘Doc you must be a miracle worker. How are you going to do that’? The colon is on the left. The liver is on the right. How are you going to do that with one incision?’

He said, I do it all the time. I’m going to start in your sternum and I’m going to make an incision in the shape of a “J”. As in J-E-S-U-S? He said yes. A Jesus cut. I said, ‘thank you Lord.’ God said ‘not yet’ and He gave me these signs along the way that let me know that He was with me.

And I firmly believe that God kept me for a reason much bigger than I ever would have dreamed or imagined. Whether that is ultimately to become the President of the United States or not, I don’t know. I just know at this point I am following God’s plan.

Cain makes his recovery from cancer appear to be a miracle from God with three proofs: 1) He visited a Dr. named Lord, 2) a woman named Grace gave him an orientation, 3) the incision was in the shape of a “J” which Cain associates with the name Jesus.

According to Cain, the visit to Dr. Lord in Savanah, three hours from Atlanta was not necessary. Cain, according to press releases had consulted with at least five other doctors. The doctor did not give any new information. By his own admission, Cain only went to see the doctor because his name was Lord. This indicates that Cain within one week of learning he had a quite curable form of cancer was already planning on portraying his cure as a miracle from God.

That a woman behind a counter that Cain talked to was named Grace is possible, but Cain’s addition of pointless details, (e.g. ‘ She said ‘Grace’. I said, ‘Do you spell it the same way as you spell it in Amazing Grace?’ She said, ‘yes.’) about the meeting with the woman suggests that he made her up. When people are lying, they tend to add pointless details to distract people from the fact that they’re lying. Also note that Cain does not give the last name of the woman to make it more difficult to fact check her.

Assuming it was true, it is probable that Cain came in contact with numerous receptionists and nurses during his time of treatment. There are over 286,000 women named Grace in the United States. It is the 114th most popular name (information from http://names.mongabay.com/female_names.htm). The number of women who have this name is 0.189%. In this case the name did not need to be Grace in order for Cain to associate it with a miracle. There are many other female names that Cain could have used to associate himself with a Biblical Miracle. For example, there is Mary the most popular female name in America. The number of women with this name is 2.629%. Cain could also have used Maria (7 – .828%), Angela (29 – 468%), Marie (44 -. 379%), Gloria (56 – .335%), Angelica (390 – .039%), Angel (424 – .035%), Hope (427 – .034%), Faith (484 – .028%), Gracie (638 – .018%) and Charity (643 -.018%). If we add up the percentage of women with these names, we find it is 5% or 1 out of every 20 women.  If Cain met 20 women during this period, his odds would be roughly 50/50 of finding one with one of these names. If he met 40 women, his odds would have doubled to 66%. If he met 60 women, his odds would have been about 75% to 25% favorable.

Since he had met two people with names he could relate to biblical miracle language, we would expect that Cain would come up with a third name to connect to biblical miracle language. Instead Cain, pulls a switch and comes up with a letter and Cain does the connecting by coming up with a name. The doctor told him that his incision would be in the shape of a “J”. Cain connected this to the word “Jesus.” He could have just as easily connected it to any other word starting with the letter “J”. Crossword solver (http://www.crosswordsolver.org/definition/J) lists some 2,000 words and names starting with the letter “J”. Cain could just as easily have connected himself and his “J” cut with James Madison, Jefferson Davis, Jellyroll Morton, Johann Sebastian Bach, Julio Iglesias, John Doe, Jack Benny, Jack Lemmon, Jack Nicholson, Jame Dean, Jacques Costeau, Jeremy Bentham, Jesse Jackson, James Cagney, Jimmy Steward, John Wayne, John D. Rockefeller, J. Edgar Hoover, Joan Crawford, Jane Austin, Jane Fonda, John Wilkes Booth, Joseph Stalin, Julius Caesar, or Judas. For that matter, he could have associated the “J” with jester, joker, jailbird, jealous, jacking off, jeer, jejune, jellyfish, jinx, jughead, junk, junkie, junior, or juvenile delinquent.

Cain should also know that the letter “J” is a modern symbol, first used in the 17th century in the English languish. In Greek the name Jesus started with the letter iota (ί) in latin, it would have been the letter “I.” Thus if the cut had been a straight line, Cain could have said, it stood for Isus, Latin for Jesus, if a straight line with a curve to the right, it was Greek iota, the first letter of Jesus’ name in Greek. If a horizontal line with a slight curve down at the end, he could have said it was the Hebrew letter yod which began the name Jesus in Hebrew. A diagonal line with a curve at the end would have been yudh, the first Aramaic letter for the word Jesus. If the incision was a “C” cut, it could have said it stood for Christ. If it was an “X” cut, he could have said it was the Greek letter chi which stood for Christ.

This type of thinking where symbols are confused with their ideological referents can be described as pre-enlightenment, pre-scientific, magical or religious thinking. Its use in by an adult shows a lack of rational, scientific education and training. It may also be associated with schizophrenia and mental illness. The man who thinks that his surgical scar is a message from his God is not a rational being.

Besides using his cancer experience to promote the idea that he has been chosen by God to be President of the United States, Cain has used it to attack President Obama’s health care reforms. Here is Cain on Fox News in 2009[11]:

CAIN: The health-care system, I call it the health care deformed legislation. It’s going to deform our system. If that system had been in place when I contracted cancer or was diagnosed with cancer in 2006, Neil, I would be dead. And here’s — for the following reason.

Health — government-controlled socialized medicine ultimately leads to rationing, which leads to delay. With the bureaucrat deciding when or whether or not you can get that CAT scan.

The first thing, after my cancer was detected, that I needed to get after the colonoscopy was a CAT scan. In Canada you might wait six months. In Britain you might wait nine months.

I was able to get a CAT scan in five days because one, we’ve got plenty of CAT scan machines here in the United States right now, because the government is not telling hospitals how many they can have and how many they can’t have.

And I, like the 70 percent in this country that have private insurance, I was able to get a CAT scan in one in five days. It saved my life.

Polifact.com judged this reasoning on President Obama’s Health Care Reforms to be false[12].

We don’t know the personal details of Cain’s health status or how he is insured. But it’s impossible for us to see how a government bureaucrat could have delayed Cain’s care. Cain said at the debate that, “If we had been on ‘Obamacare’ and a bureaucrat was trying to tell me when I could get that CAT scan, that would have delayed my treatment.” But there is no part of the health care law that allows a government bureaucrat to weigh in on an individual’s course of treatment — not Cain’s nor anyone else’s. We rate his statement False.

Polifact also examined Cain’s repeated lies about the low number of Cat scan machines in Canada and the long wait times. They also concluded his statements were false[13].

Unfortunately Cain would not tell us how he determined the number of CT scanners in Canada and the United States. In fact, neither he nor anyone from his staff would say anything to us beyond, “I don’t think we’re going to comment.”
But PolitiFact did find data quantifying the number of CT scans per capita.

Canada had 12.7 CT scanners per 1 million residents in 2007, according to the Organization for Economic Co-operation and Development. The United States had 34.3 per million in 2007, the last year the organization had data for the United States.

Canada has fewer CT scanners per capita than Greece and Portugal, two countries on the verge of bankruptcy, and it certainly has fewer than the United States, but not “like one-tenth.” It’s more like one-third.

Even though Cain’s numbers were not factually accurate, his general opinion that decreased diagnostic capacity puts patients at risk still deserves scrutiny.

Canada spends less on medical treatment and therefore does have less capacity, said Edwin Meyer, founder of Buffalo-based Cross Border Access, a company that helps negotiate hospital billing rates for Canadians coming to the United States for medical services.

Canada does a good job prioritizing who needs service right away and by doing so keeps costs for patients low, Meyer said.

But a person with a non-life-threatening injury that keeps them out of work and causes constant pain may not receive diagnostic services and surgery right away.

“People that are in need but stable can end up waiting a long time,” Meyer said.

While the United States has better capacity in general, many Americans, like the uninsured, do not have access to this capacity, said William Custer, a professor at the Institute of Health Administration at Georgia State University.

The high number of CT scanners has also helped to drive up the cost of health care in the United States, but Custer said there is little evidence that this more costly service leads to better health outcomes.

Ultimately, you can’t judge a national health care system on medical capacity alone, he said.

Cain not only lied about the number of Cat scan machines in Canada, he also lied about it endangering the health of patients. Survival rates in Canada for Colon cancer was 63% from 2004-2006[14], roughly the same as the more than 60% chance Dr. Abdalla told Cain he had.

While I could not find average Cat scan data waiting times for Cancer patients in Canada, I did find referral to treatment waiting times. According to Cain’s biography, he was adviced to get a biopsy on Feb 10th for to test for cancer.  He waited until March 22nd to get the biopsy for cancer which tested positive. He had his Cat Scan one week later on March 29th. It appears treatment didn’t start until at least April 28th when he went to see Dr. Abdullah. We can take the time between Cat scan to the time of his seeing Dr. Abdullah as his wait time. It was March 29th to April 28th, a total of 4.5 weeks. How does this compare to wait times in Canada. According to CancerCare Ontario[15].

Radiation wait times have been continually improving in Ontario since 2003. Median provincial radiation wait times fell 31%, from 6 weeks in fall 2003 to 4.1 weeks in fall 2006. This is based on the waiting period from the time a regional cancer centre receives a referral for a patient to receive radiation treatment to the time the patient receives his or her first treatment. This period is called “referral to treatment.” The median wait time is the point at which half the patients have started their radiation treatment and the other half are still waiting.

Cain’s wait time between referral to treatment was at least 4.5 weeks in the Spring of 2006, the average wait time from referral to treatment in Ontario, Canada was 4.1 weeks in the Fall of 2006. In other words, the average person in Ontario, Canada waited for treatment just as long as Cain, one of the top 1% wealthiest men in America did.

It is noteworthy that Cain not only falsified his data, but his data was irrelevant to the issue. Wait times for Cat Scans simply do not measure the quality of health care. Let us say you have two countries with 10 people wanting to get Cat Scans in each. In both countries, eight people want it for treatment of cancer and two people want it for cosmetic surgery to remove wrinkles. In country A with a profit based health care system, the two people who want cosmetic surgery get their Cat scans in one week. The other eight cannot afford to get them and die. In country A, the average waiting time for a Cat scan has to be considered as 1 week. In country B, with socialized health care, The eight people who need them to treat Cancer get them in one week, but the other two with cosmetic surgery have to wait six months/26 weeks. In country B, total average waiting time would be (2 x 26) + (8 X 1) or 60 weeks or an average of 6 weeks waiting time per person. The results: Country A with the profit system ends up with 8 dead poor people and 2 happy rich people without wrinkles, and the average Cat scan wait time is only 1 week. Country B with the socialized system ends up with 10 living people, with 8 living poor people and 2 unhappy rich people who had to live an extra six months with their wrinkles. The average Cat scan wait time is 6 weeks. Obviously any sane person would say that Country B with 6 week wait time provides better health care for its citizens than country A with a 1 week wait time, but lots of dead poor people who can’t afford it.

Rather than bogus claims about Cat scan waiting times, one only has to look at life expectancies in countries with socialized health care and for-profit health care to see the difference[16]. The United States is number 36 in the World, currently tied with Cuba, a much poorer country that spends 1/10th per person on health care and yet has an equal life expectancy through socialized health care[17]. Canada, although it spends 2/3rds per person for health care has a life expectancy 2.4 years higher than the United States. The 35 countries that have moved ahead of the United States in life expectancy over the last 30 years have done it with government-run socialized health care systems.

We should also note that the University of Texas’ M.D. Anderson Cancer Center, where Cain was treated, is a non-profit institution. It was established as part of an act by the Texas legislature in 1941. The Federal Government’s “National Cancer Act of 1971 established it as one of the nation’s three comprehensive cancer centers” (See M.D. Anderson – Wikipedia,  http://en.wikipedia.org/wiki/University_of_Texas_MD_Anderson_Cancer_Center). It is correct to say that Cain is alive today because the federal government of the United States supported the idea of socialist health care and spent billions of tax dollars from 1971 to 2006 to successfully develop the science of treating cancer. Cain should be a poster child for socialized health care.

To sum up, Cain lies about his miracle cure from cancer, he lies about President Obama’s health care reforms, he lies about the number of Cat Scan machines in Canada and he leis about the quality of health care in Canada and other countries.

With the way he uses his cancer to promote his political career, Cain shows not that he is an extraordinary human being chosen by God to be president, as he claims, but that he is an extraordinarily self-centered, pre-enligthtenment thinking and morally sick human being.
 

[1] http://www.rollingstone.com/politics/blogs/national-affairs/docs-herman-cains-cancer-isnt-disqualifying-20111012, Dickerson, Time, Docs: Herman Cain’s Cancer Is Not Disqualifying, Oct 13, 2011.

[2] Jordan, Steve, Omaha World Herald, April 14, 2006.

[3] Atlanta Journal Constitution, Herman Cain Diagnosed With Cancer, April 12, 2006

[4] Nation’s Restaurant News, Ex-Godfathers, NRA Chief Cain in Cancer Treatment, 5/1/2006/Volume 40, issue 18.

[5] Cain, Herman, This is Herman Cain: My Journey to the White House, Threshold Editions, 2011.

[6] The Atlanta Journal-Constitution, For Cain, the Knife Delayed, May 2, 2006.

[8] Trish, Henry, Cancer spurred Cain to go ‘bigger and bolder’ CNN, Oct. 19, 2011.

[10] The Brody File, Herman Cain’s Story of God’s Healing Power, March 22, 2011.

[11] Cavuto, Neil, Fox News, Stalled Health-Care Leading to Surge in Dow? – Will Obama Alienate His Rich Supporters? – Housing Sales Rise For Third Straight Month, July 23, 2009.

[12] http://www.politifact.com/truth-o-meter/statements/2011/sep/27/herman-cain/herman-cain-said-government-bureaucrats-will-deter/ Polifact.com, Herman Cain said government bureaucrats will determine when you get a CAT scan once the new health care law begins.

[14] http://www.cbc.ca/news/health/story/2010/09/15/cancer-survival-stats.html, CBC News, Cancer Survival Rates Imprové Slightly.

[16]         http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy#List_by_the_United_Nations_.282005-2010.29

Cain Uses Crying-Family Defense Against Sexual Harassment Charges

Cain dramatically Almost Breaks Down Thinking About his Inauguration as President and His Wife holding a Bible

This is Cain’s advice from his book Speak as a Leader: Develop the Better Speaker in You:

* expect the unexpected and be prepared to remain calm and professional.
* There is no such thing as off the record.
* Think sound bites and plan some ahead of time if you know the topic to be discussed.
* Say it over and over.

Cain has choked up and held back tears at least three times in two days. Each of “the choking ups” have been in regard to his wife and family.

1. WMUR New Hampshire Interview:

2012 Republican firebrand Herman Cain exposed his vulnerable side yesterday, nearly breaking down into tears during an interview with the New Hampshire radio station WMUR.

When asked how he would feel on his hypothetical inauguration day, Cain was visibly moved, choking up and replying: “I almost can’t say it. Holding the Bible when I’m sworn in. It’s emotional.”

It is a surprising emotional outburst for the typically brash candidate, who tends to stick to anger and/or enthusiasm on the campaign train, even in the face of damning sexual harassment allegations and harsh criticism over his gaffes/general lack of experience.

2 and 3: Republican Debate, November 19, 2011

During Saturday night’s Thanksgiving Family Forum, GOP contender Herman Cain choked up as he talked about a health crisis from his past.

Debate moderator Frank Luntz asked the candidates to describe a personal challenge they had endured, and Cain related the story of finding out that he had stage 4 colon cancer in 2006.

The Des Moines Register transcribed the exchange:

“I will never forget,” Cain began, “walking out of that surgeons office after she had just told us stage four …”

And then Cain paused. His eyes began to water.

Moderator Frank Luntz interjected: “Take your time.”

“It’s as bad as it gets,” Cain continued. “I will never forget before my wife and I were about to get in the car I said, I can do this…’

Cain paused again. The audience remained silent.

“She said, ‘We,’ ” Cain finished.

Cain’s hands covered his face. The audience erupted in applause. As Texas Gov. Rick Perry fielded the next question, Cain removed his glasses and continually cleared his eyes with a handkerchief.

Cain also fought back tears when he spoke about how he had not spent enough time with his children.

Note that Cain is not getting emotional over the suffering of billions of people in the world living in poverty. He is not getting emotional over the 50,000 U.S. citizens, including many children who will die this year because they can’t afford decent health care or health insurance. He is getting emotional over his relationship with his wife and family.

Cain has written a book on how to give effective speeches and has given several thousand speeches over the last 25 years. It is hard to believe that these choke-ups are not a deliberate rhetorical tactic to aid his campaign.

Is Herman Cain Off His Beamer? The Truth About Cain’s Beamer Program at Burger King

Cain Beaming on a Recent Television Commercial

Herman Cain’s “Beamer program” is a small detail that he includes in his autobiographical material to show what a brilliant manager he is. This article examines Cain’s Beamer program and concludes that it did not exist. Cain was at best enforcing the normally degrading policies of fast food restaurants towards their employees in a strict and harmful way. This article suggests that Cain made up the Beamer program as a pseudo-parable to further Cain’s self created myth that he is a great businessman. At the same time, the Beamer program tall tale is meant to cover up the truth that Cain’s rise in the Burger King corporation was not due to anything he did, but to Jessie Jackson’s PUSH organization threatening a consumer boycott and forcing Burger King to institute an affirmative action program to promote black managers in 1982-1983.


Cain’s Beamer Program Mytheme
Cain often refers to the Beamer program. The references vary quite a bit, but they generally follows a standard template. Here are a few samples. The first is from Cain’s website, “Herman Cain, THE New Voice Inc[1]:

 Return with me again to my first Burger King restaurant. When the District Manager told me that I was being given the responsibility to manage the restaurant (although I thought of it as being CEO of the restaurant), I asked him to explain his expectations of me. “Just increase the sales and the profits,” he said. When I asked if could change any of the menu prices, he said I could not. I asked if I could spend some discretionary marketing dollars. He said nope. I asked if I could eliminate the Parmesan sandwich from the menu, since we only sold two a month. He again said no. Everything I asked about was a big fat “cannot.”

As I started to take charge of the restaurant, I started to think about one thing he did not put in the “cannot” category. He did not say I could not change the attitude of everybody in the restaurant. I had remembered from “Burger Boot Camp” at Burger King University (yes, there is one) how much they emphasized telling the cashiers to smile, to get customers to smile, in order to make them feel like coming back. I noticed a lot of my cashiers were not smiling either, and so a lot of the customers were not smiling. This is when I created the BEAMER program, which taught people (mostly teenagers) how to make people smile.

You look people in the eye and smile, and they will smile back.

Unless someone is among the walking dead, it works every time.

When I took over as manager of the restaurant, its end-of-year sales projection was about $800,000. After three months of the BEAMER program, the District Manager (Mr. “Cannots”) revised the projection upwards to one million dollars, since the sales trend had moved up noticeably. (I still had the Parmesan sandwich on the menu.)

Cain’s claim that there was an expectation that he would increase sales and profits is absurd. Cain was in an executive training program designed to allow him to become a regional sales manager. In this phase he was being taught to manage a store, which he had never done before. It is hardly believable that someone would demand that he increase profits under such circumstances. Since Cain was only going to be at the store for three months and he was not allowed to make any changes, the idea that he would be responsible for increasing profits is even more outrageous. Clearly factors beyond the control of any manager, such as successful national ad campaigns, local competition and the state of the local economy, would affect the rise or fall of profits at an individual restaurant.  A manager-trainee without even the power to change menu items or prices could not be held responsible for increasing profits. Even if profits increased, it would not demonstrate any ability to manage a store. This suggests that Cain still does not have a clue about the purpose of his training or store management in general. If he did, he would never propose something so ridiculous.

Here is a short version from the conservative echo chamber “National Review”[2]:

Cain Believes in Happy Employees: Tired of surly DMV employees? Ready to lose it if one more postal worker glares at you? Well, get ready to pull the lever for President Cain. When managing a Burger King restaurant, Cain became frustrated when he wasn’t allowed to make any significant changes, including changing prices or increasing the amount spent on marketing. As he tried to figure out how he could increase profits, he noticed his Burger King cashiers were failing to radiate good cheer as they rang up customers. So he “established the BEAMER program, which taught our employees, mostly teenagers, how to make our patrons smile” by smiling themselves. It was a success: “Within three months of the program’s initiation, the sales trend was moving steadily higher.”

Notice that the conservative author thinks that his Beamer program is a reason or voting for Cain for president. Apparently, she thinks a president needs to appoint a new government agency designed to get people in the country to smile more.
Here is the story from his new biography, “This is Herman Cain! My Journey to the White House[3]”

So as I took charge of the restaurant, I considered the one thing he could not put into a “you cannot do that” category: changing the attitude of all of my employees. I noticed that many of my cashiers were not smiling. At Burger King University we had been advised to tell the cashiers to smile because then the customers would smile and come back. So I established the BEAMER program, which taught our employees, mostly teenagers, how to make our patrons smile.

Within three months of the program’s initiation, the sales trend was moving steadily higher and the district manager raised his sales projections to upward of one million dollars – and I still had that Parmesan Sandwich on the menu.

The Beamer program had a simple but effective premise – look people in the eye and smile, and they will smile back, and it was a huge success. One day, at the end of a lunch shift, a lady who was sitting at a table where she could observe the entire front counter asked me, “Are you the manager?”

I assumed she had a complaint, because you usually don’t expect customers to stop you to say something is good. But she asked, “How do you get so many happy people at the front counter?” I smiled and thought to myself, “Yes, its working!”

Notice the addition of the woman to the story. Cain puts in the extraordinary detail that “she was sitting at a table where she could observe the entire front counter”. Cain is apparently worried that 25 years after this momentous event, someone will ask him, “How did she know that so many people at the front counter were smiling.” Cain answers the question, “because she was sitting at a table where she could see it.” Cain doesn’t answer the question why the woman would be interested in the facial expressions of the teenage girls at a fast food restaurant? Since every fast food restaurant and almost every retail industry for the past one hundred years has asked their cashiers to smile, one wonders why the woman would assume the workers were happy because they were smiling? Had she just gotten out of a mental facility where she had been kept under sedation since she was a child and had not seen cashiers at fast food restaurants smiling?

The woman is fictitious and the incident is fictitious, like the farmer’s wife in a joke, she is just a stock figure, the “satisfied customer.” She represents Cain’s ideal customer to provide a human punch line for his power of positive thinking example. If we take her as a real customer, we must assume that Cain is mentally challenged. Why would he give weight to a single observation of a single customer among thousands of customers? Why does he depend on a chance encounter to be reassured that his project is working? Might she not be an anomaly, one out of ten thousand who cares if her cashier smiles at her. Might the other 9,999 typical customers not prefer a serious face? Perhaps, she was just trying to come-on to Cain by saying something nice to him. Did Cain ask her if she was going to buy any more food because the cashiers were smiling? If Cain was serious about the project, he would certainly have done some research to see if his project was working rather than rely on a chance encounter with a chance customer. The story suggests that Cain had no real or significant feedback system in place to tell him if his change was actually producing satisfied customers or increased sales.

Cain is simply making up the incident to rhetorically reinforce his point. If not and he is, in fact, basing the success of his program on a woman’s chance remark than he is a completely incompetent manager who does not provide reasonable feedback mechanisms for his managerial changes, I think we can safely take the first as the most probable. The woman only appears because Cain wants a punchline for his power of positive thinking message-tale.

With the smile-loving woman out of the way, we can look at the other punchline in the tale, the money made from forced smiles. Claims makes two claims regarding the economic results:

How Much Money Did the Beamer Program Make?

Within three months of the program’s initiation, the sales trend was moving steadily higher and the district manager raised his sales projections to upward of one million dollars[4].

The two claims are 1) within three months of the program’s initiation, the sales trend ws moving steadily higher and 2) the district manager raised his sales projections to upward of one million dollars.

Cain only managed one restaurant during his time in a fast track executive learning program at Burger King. He managed it for three months[5], apparently from June to August, 1982. According to National Restaurant News[6] average sales at Burger Kings rose from May, 1982 to May, 1983 from $751,000 to $839,000. That is a rise of 11.7%. That sales trends “moved steadily higher” at Cain’s restaurant would have been expected with or without the Beamer program. We certainly cannot take this as evidence for any success of the Beamer program.

On his website New Voice Inc., Cain is more specific. He writes:

 When I took over as manager of the restaurant, its end-of-year sales projection was about $800,000. After three months of the BEAMER program, the District Manager (Mr. “Cannots”) revised the projection upwards to one million dollars, since the sales trend had moved up noticeably[7].

The regional manager would have been expected average monthly sales of $800,000/12 or  $66,666 per month when Cain took over. Since he moved it to $1,000,000, he was expecting sales of 1,000,000/12 or $83,333 a month by the end of the year. If the manager was expecting a steady rise equal to the rise that happened during Cain’s three months, we can assume that he imagined sales would go up $16,667 in the first six months from $66,666 to $83,333 a month and $16,667 to $100,000 the last six months. This would give us our $83,333 monthly average. Since Cain was there for three months, he must have raised sales half of the $16,667 six month rise or an average of $8,333 over his three months. It seems that Cain is saying that sales went from an average of $66,666 per month when he came to an average of $75,000 ($66,666 + $8,333) when he left three months later. This would be an increase of $25,000 ($8,333 x 3) over three months. The regional manager had been anticipating sales of $200,000 and Cain did sales of $225,000 in total over three months.

Cain Compared to the National Average Manager

If we are to believe Cain, his Beamer program allowed him to increase sales 12.5% for each of three months. We should compare that to the national average of 11.7% increase in 1982. Cain did .8% (12.5% – 11.7%) better than the national average. If we go back to the $75,000 per month in Sales, .8% would be $600. Assuming that the Beamer program was responsible for this entire rise above the national average, this means that it brought in $600/30 days or $20.00 per day. We can say that Cain’s Burger King made $20 per day in sales more for Burger King than if it had had an average manager and not Herman Cain and his Beamer Program..

How Much Profits Did Cain Produce for Pillsbury?

We have to remember that sales are not profits. Pillsbury made profits of $39.4 million in the last fiscal quarter ended May 31, 1982, just before Cain arrived. Revenues were 903.7 million[8]. Thus net profits were 4.3% of sales. Assuming Burger King did average profits for Pillsbury and the profits that Cain produced for Burger King was 4.3% of $600 per month, we get a total of $25.80 per month. On a daily basis it would be $25.80/30 or 86 cents a day. This does not sound like much, but over the three months that Cain was manager, this adds up to $77.40.

The Bottom Line Impact

The Beamer Program is the only thing that Cain has ever said distinguished him in his training program when he managed a store. One has to wonder if it was the extra $77.40 that Cain’s Beamer Program brought in over three months that got him his appointment as Philadelphia regional vice-president of 400 stores. Could it not have been rather the $50 million dollar Affirmative Action Agreement that Jessie Jackson PUSH organization signed on April 18, 1983 with Burger King that got him his appointment[9]? Since, Burger King had never had a black regional manager before, one has to consider that this was the primary reason behind Cain’s promotion. It seems likely that this is the reason that Win Waller, President of Pillsbury, had offered him a regional management position before he had even started his special training program.

Ruining the Data

I wish that I could say that Cain was consistent in the rather scanty figures he gives for the Beamer Program over the years, but he hasn’t been. Cain gives somewhat contradictory figures in other reports on his Beamer program. In 1988, for example, he reported in the Omaha World-Herald[10], “Six months later it broke $1 million in sales and was the top – volume restaurant for three consecutive months[11],”

If Cain is telling the truth here, then the restaurant must have made $225,000 under Cain in three months and $775,000 in the following three months under the man who replaced him. One wonders why in this case the man who followed Cain and raised his sales figures by 300% did not get appointed regional vice president. We can chalk up this discrepancy to Cain’s confused memory or perhaps the reporter’s misunderstanding.

The Truth About the Beamer Program

I have been having fun showing the absurdity of Cain’s own figures. The true figures aren’t important for Cain. He knows that Burger King does not release sales figures for individual restaurants. He knows that he can make up any figures he wishes and nobody can disprove it. The Beamer Program is not meant to be something that can be checked. It is a motivation parable designed to inspired people to admire Cain and his common sense.

Cain did reveal the true nature of the Beamer program in the previously mentioned 1988 interview:

Cain said he adopted what he called a “beamer program” when managing Burger King restaurants.

“Beamers,” he said, were employees with sunny dispositions who had ready smiles and were at ease making eye contact with customers.

“People who had trouble smiling were assigned to the kitchen,” he said.ATK Plan

Cain said he also practiced what he called the ATK plan in directing employees to do a job.

He said “A” stands for “Ask them to do it” and if that fails, “Tell them to do it.”

If that fails, he said, he moved on to K, which stands for “Kick ’em out.”

It was already the policy at Burger King for the cashiers to smile. Cain did no more than strictly enforce that policy with threats. He punished kids who “had trouble smiling” by assigning them to the kitchen. He asked them once, then told them to smile and then fired them. That was the entire program.

Kids who have to work at repetitive jobs at minimum wage during the summer while their wealthier friends and classmates get to hang out could not have been very happy. Cain forced them to hide their unhappiness with threats of being fired. Cain says in his new book, “The culture at burger King was intimidation, fear and screaming[12].” No doubt, Cain’s Beamer Program contributed to that atmosphere.

There is no evidence that his so-called Beamer Program helped Burger King employees, customers or owners in any way. It may have helped Cain’s low self-esteem by bullying and forcing young girls and boys to learn to be deceptive and repress their feelings behind a smile. Cain was no doubt doing what he had been taught by his parents. He described how they motivated him to a church congregation in 1989[13]:

 “When I was a child, I knew I was going to school, I knew was going to church and I knew I couldn’t talk back to my mother. But I had to decide to do well,” he said. “I don’t know why I wanted to do my lessons, other than fear. There are two things which you can use to motivate a child — fear and guilt. Make them feel guilty if they do wrong. Then you are speaking to their soul.

The abusive and senseless Beamer Program should be added to the series of motivational pseudo-parables that is the myth of Cain’s success as a businessman. It only points towards him being an abusive and abused person who has learned and teaches others to hide their feelings behind a smile. What that smile hides is not funny at all.

[1] Cain, Herman T.H.E. New Voice, Inc. “Achieving Your Dreams,” http://www.economicfreedomcoalition.com/economicfreedom-achievedreams.asp, viewed November 16, 2011.

[2] http://www.nationalreview.com/articles/278973/candidate-cain-katrina-trinko?pg=2 National Review Online, Katrina Trinko, This is Candidate Cain,  October 3, 2011 3:00 P.M.

[3] Cain, Herman, “This is Herman Cain! My Journey to the White House,” Threshold Editiona, 2011.

[4] Ibid.

[5] Computer World, Moving Out and Up to Corporate Offices, December 5, 1983

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

[7] Above. New Voice.

[8] New York Times [New York, N.Y], Pillsbury Posts Gain; Beatrice Off,

25 June 1982: D4.

[10] Omaha World-Herald, Beeder, David C., Godfather’s Chief: Success a Journey, Not a Destination, October 4, 1988

[11] Above.

 [12] Cain, Herman,  This is Herman Cain: My Journey to the White House,

[13] The Advocate (Baton Rouge, La.), Simoneaux, Angela, Businessman calls for stronger families, October 16, 1989

Did Herman Cain Invent Bill DeLeat?

At the top of this image of restaurant management software is the option to "Bill Delete." Does the name of Cain's Mysterious Protector "Bill DeLeat" derive from "Bill Delete?"

Rachel Maddow recently pointed out that Herman Cain at a Republican Debate had quoted some lines from a Pokemon movie song and identified the writer as a great poet. This suggests to me that Cain is truly detached from reality and social norms. Did he really imagine that nobody would find out that he was quoting a children’s movie and not a great poet? Does he really think that people are that gullible that they don’t know the difference between great poetry and children’s platitudes? Probably it is because he himself and the people he hangs around with don’t know the difference.

I think I found another instance of Cain trying to be cleverly deceptive. In three of his books, Cain mentions a supervisor named Bill DeLeat who saved his job. He says that when he had his first management job at Pillsbury, running the Philadelphia Region Burger Kings, Mr. DeLeat helped him fight a conspiracy by Burger King executives in its Miami home office.  Apparently the executive back in the home office started hating him because, according to Cain, he had a different background. Suddenly and miraculously, he starts reporting to a new CEO named Bill DeLeat who helps him out of the jam. The problem is that I have been unable to find any information about any vice-president named William or Bill DeLeat at Burger King around 1984-1985.

I wonder if Cain made up this Character. Could this be some kind of alias that Cain was assuming, perhaps writing letters in his name to save himself from being fired?  He refers to Mr. DeLeat as a “CEO of Self,” I find it terribly suggestive that he is an imaginary CEO made up by Mr. Cain’s own self.

Why did Cain get into such trouble that he was in danger of losing his career? Did he perhaps delete bills that would have made his region results look bad? Was “Bill Deleat”/”Bill Delete” the way he saved himself when he presented poor results to the managers at Burger King? Is Cain making a little inside (his head) joke that he reported to a new manager named “Bill Deleat” who fixed things for him?

I know that this sounds paranoid on my part and I certainly do not want to falsely accuse Mr. Cain of such incredible deception.  My Google and dozens of other searches have failed to turn up anything on Mr. DeLeat. Therefore, if anybody has any information about William or Bill DeLeat, an executive vice president at Burger King around 1984-1985, according to Cain, I would deeply appreciate hearing from you. It would put my mind at rest to know that Mr. DeLeat was in fact an executive at Burger King during this period and not an imaginary character made up by Mr. Cain.

Here are the references to Bill DeLeat in Cain’s books

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. (from “This is Herman Cain,” pg. 58)

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 headquearters] 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 toward 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. ( from “They Think You’re Stupid,” pp. 193-194)

That there was a realignment of the regions which report to the divisional executive vice presidents. My new boss would be Bill DeLeat, who I knew but with whom I had not worked directly. He spent three days in Philly with me evaluating my operations from top to bottom. Each department director presented an update on their respective… (from “Leadership is Common Sense,” pg. 58)

It is sad that the corporate media has not investigated this episode in Cain’s life. What was the nature of this “direct report?” What were the charges against Cain that were so serious that if they had “been handled differently,” it would have led to the end of his corporate career. “Period?” How did the mysterious angel, that CEO of Self, “Bill DeLeat” save him?

Again, if anybody knows anything about Bill DeLeat or can find any research material on him, please let me know.

Selling and Telling Whoppers: Herman Cain and Burger King

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 Career,  https://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.

The Godfather’s Godfather: How Jessie Jackson Launched Herman Cain’s Managerial Career

April 14, 1983, Jessie Jackson and Burger King President J. Jeffrey Campbell sign an agreement to hire and promote more Black executives. Around this time, Herman Cain, without any real life prior restaurant management experience, outside of a nine month executive training program, was named a Burger King Regional Manager.

This article examines the relationship of Herman Cain getting his first major managerial position of his life at Burger King, around March, 1983, and at the same time, Burger King starting a major affirmative action program to promote blacks into executive positions. The evidence suggests that it was not a coincidence and Cain owes his managerial career to the liberal activists who pressured Burger King into reversing its racially discriminatory policies.

“My goal was eventually to get where I am now, quite frankly. My goals beyond this point are to become even more integral to the management of the Burger King organization. At some point, I might like to move into division management and become a senior vice-president and division officer and maybe become an executive officer. If ever I were to become so successful in Burger King that there wasn’t anything else for me to do, sure [I’d look elsewhere]. But you’re talking 20 to 25 years away at this point. Burger King is big enough to satisfy all my ambitions at the present time[1].” — Herman Cain, circa November 1983

In this December, 1983 Computerworld article, Herman Cain sounds extremely satisfied and content after starting his new job managing the Philadelphia region Burger King restaurant chain. This is in contrast to the previous year when Herman Cain was 37 years old and in despair. He admits to feeling trapped in a dead-end job working for Pillsbury information systems/information management in Minneapolis, Minnesota. He had a nice title “vice president of systems services[2].” He received this title in 1981, after three year as the “director of management science.” It was the policy of the company to promote people when they were young and give them nice titles. Pillsbury had dozens of young and fresh “vice-presidents.”

Being granted a title of vice-president in your 30s was no guarantee of a long career at Pillsbury[3]. For example, all the men in this picture below became Pillsbury vice-presidents or presidents in their 30s. Charles S. Olcott was 35 when he was “vice president” of investor relations in 1982[4]. He was 39 when he was named as President of Burger King in 1986[5]. He was 41 in 1988 when he was forced to resign[6]. Kyle Craig was 34 in 1982 when he was appointed senior “vice president” and director of marketing[7]. He was 40 when he was forced to resign in 1988[8].  J. Jeffrey Campbell was 37 when he became an Executive “vice president” in charge of marketing in 1981[9], age 39 when he was named Chairman and CEO of Burger King[10] in 1983 and 40 when he was named executive vice president for Pillsbury in 1984. He was 45 when he was forced to resign in 1988[11].

Figure 1 Four Pillsbury Executives - Charles S. Olcott, Herman Cain, J. Jeffrey Cambell, Kyle T. Craig. All were made vice-presidents in their mid 30’s, all were gone less than seven years later in their early 40’s. All four resigned from Pillsbury in 1988 a few months after this picture. Picture from Ebony, Magazine, 1988.

As vice-president of system services, Cain was probably making around $70,000 dollars a year at the time[12]. Other vice-presidents were earning $400,000[13].  We should remember that Cain was vice-president of a very small group of only 15 computer tech people[14]. Other vice-presidents were in charge of thousands of people. It was certainly enough to support himself, his wife and two children, but his father “was suffering the complications of diabetes[15].” After some five years at Pillsbury, all was not well for Herman Cain.

Cain describes his mental depression this way in his book:

After the headquarters project turned out successfully, I was once again bored. Life was good – Gloria and I were healthy; we now had a daughter and a son; we lived in a nice home; we had even started taking vacations, which we had never done much earlier in my career. I was even singing in the church choir and recording with a Minneapolis gospel singing group. But my motivation had collapsed.
I was sitting in my new office on the thirty-first floor of the World Headquarters one day when I looked out the window and saw that the inflatable dome of the new Minneapolis stadium had collapsed. I realized, as I sat there, staring out the window, that what had kept me happy and motivated was the excitement, challenge, and risk of the past few years[16].

Cain beautifully associates and symbolizes his mental collapse with the collapse of the Dome in the Minneapolis Stadium. A good psychoanalyst can see how Cain uses external images to describe his internal mental state. Unfortunately, not having a background in psychoanalysis, Cain blames his problems on the metaphysical principle of “self-motivation.” He is unable to articulate or analyze the truth about his financial and social conditions. In fact in an earlier article in Ebony magazine, he again points to this key moment in his life, but describes the reason for his depression differently[17].

One day I was sitting in my office on the 31st floor of the new Pillsbury Center and I asked myself, ‘Now what?’ he recalls, ‘Coming in to sign budgets and review administrative papers for the next 25 years didn’t quite appeal to me.”
So Cain decided to shift gears and after talking to Pillsbury officials resigned his vice-president post to learn the fast food industry at Burger King, a Pillsbury subsidiary.

Note that Cain sees himself doing the same thing at Pillsbury for the next 25 years. He sees no chance for advancement.   One wonders why he does not plan on starting his own company or moving to a new company. He understood that Pillsbury had a history of racial discrimination and he would not advance further. He didn’t have the capital to start his own consulting tech firm and opportunities with other firms were limited by his lack of educational background (only one year at Purdue getting a Masters in management science) and experience (working on singular information management odds jobs for the Coke and Pillsbury Companies for 10 years.

Cain is trying to make it seem that he made a deliberate strategic choice in abandoning his five year tech career at Pillsbury to do something new. He is trying to explain why at age 37, with no background in managing restaurants of any kind, he suddenly shifted to this completely new field. He tries to pass it off as simply a matter of wanting excitement and adventure. In fact, being a vice president in a computer tech group of 15 people was a great achievement for Cain. He had only had a year of computer tech at Purdue. He had worked alone in his five years at Coca Cola.

He knew too that a slew of young people were graduating every year with Masters’ degrees in computer tech and information management and had grown up in the new computer culture. He knew that Pillsbury would not hesitate to fire him in a moment and hire a recent graduate five years younger than him, who would be happy to do his job for the next five years at 2/3rds his salary. Staying at Pillsbury for the next 25 years could only have been a pleasant wishful hope for him.

Cain likes to tell how his expertise and skills had caught the attention of his bosses at Pillsbury. In fact the truth is far more likely that his deficiencies and mistakes had caught their attention.

Cain only describes two major jobs he did in his five years in a management systems (basically a computer tech) job at Pillsbury. One was installing a main frame computer and integrating information systems when the company took over Green Giant in January, 1979[18]. While this is reasonably complicated, it shouldn’t have taken his department more than a couple of months to accomplish this. He says that this went “smooth as silk[19].”

He claims that because of this, a year later in 1980, he was made vice president in charge of systems services. In both his new book and his 2005 book, “They think you’re stupid,” Cain claims credit for a successful “smooth as silk” job which was done while his predecessor, John Haaland, was still in charge of his 15 person group. Claiming credit for other people’s work is not unusual for Cain. For example, he claims repeatedly in later interviews to have settled a large lawsuit against Godfather’s which was settled before he arrived[20] at Godfather’s. In his 1983 Computer World interview, he was more modest, saying that he was a strategic officer on the Green Giant project and a lot of people from both Green Giant and Pillsbury were involved[21]:

Management’s concern during this integration process was that we avoid a computer disaster, keep some key people from leaving and be sure we could run some systems critical to the business. So they perceived it as more of a people issue than a technical issue. Between the two organizations, we had an abundance of technical expertise, in terms of information systems people, model builders, programmers, etc. It was a question of getting them all to come together, establishing a direction, some goals, and then getting people to follow that.

If there was an abundance of technical expertise to avoid a computer disaster and install the mainframe computer, what exactly did Cain do on this project? He describes his role this way, “one of the main responsibilities I faced was how do I integrate the information systems function — meaning the people, the systems, the hardware and the budgets — into one unit.”

As Pillsbury’s organization for information systems consisted of 15 people, we may assume that Green Giant’s was roughly the same size or smaller. Cain’s major achievement of his first two to three years at Pillsbury appears to have been helping “strategically” to get two departments of around 15 people each from two companies to work together as one department in one company.

Once he took over John Haaland’s job in 1980, he now faced his first major job on his own in 1981. He had to organize a move into a new headquarters for 2,000 people in Minneapolis, Minnesota. This should have been a relatively simple affair with 15 people in his department, like the installation of the Green Giant mainframe, but apparently it went very badly. In the 1988 Ebony article, he describes it this way:

Within five years, he had become vice-president of corporate systems and services. However, the new title came with a formidable task of overseeing the construction of Pillsbury’s World Headquarters Project, a job that required the moving of 2,000 employees scattered around the Minneapolis area into the new corporate headquarters. Making matters worse, the project had been running overbudget and had been stalled by contractual disputes.

Cain rose to the challenge as he and his staff moved quickly to resolve the disputes among the contractors and those between the new building’s owners and some of the prospective tenants. With that done the project moved to an on-time completion and came in under budget. For his work, Cain gained recognition among Pillsbury’s senior management as a guy who could get things done[22].

Cain tells us that, “the new title came with a formidable task of overseeing the construction of Pillsbury’s World Headquarters Project, a job that required the moving of 2,000 employees.” Part of being a vice-president of a company’s information management group is that you get information to people who need it. Cain was apparently supposed to do certain things and did not realize that they were his responsibility as a new vice-president. The running over budget and other problems were his responsibility. Cain adds some important details about the problems he encountered on this project in his new book[23]:

It wasn’t long before I realized what a decision-making coordination, and communications nightmare my assignment was turning out to be! The project was over budget, behind schedule, and headed for a “crash” with our future landlord. Language ambiguities in the lease contract caused conflicts over who would be responsible for paying for changes to the project—and we’re not talking peanuts, but millions of dollars in real money.

I asked the previous executive in charge to call a meeting so that I could meet everyone responsible for various pieces of the project. Walking into the conference room where more than twenty people were sitting around a large table, I wondered “who are these people?

After four years at Pillsbury, it is 1981 and Cain is in charge of his first major project. It was what should have been a relatively simple move of 2,000 people and equipment into a new office building. Yet, by his own admission, the project turned into a “nightmare,” crashing all around him and he has to call on the previous man in charge to help him set up a meeting. At the meeting, he doesn’t even know the people who are key to making the move.

I soon found out. There sat a chief accountant, a chief architect, a chief attorney, a chief construction consultant, a chief contractor, a chief engineer, a chief moving manager, a chief planner, as well as all of their co-chiefs! Said “Chiefs” looked at me as if to say: so how are you, a young whipper-snapper going to straighten out this mess.
Frankly, I had no idea…The World Headquarters Project was an all consuming mess!

Cain had made an “all consuming mess!” of his first important project as vice-president. He had to go to the CEO and COO of Pillsbury, Bill Spoor and Win Wallin to get things straightened out. In Cain’s narrative, he just went to them for advice. Obviously, when you go to the CEO and COO of a major multi-billion dollar corporation, it is not just for advice. Obviously, they had summoned Cain to a meeting to straighten out mistakes that Cain had made. Cain’s narrative jumps over this and he announces, “the project was completed ahead of schedule and under budget. Five years later Bill Spoor presented me with the Pillsbury Company’s Symbol of Excellence in Leadership Award.”

On his first major assignment, he had messed up badly, mis-coordinating a relatively simple location move for 2,000 employees and equipment. Why should Spoor present him with an award five years later for excellence? In his 2005 book, Cain says that Spoor presented him the award two years later[24]. I found no evidence of Cain ever having won the award two or five years later or that Pillsbury ever gave anybody an award called a “Symbol of Excellence in Leadership Award.” Since the name of the award is awkward, as is much of Cain’s phraseology in his speech making, my conclusion is that Mr. Cain made up the award for himself. I hope somebody can send me evidence that he did receive such an award.

Rather than being successful in the one major project he was in charge of at Pillsbury, it was more likely that Cain was perceived as a major failure by the leadership at Pillsbury. For the next year, he apparently did not receive any important assignment. This must have been part of the cause of his depression.

This article appears to confirm that Cain started his Philadelphia Region Burger King Management job around September, 1983, five months after Burger King's Affirmative Action program for hiring more Black Executives was announced.

We now come to a problem of dates. Cain often repeats how he decided to start his career over, quit his job, underwent nine months training and became the Philadelphia Region vice president in charge of 400 Burger Kings. He is never specific about the dates for these events.  I wanted to see if he got his position at Burger King before or after Burger King announced an Affirmative Action agreement to hire more black executives in March 1983 (more on this later).

Cain claims on his website that he left Pillsbury and went to Burger King in 1982. However, Cain has said that his decision-making moment to change the course of his life came on the day that the Minnesota Stadium Dome collapsed. Actually, the roof of the Dome deflated three times, on Nov. 19, 1981, December 31, 1982[25], and April 14, 1983[26]. Which dome collapse is Cain describing?

Trying to find when Cain took over his new post as Philadelphia regional manager for Burger King was a far greater problem than one would imagine. I could only turn up announcements in the Black press of the time. One announcement was in the Afro American, a Baltimore, Maryland weekly black newspaper from the time. The newspaper was dated September 10, 1983[27]. This seems to suggest that Cain was promoted August or September 1, 1983 to be Philadelphia region manager. A Monthly magazine, Black Enterprise notes the promotion in its December 1983 issue. Magazines often had lead times back then between layout and publication date of two or three months so this seems to confirm the August-September 1, 1983 date. However, a Jet magazine from August 8, 1983, has Cain referred to as “a region vice president[28].”

Herman Cain and J Jeffrey Campbell at a Washington DC party. Picture from Jet Magazine, August 8, 1983

Cain says his fast track training for the Burger King job lasted nine months[29].  We know that for three of those months he was managing a store. In the December, 1983 Computer World[30]article we read:

I learned by actually working all the positions in a Burger King restaurant: up through assistant manager levels, restaurant manager level, district manager level, franchise district manager level, area manager level. I moved along as I became more familiar. It’s training, but I actually had to hold these jobs. I was actually responsible for a restaurant for three months during this time. I was the manager responsible for opening and closing, all the day-to-day activities, hiring and firing, equipment maintenance, you name it. That’s the way you understand the guts of the business .

As an aside, let me note here that Cain likes to say how he started from the bottom up. In fact, his training at levels less than a store manager lasted at most two months[31]. In his training program, according to his own words, he simply learned all the daily customer related restaurant work (cooking, taking orders, cleaning, replacing equipment, counting money and receipts, opening and closing, etc.) in two months. He moved on and managed a single restaurant for three months. He was district manager, franchise manager and area manager for at least four months. This was hardly starting “at the bottom.” This was a training program designed to install Cain as a top executive at Burger King. Pillsbury management skipped him over hundreds of loyal Burger King employees who had worked hard for five and ten years or more and already had major experience in the restaurant business. Cain knew that he was not going to work at any of these jobs for more than a few days or weeks. He knew that he was going into a high level management position. Cain revealed this in a 1997 article, “…Cain was bored. He wanted to run a business. Pillsbury President Win Wallin suggested that Cain learn the operations at Pillsbury ‘s Burger King division because it could mean that Cain would become a regional vice president[32].” There’s a difference when you’re flipping burgers for minimum wage, and have no other job prospects, and you’re flipping burgers for a week or two, knowing that the president of a $3 billion dollar company had promised that you’d be a regional manager making $200,000 a year in 18 months. Cain proclaims he started from the bottom at Burger King, when the truth is he started from the top.

At first glance, the nine month training period fits right into Cain’s scenario if we imagine that his career epiphany or depression happened when the Minnesota Metrodome had its December 31st 1982 collapse. He walks into the president’s office the next day and his training begins. His training lasts from January 1 to September 1, 1982 which is exactly nine months.
However, Cain, in recounting the story sentimentally in an article for Parade Magazine in 1995, wrecks that time line[33]:

Cain turned to Win Wallin, the president of Pillsbury, for help. “I can’t get to your job from where I am,” Cain told him. “What do you recommend?” Wallin suggested getting on the operations training track in the company’s Burger King division, which could lead to being a regional vice president. “If you want to run a business,” Wallin said, “you have to start at the bottom and learn it from the ground up.” It would be an unconventional move. Cain would have to resign his title, give up his company car and nice new office, and forgo stock options to start over, flipping hamburgers with the broiler crew.

As with every major decision in his life, Cain turned to prayer for help. He got down on his knees: “Lord, what do you want me to do?” When his wife noticed him lost in reflection and meditation, she told him, “Don’t worry—I know you can do this.” Cain accepted her words as a sign from God that he was making the right move.

In April 1982, Cain said goodbye to Pillsbury headquarters. That same day, he got word that his father had died of complications from diabetes. He was only 57.

Cain’s father died March 29, 1982[34]. This is a helpful clue, but now the time line doesn’t fit for a couple of reasons. The first problem is reconciling it with the dome collapse. The first dome collapse was almost five months before this and Cain tells us that he made his decision to change jobs just after the dome collapse. Second, this would mean that Cain spent from April 1982 to September 1983, taking 17 months to do the program he says that he did in nine months. Cain often says the training was supposed to take 18 months, could it have actually taken 17 months and Cain is glorifying himself by saying it took nine? Of course, there is also the possibility the news sources for that September announcement may have been announcing old news. If we ignore the press articles, and assume he did take nine months, this would put his coming to Philadelphia in January, 1983, two months before the Affirmative Action agreement.

Still, it is impossible to completely reconcile the four dates.
1) Cain makes decision to pursue new career when dome collapses (Nov. 19, 1981, Dec 31, 1982, or April 14, 1983)
2) Cain leaves Pillsbury (farewell party March 27, 1982, when his father dies)
3) Cain undergoes nine months training.
4) Cain becomes Burger King Philadelphia regional manager (August or September 1983 suggested by Black press of the time).

Cain is misleading us somewhere. We can only go with the most likely scenario. Cain made his decision with the first Dome collapse on Nov. 19, 1981. Four months later after his farewell party and father’s death, he began his training in April, 1982. This would have him becoming regional manager nine months later in January, 1983. However, why then does the black press suggest a date eight or nine months later – August or September for Cain getting his job?

A July, 1987 puff piece for Cain in Nation’s Restaurant News entitled “Godfather’s Able Pharoah” (comparing Cain to an Egyptian Pharoah) perhaps helps us out of this dilemma. It tells us, “Cain resigned his vice presidency and secured a transfer to Burger King–as a unit staffer. Two months of broiling burgers and drawing shakes earned him a promotion to restaurant manager, and within nine months, he was named a regional vice president[35].”

If this is correct, Cain did two months as a unit staffer and nine months later, after a total of eleven months of training, he was named a regional vice president. If we assume training started in April, 1982, then Cain was named to a regional management position in March or April 1983.  This also explains why the August, 1983 Jet article just refers to him as a regional vice president and this Nation’s Restaurant News article says he was “named as a regional vice president.” Apparently, he was named a regional vice-president in March, but he did not actually take over the Philadelphia Area region until September, 1983. This would explain why we don’t read the announcements until that time. If this is correct, Cain was named a regional vice president at the time Burger King was announcing its Affirmative Action agreement in March, 1983, but he was still in a training program. In the last six month phase, he was still training to be a regional vice-president and actually, officially took over the position in Philadelphia in September 1983. We may suppose that the training program consisted of twelve months actual training and then six months of transitioning into the actual management position. This also means that Cain actually did his 18 month training program in 17 months. The twelve month of Cain’s training was probably cut short a month because Burger King wanted the announcement that he was going to be a regional manager to coincide with the Affirmative Action agreement.

This is the best that I can discern given the limited facts. Hopefully someone will clarify the dates of these events at some point.

As Cain describes it, quitting a secure $70,000 a year program to go through an 18 month management training program with teenagers to get a fast food management job was a gutsy move. It isn’t a gutsy move, it is an insane move. It is a move one would only do out of desperation, if one had no choice. Cain makes it seem as if he stopped by the office of the President of Pillsbury, Wim Wallin to seek some fatherly career advice. This is a highly unlikely scenario. According to Cain, Wallin just happened to suggest the Burger King training program. Cain went home and prayed and with trepidation Cain immediately decided to follow his boss’ suggestions and handed in his resignation.

It is far more probable that Wim Wallin called Cain into his office. He did not offer Cain the choice of staying in the field that he had been working in for almost 10 years, information/systems management. It is far more probable that Cain was given an ultimatum: a management job at Burger King after a short training program or be fired. The only choice that Cain had was to go on the open market and look for a job or accept Wallin’s offer. Both were bad choices that could ruin Cain’s life and that is why he prayed.

Under this scenario, we have to ask why Wallin was so anxious to have Cain move to Burger King when Burger King didn’t need any of Cain’s background talents in math and computer tech. They could have picked any liberal arts College graduate to do what Cain was about to do. The answer is that there was one thing that Cain had over any college graduate. He was a black man with five years seniority at Pillsbury. Pillsbury didn’t want to fire Cain, even if he was incompetent, because they didn’t want a discrimination lawsuit. On the other hand, J Jeffrey Campbell, president of Burger King needed a black man like Cain. He needed a black man because he was working out a deal with Jessie Jackson to get Black executives into Burger King.

On March 17, 1983, at Burger King’s headquarters, in Miami, Florida, push had come to shove. Jessie Jackson’s PUSH organization had reached an agreement with Burger King President J. Jeffrey Campbell. Jackson had called off an announced boycott of Burger King. The Miami Herald reported:

Figure 3 Jet Magazine, May 9, 1983 Burger King President Campbell signs PUSH agreement with Jessie Jackson to bring more Black Executives into Burger King.

The Rev. Jesse Jackson, head of the Chicago-based Operation PUSH, announced a “far-reaching mutual aid agreement” had been reached for greater minority participation within all areas of the Miami-based company…

That involvement will be in “franchising, employment at all levels, procurement, advertising,” said J. Jeffrey Campbell, president of Burger King USA…

Operation PUSH had been negotiating an agreement with corporate officers for six months. Jackson let the officers know that Wednesday’s session would be the last before a national boycott would be called[36].

Jackson had good reason to target Burger King for its discrimination. A year later, fast food rival MacDonald’s got hit with a $50 million dollar discrimination law suit. A Philadelphia Daily News article on the MacDonald’s law suit wrote how similar McDonald’s policies were to Burger King. It noted[37]:

Operation PUSH, the civil-rights group founded by Jesse Jackson, began looking at Burger King after its black operators voiced complaints similar to those of McDonald’s minority franchisees.

“We feel the system is designed to keep us in set neighborhoods,” said Pettis Norman, president of the Burger King Minority Franchisee Association. ”We feel we have been locked into less-than-successful operations.”

Norman, who played tight end for the Dallas Cowboys for nine years, said there are only 60 black or Hispanic Burger King operators and they run only 140 of the 3,500 restaurants in the chain.

Burger Kings run by minorities have annual sales volumes that are $200,000 to $250,000 below the national average of $800,000 to $900,000, Norman claimed.

Pillsbury had been sued for racial and sexual discrimination in 1977[38]. It was able to get the suit thrown out on technicalities in 1978. The agreement with PUSH did not stop a law suit against Pillsbury settled in 1990, costing 3.7 million, for “across-the-board race discrimination, including failure to hire and promote blacks, a lack of pay raises for those who did work there and a disparate number of firings in the group[39].” It did not stop a $500 million dollar lawsuit by Black franchise owners in 1988[40].

The PUSH agreement was still a good deal for both Campbell and Burger King and Jessie Jackson. Jackson got some money and helped black people at all social levels, Campbell avoided law suits and won great popularity. Also Campbell probably recognized that the majority of his customer base was black and it was time to stop the systematic discrimination that had been going on at Pillsbury.
While Jackson and Campbell reached an agreement on March 17, 1983[41], this agreement was not signed until April 18, 1983 . The Miami Herald reported:

A $450-million trade covenant signed Monday by the Burger King Corp ., its Minority Franchise Association and Operation PUSH will bring blacks into the mainstream of the Miami-based company’s corporate structure and provide as many as 20,000 new jobs, the organizations say.

The four-year agreement sets goals for minority employment and participation in management and introduces new initiatives, including the hiring of UniWorld, a black-run advertising agency, and more minority contractors and suppliers.

Burger King set a goal of 21 per cent black employees and promises to distribute those jobs among the upper as well as lower levels of the company. The restaurant chain will make available to black owners 15 per cent of its franchises, or 548 stores, by mid-1987. It will also spend 15 per cent of its advertising budget with a black ad agency.

For Cain, admitting that he had been a failure in his information management job, admitting that he was forced to enter a field that he knew nothing about at the age of 37 and admitting that he only got a job managing Philadelphia Burger Kings because he was a black man with seniority, needed to fulfill a quota was to admit reality. Cain preferred to ignore that reality, spin the truth and glorify himself as an exceptional individual.

We know that Campbell started negotiating to get more black executives with Jackson six months before the March, 1983 agreement or as early as September, 1982. However, Burger King management must have known of PUSH’s plans for a black boycott much earlier. This explains the real reason Pillsbury moved Cain from Pillsbury to Burger King some time in April, 1992. Cain’s depression was over the fact that he was being forced to move to a new job he did not want by Pillsbury management, it was not Cain being called by God like the old testament prophets as Cain insinuates in his numerous autobiographical works.

To summarize, the evidence suggests that Cain was not successful at his job at Pillsbury. The evidence indicates that Jessie Jackson’s PUSH organization’s threat of a black boycott of Burger King moved Pillsbury to transfer him from his job at Pillsbury to a highly visible position as the only upper level black manager in Burger King, running predominantly black Philadelphia Area Burger Kings.

Cain claims that as manager of 400 Philadelphia Burger Kings he turned the worst performing Burger King region into one of the best. In my next blog, Selling and Telling Whoppers: Herman Cain and Burger King, I’ll look at the publicly available numbers to show that this is another reality challenged bit of self-glorification on Mr. Cain’s part.

[1] December 5, 1983, Halbrecht, Herbert Z., Computer World 17, Moving Out and Up to Executive Offices.

[2] Ibid.

[3] Here are some other bright young executives at Pillsbury with short carriers: Jay Darling became executive vice president in charge of operations and support systems in 1984 at the age of 34. At 35, he was made President of Burger King. At 37, he “resigned.”  7/22/1986, N.Y. Times, Financial Desk: Burger King President Quits, pg. 11. Jerome B. Ruenheck became president and chief operating officer of the Burger King Corporation in 1980 at the age of 41. At 46, he “resigned.”  Before him, Louis P. Neeb, was 41 when he became president of Burger King in 1980, He was 43 when he resigned in 1982. 1/14/1985 N.Y. Times, Financial Desk: President Resigns at Burger King, pg. 2.

[4] Feb 16, 1987, Nation’s Restaurant News,  Burger King chief plays peacemaker; Olcott faces management challenge in new role as president

[5] Oct. 27, 1986,  Edwards, Joe, National Restaurant News, Burger King Names Olcott President.

[6] Oct. 20, 1988, Washington Post, Pillsbury Might Sell Burger King
[7] June 21, 1982, Herald Staff, Miami Herald, Craig Promoted at Burger King. Craig was promoted after 4 years at Burger King.
[8] June 13, 1988, Star Tribune, Second Pillsbury executive resigns – Led full-service restaurant group
[9] June 8, 1981, Dougherty, Philip H., N.Y. Times, Back at Burger King.
[10] June 10, 1983, Merzer, Martin,  Miami Herald, Brinker Resigns as Burger King Chief.
[11] Above, Second Pillsbury executive resigns

[12] Joan Lefkowitz, a 35-year-old director of corporate human resources at Pillsbury’s Burger King said she was making $50-60,000 in a 1984 article. Cain, as a computer specialist was probably not making much more.  January 9, 1984, Miami Herald, Askari, Emilia, Still Lonely at the Top for Women. Cain himself later said, “I was making $70,000-plus,” Cain said with a chuckle, “and next thing I knew I was working in a Burger King restaurant in Hopkins, Minn.”  Knowing that Cain tends to exaggerate everything, we should take this as the maximum he was possibly making. from July, 20, 1987, Anthony, Neal St., Star Tribune, In a Short Time, He Turned it Around.

[13] May 23, 1980, Lescaze, Lee, Washington Post, Pillsbury Officer Picked by CBS. And Sept 2, 182, Miamia Herald, Burger King Chief Gets Extra $350,000.

[14] Above, Moving Out and Up to Executive Offices.

[15] Herman Cain, This is Herman Cain: My Journey to the White House, Threshold Editions, pg. 48.
[16] Ibid, pg. 49.
[17] April 1988, Lyons, Douglas, C, Ebony Magazine, The Godfather of Pizza. pg. 82
[18] January 31, 1979, Nashua Telegraph, Pillsbury Acquires Green Giant Firm.
[19] Above, This is Herman Cain, pg. 46.
[20] The lawsuit by franchisee, Concept Development Inc. was settled in March 1986, two weeks before Cain was appointed to Godfather’s. See March 20, 1986, Wall Street Journal, Pillsbury Unit Settles Suits With Concept Development Inc.

Cain had nothing to do with the settlement. For his falsely taking credit for it, see, for example, September 6, 1987, Omaha World Herald, Jordon, Steve, Godfather’s Chief to Double Number of Pizza Restaurants.

[21] Above, Moving Out and Up.

[22] Ibid.,

[23] Ibid.,  pp 47-48.
[24] Cain, Herman, They Think You’re Stupid: Why Democrats Lost Your Vote and What Republicans Must Do to Keep it, Stroud & Hall Pub, 2005, pg. 191.
[25] Dec. 31, 1982, Miami Herald,  Roof of Minneapolis Metrodome Deflates in Snow Clearing Accident.
[27] September 10, 1983, Afro American, People in the News.
[28] August 8, 1983, Jet, Burger King Hosts Minority Students in Nation’s Capital
[29] Above, This is Herman Cain, pg. 58.
[30] Above, Moving Out and Up.
[31] Feb, 1988, Black Enterprise, This Pizza Man Delivers.
[32] June 3, 1997, Russo, Ed, Lincoln Journal Star, Cain: Focus on economics, not race, when hiring
[35] Sept. 14, 1987, Nation’s Restaurant News, Godfather’s able pharaoh: Herman Cain steps from obscurity to take the helm of suffering pizza chain and overcomes all odds to turn around the company and its profits
[36] March 17, 1983, Miami Herald, Burger King Joins Push for Minorities.
[37] March 8, 1984, Geller, Andrew, Philadelphia Daily News, $50M Suit Challenges Big Mac Black Franchisee: I was kept from White Areas.
[39] October 13, 1990, Walsh, Sharon, Washington Post, Pillsbury to Pay $ 3.6 Million To Settle Discrimination Suit
[40] October 31 2011,  Connelly, Mike, N.Y. Times, Minority Franchises Sue Burger King, Charging Pillsbury Unit Discrimination.
[41] April 19, 1983, Miami Herald, Burger King Corp Sets Goals for Increased Minority Hiring.

Herman Cain’s Appointment to The Federal Reserve: Unethical or Criminal?

In September, 1988, Cain became mortgaged to Citibank for everything he owned. In December, 1988, The Federal Reserve Bank in Kansas City appointed Cain to be a director and to set monetary policy for banks, including the bank that his entire net worth was mortgaged to. How unethical is that? Is it legal?

According to the Federal Reserve, “The Federal Reserve implements monetary policy through its control over the federal funds rate—the rate at which depository institutions trade balances at the Federal Reserve .”

Herman Cain was appointed to the Kansas City Board of the Federal Reserve on December 29, 1988. This is the announcement of his appointment from the Omaha World Herald :

Herman Cain , president and chief executive officer of Godfather’s Pizza Inc. of Omaha, has been named a director of the Omaha branch of the Federal Reserve Bank of Kansas City.

He succeeds Janice D. Stoney, president of the consumer division of U S West Communications in Omaha.

A bank spokesman said Mrs. Stoney, who is completing her second term on the board, resigned to give more attention to her obligations with U S West.

The five directors of the Omaha branch are appointed for two – year terms. They usually are reappointed twice.

Cain did not have a background in economics or banking. He had a BA in mathematics and an MA in Computer Science. His only management experience was less than 3 years as manager of some 400 Burger Kings and less than 3 years as manager of around 600 Godfather’s Restaurants. This hardly qualified him to oversee policies for the banking industry.

Three Months before his appointment on September 20, 1988, Cain had been given a loan of approximately $30,000,000 dollars by Citibank to buy Godfather’s Pizzas. He was in debt to Citibank for his entire net worth.

Cain described how much he owed CitiBank in an interview in 1992:

When the buyout group was seeking financing, he said, he talked with bankers who wanted to know how much money the managers could raise toward the purchase.

“When we bought Godfather’s Pizza, we believed in the company, and we took a real big chance when we signed that mile – high stack of documents,” he said, “signing away our lives, all of our cars, my house. They even wanted the golf clubs listed as assets.

“When they asked for the golf clubs, I knew they were serious.”

Cain said he asked his banker why the loan went through even though the managers couldn’t raise the usual 20 percent to 25 percent of the purchase price.

“He said, ‘As long as we’ve got all of your money, we’re happy,’ ” Cain said. “Then I understood.”

Rule No. 2, the banker told Cain: “Before we lose a dollar, you will lose everything .”

When the Federal Reserve Bank of Kansas City appointed Herman Cain to its Board of Directors it must have known that Cain was in debt for every penny he owned, including his golf clubs, to Citibank. How could someone in debt to a bank for everything he owned be objective in setting monetary policy for banks, including the bank that had just given him a $30,000,000 loan?

Cain admits that the loan was unusual in that he did not put up the usual 20-25% needed for the loan. Is it possible that Citibank got something in exchange for the loan more important than this down payment? Is it possible that Citibank got someone on the Federal Board who was totally unqualified, but seriously in debt to them, and would advocate whatever policies they wished?

It is clear to me that the appointment of Cain and his acceptance was totally unethical.  You can not give objective monetary policy advice in the best interests of all the people, if your direct financial interests will be drastically affected by the policies you set. My question for lawyers and others is “Was it illegal?” The appointment of an unqualified person (no economic or banking background) to a board to oversee banking policy immediately after that person has received a massive loan under unusual circumstances seems a criminal activity to me.

1. The Federal Reserve System Purposes and Functions, Chapter 3, “The Implementation of Monetary Policy,” pg. 27. http://www.federalreserve.gov/pf/pdf/pf_complete.pdf (viewed Oct. 23, 2011)
2/ Omaha World-Herald (NE) – Thursday, December 29, 1988, “Cain Named to Fed Board,” http://iw.newsbank.com/iw-search/we/InfoWeb?p_product=AWNB&p_theme=aggregated5&p_action=doc&p_docid=12E0AEA31C6D9A68&p_docnum=9&p_queryname=7 (viewed Oct 23, 2011).
3. Omaha World-Herald (NE) – Friday, October 2, 1992. “Focus, Not Expansion, Is Key, Pizza Chain Boss Says” Author: Steve Jordon, World – Herald Business Editor

Fact Checking the Fact Checkers: Herman Cain and Godfather’s Pizza – Part 3

As of Oct 18, 2011, PolitiFact[1] had checked out 19 statements by Herman Cain. It judged him telling the truth zero times, “mostly true” 3 times, “half truth” 4 times, “mostly false” 3 times,   “false” 7 times,  and “pants on fire” 2 times.” That’s 16 out of 19 half truths or worse, which means 84% of Cain’s statements have been judged half truths or worse.  Politifacts is obviously willing to call Cain out when he lies.

That is why it is so disappointing in this case, where PolitiFact should have exposed the fact that Cain wasn’t telling the truth when he talked about his success as manager of Godfather’s. If they had dug a little deeper and understood the situation more clearly, that is what I am sure they would have done. It is not a difficult situation to understand. Cain was appointed manager by Pillsbury to their new Godfather’s Pizzas restaurants  in order to increase profits which had fallen from about $16 million in 1984 to virtually zero in 1985. Based on the estimates of the previous owners, they hoped the chain would do $16 million in 1986, rising to $30 million in 1990.  The main question that PolitiFact should have looked at is did Cain meet these marks. If he did, then he mostly told the truth about turning Godfather’s around, if he didn’t, it was not mostly true.

Instead PolitiFact did a puff piece on Cain[2], talking about all sorts of irrelevant things about his manager style. It says, “He emphasized communication, giving speeches at important moments to employees and franchisees. After his first 60 days at Godfather’s, he gave a speech he called “get on the wagon,” which he now uses in political speeches.”

Some managers give speeches, some don’t. Some managers are good speakers, some aren’t. Many managers are excellent managers without giving any speeches. His speaking abilities is irrelevant to the question of whether he turned things around at Godfather’s.

The Polifact article tells us “Cain changed that by uniting the franchisees, overhauling the chain’s advertising, and getting his team focused on its core mission: pizza.

Did Cain unite the franchises? Here is what the previous president of the company said about the franchise situation in a Nation’s Restaurant News article from Dec. 2, 1985, months before Cain took over:

While Godfather’s remains locked in litigation with its largest franchisee, 114-unit Concept Development Inc., most others have responded favorably to a new short-term marketing plan and the promise of vastly increased support services. Nonpayment of royalties has practically ceased, Pettis said, although the company expects to lose some franchisees “who are able to pay but just don’t want to.

“There’s now a sense of cautious optimism within the system,” added Pettis, who reports to Burger King chairman and chief executive Jeff Campbell under Pillsbury’s current restaurant scheme. “It took a lot of work, but most [franchisees] are convinced that things will get better[3].”

The lawsuit with the Concept Development Inc. franchisee was settled before Cain came on board. Thus it was really his predecessor , Pettis, who united the franchisees behind the company.

The PolitiFact article backs up its claim that he overhauled the advertising, but not by giving the facts. It starts giving testimonials for Cain from apparently a list of old friends. It says, “Charles Henderson, who runs coffee kiosks in Pennsylvania, was Cain’s director of marketing back then. He says Cain is “probably the most inspirational person I’ve ever met in my life.” That a man who Cain hired to do marketing speaks highly of his speaking ability is nice, but quite irrelevant to the question at hand. Cain’s speeches might have turned hundreds of employees to Jesus or the Devil, but this has nothing to do with making profits for the stock holders of Pillsbury. That was what Cain was supposed to do.

Some managers start new ad campaigns, some don’t. It is irrelevant if the new ad campaigns don’t increase sales or profits. The article never tells us if the new ads did that. The article tells us how he hired J. Walter Thompson, a new ad agency, but it does not tell us that they split twenty months later “over compensation[4]” In fact, Cain had numerous ad campaigns and four different ad agencies over the first two and a half years at Godfather’s. None of them appears to have helped. The constant changing of ads and companies indicate that Cain himself was dissatisfied with the ad results from Ads that he himself had selected.

The article gives a testimonial from Jeffrey Campbell, the executive at Pillsbury who hired Cain to run Godfather’s. Campbell is certainly a nice man and his praises of Cain may be sincere or it may be due to the fact that Cain’s failure may be seen as his failure. He gambled big time on Cain by putting him in charge of Godfather’s and lost. The article does not mention that Campbell was fired by Pillsbury twenty six months after hiring Cain. Campbell was fired when the restaurants division he was in charge of had suddenly falling profits.  This is from a June 1988, New York Times article[5]:

 J. Jeffrey Campbell resigned yesterday as chairman of the Pillsbury Company’s troubled restaurant group, and Pillsbury said it would appoint a new corporate chief executive by its annual meeting in September.

William H. Spoor temporarily assumed the top corporate post in February.

A Pillsbury spokesman said Mr. Campbell’s departure after 13 months on the job spared Mr. Spoor’s successor from the decision of whether to keep the manager of the restaurant group.

Pillsbury has acknowledged disappointing performance in several food businesses over the last three years, and particularly at Burger King, which has lost market share to its archrival, McDonald’s. Amid these problems, John M. Stafford resigned as Pillsbury’s chairman and chief executive in February. Mr. Spoor, who held the job from 1973 to 1985, returned and and began searching for a replacement.

When Mr. Spoor returned, security analysts speculated that Pillsbury might be acquired or that Burger King might be sold. Some analysts believed Mr. Campbell wanted Mr. Stafford’s job; others believed Mr. Campbell was close to being dismissed because of the restaurant group’s poor results.

Mr. Campbell had supervised the operations of Pillbury’s Burger King, Steak & Ale and Bennigan’s restaurant chains. He was promoted to his recent job from the post of chairman of Burger King.  

Testimonials by the man who hired Cain and the man Cain hired to do ads are certainly not objective facts. If Cain failed as a manager, these men can be seen as partially responsible for that failure. They have subjective reasons for praising Cain.

The article then does something right. It looks at the numbers:

Technomic, a research and consulting firm focused on the restaurant industry, has research data on Godfather’s going back to the 1970s. At PolitiFact’s request, vice president Darren Tristano examined the revenues and franchise numbers for Godfather’s during the time Cain headed it from 1986 to 1995.

It’s not possible to determine profitability from those numbers, but they do show Godfather’s place in the market, particularly in comparison with its competitors.

“It’s really hard from that period to find a strong positive or a strong negative. It’s more like ‘steady the course,’ ” Tristano said.

This shows a serious problem. If an analyst like Tristano was not able to determine profitability from his facts and figures, how were stockholders and others at Pillsbury able to make vital decisions at that time?

Tristano is being truthful, but euphemistic when he says that it is hard to find a strong positive or a strong negative and “It’s more like steady the course.” Godfather’s was basically breaking even when Cain took over in 1986 and it apparently was breaking even when he left in 1995.  In this sense, Tristano was telling the truth when he says that he found a neither strong positive or a strong negative. “It’s more like steady the course.”

However the Politifact writer, taking Cain’s general line as true, misinterprets this and tries to find an excuse for it.

Still, “steady the course” isn’t bad for a company that was troubled to start out with and in an industry that’s punishingly competitive, analysts said.

Godfather’s position was particularly perilous. It wasn’t as big as chains like Pizza Hut and Domino’s, and it also had to compete with locally owned mom-and-pops in just about every market.

Cain did not say “he steadied the course” at Godfather’s Pizza. He said that he turned it around. The demand for restaurant pizza was booming in the late 1980’s and that is why competition increased.

As far as competition is concerned, Godfather’s Pizza had an advantage over Pizza Hut and Domino’s. It had the backing of Pillsbury, a corporation with over 3 billion dollars in assets and the second largest fast food restaurant owner in America when Cain took over.

Cain himself had this to say about the competition, 18 months after taking over Godfather’s, on November 1, 1987, in the Wall Street Journal:

“It is a tough battle that never lets up in this market segment,’ admits Cain. But the greatest strength in the pizza segment right now is that it is still growing strongly. According to Henderson, the segment will grow 10 percent through 1991 with market share reaching 15 percent. “Because of the growth in the segment,’ says Cain, “I believe there is room for all these players, at least for now.’ He adds that the growth also means that Pillsbury would not sell Godfather’s. “The segment is growing quickly, and it is hard to imagine that a growth-oriented company like Pillsbury wouldn’t want to be in it. If they had sold Godfather’s 18 months ago, they would eventually have wanted to buy another pizza chain.’

This was six months before Pillsbury announced it was selling the company. Cain predicted Pillsbury would not sell the company and he claimed the “the segment is growing quickly.” Instead of crying about how tough the pizza business was, as the PolitiFact article claims, Cain was primarily emphasizing how quickly the pizza business was growing.

The PolitiFact article is particularly clueless when it says, “Two years after Cain was named chief executive officer, Pillsbury decided to get out of the pizza business and sell Godfather’s. Cain and his management team decided to buy the chain in a leveraged buyout for an undisclosed sum.”

First, Pillsbury did not decide to get out of the pizza business. It still continued to have its frozen pizza business. Second, the only reason that Pillsbury decided to sell Godfather’s Pizzas was because Cain had failed to deliver on his promise to turn the company around. After waiting two years, they stopped believing Cain’s Mosaic promises of a bright future just around the corner. They put Godfather’s Pizzas up for sale because he was continuing to lose money.

This is from the Wall Street Journal of March 18th 1988.

Pillsbury Co. reported a $107.8 million loss for its third quarter ended Feb. 28, and disclosed it is negotiating to sell its 580 unit Godfather’s Pizza chain.

The earnings report came after a second day of frenzied trading in Pillsbury stock, fueled by speculators and various unconfirmed takeover rumors.

Pillsbury’s loss compares with earnings of $48.5 million, or 56 cents a share, in the year-earlier quarter. Revenue fell 2% in the latest period to $1.50 billion from $1.53 billion. The revenue decline came from Pillsbury’s restaurant business.

The troubled food and restaurant concern had write-offs for restructuring in the quarter of $140.9 million, $50 million more than Minneapolis-based Pillsbury had said it expected to write off earlier this year.

Pillsbury’s decision to sell Godfather’s is the latest move in a series of efforts to improve its restaurant group’s performance. In the latest quarter restaurants were responsible for pretax losses of $113.1 million. Pillsbury’s Steak & Ale and Bennigan’s chains also are considered by some analysts as candidates for the auction block.

While the company didn’t indicate what price it hoped to receive for Godfather’s, Pillsbury paid nearly $400 million for the struggling chain in 1985.

It was only when they were unable to find another buyer for the company that they finally sold it to Cain and his management group.  The purchase prize was not disclosed, but some original estimates of $30 million appear to have been accurate. It is hard to imagine that Cain just decided to buy the company. It is pretty clear that Cain was desperate. He was 42 years old and essentially being fired by Pillsbury. His record would show a major management failure in running Godfather’s. It is hard to see where he could have gotten a job with his eclectic background. He hadn’t worked in computer science for seven years, basically a lifetime in computers. As a manager, he had some success at Burger King for two and a half years, but a major failure at Godfather’s. Fast Food restaurants were in a slump generally and management positions were shrinking. Buying the company in a buy-out was the only option that he really had to keep himself off the unemployment line.

In the two years that Cain managed Godfather’s Pizza for Pillsbury, 1986-1988, sales fell from $275 million to $242.5 million. The number of stores fell from 640 to 563. There is only one quarter during this time that there is any report of profits. On Oct 5, 1987, there is a report in Nation’s Restaurant’s News that Godfather’s “’moved solidly into the black,’ the company said.” There were no report after that of Godfather’s making a profit and Pillsbury put it up for sale five months later.

PolitiFact failed to emphasize these important facts which would indicate how Cain really did in his promise to turn the company around for Pillsbury. Two years before Cain took over, Godfather’s had fallen from third to fourth place in sales for U.S. Pizza Restaurants. Cain promised to bring it back to number three. When Pillsbury sold it to Cain and his management team, it had fallen from fourth to sixth place[iii]. Certainly no turnaround happened in the first two years that Cain took over. By the time he was forced to resign in 1995, Godfather’s had fallen further to eight place[6].

By selling the company to Cain for a fraction of what they had paid for it, Pillsbury was getting rid of both Godfather’s and Cain.

An article published in Bloomberg Businessweek by Tim Jones got the story right. It came out on June 6, 2011[7], the same week that PolitiFact published its article. It noted that he closed 20 percent of the company’s 640 restaurants and fired 300 to 400 people. Jones perceptively wrote,  “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.” He notes that Cain “has not released details of the company’s performance under his leadership” and ends by correctly stating:

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.

The facts point to the fact that PolitiFact should have reported that Cain’s statement that Godfather’s was going bankrupt and he turned it around was mostly a lie, if not a complete lie.

Please ask reporters to demand that Cain release his profit and loss statements from the years he was managing Godfather’s Pizzas.

[2](viewed Oct. 18, 2011) http://www.politifact.com/truth-o-meter/statements/2011/jun/10/herman-cain/herman-cain-godfathers-pizza-turn-around/

[3] Dec. 2, 1985, Zuckerman, Dave, Nation’s Restaurant News, Godfather’s Licensee’s, Pillsbury Mend Fences.

[4}] August 8, 1988, Nation’s Restaurant News.

[5] 12/22/1987, Dougherty, Philip H., N.Y. Times, Advertising, Thompson Splits with Godfather’s Pizza.

[6] June 23, 1997, Nation’s Restaurant News.

[7] Jones, Tim Bloomberg Businessweek; Chewing Over Herman Cain’s Business Pass, 6/20/2011, Issue 4234, p36-38


Checking the Fact Checkers on Herman Cain and Godfather’s Pizzas, Part 2

Cain and a Godfather's Pizza

Part 2

In Part 1, we saw that Godfather’s Pizza had been one of the most successful Pizza companies in America for over ten years. For a couple of years before Pillsbury appointed Cain manager in April, 1986, it had not made much profit. In 1984, Diversifieds Foods Inc, Godfather’s  new owners, trying to match the success of number one Pizza franchise Pizza Hut, introduced a “pan pizza.” The results were a failure and it was quickly replaced. A franchise owner Concepts Development with about 125 of Godfather’s nearly 900 units sued the company in February of 1985. Three months later, on May 19th, just three days before Pillsbury announced an agreement to buy the company, the N.Y. Times reported that analysts were mixed about the immediate future of the company.

 Analysts are divided over the outlook for Godfather’s, and, by extension, for Diversifoods. “They’re taking positive steps at Godfather’s, paring costs at the unit and corporate level,” says Margaret M.V. Preston, who follows the restaurant industry for Alex. Brown & Sons in Baltimore. “Once they start making money again, the earnings leverage might be great, but I’m not banking on them until late in the fiscal year.”

But Richard E. Pyle of Piper, Jaffray & Hopwood of Minneapolis, is not so sure. “It will be a very sick franchise for some time to come,” he says of Godfather’s[1].

Thus, in the middle of 1985, days before one of the largest Food companies in America, Pillsbury, bought the company, ten months before Cain took over, analysts were mixed about if Godfather’s would return to profitability in 1985. At this point, Godfather’s had been profitable every year since its inception in 1973 through 1984. There was simply no talk of bankruptcy.

Pillsbury President and CEO, John M. Stafford gave this optimistic assessment on September 11, 1985, in the Wall Street Journal less than six months before Pillsbury placed Cain in charge:

“With management help from our restaurant group and technical support from our frozen pizza business, we expect to restore Godfather’s profitability in the near term,” he said.

The CEO Stafford expected to restore Godfather’s profitability in the near term. Three months later, three months before Cain took over, Stafford was still upbeat.  In a newspaper article, published December 23, 1985 in the Chicago Tribune, we read:

In Diversifoods, Pillsbury got a well-named company, comprising nearly 400 Burger Kings, Godfather`s Pizza chain, Chart House dinnerhouses and Luther`s Bar-B-Q.

Pillsbury has jettisoned Chart House and has similar plans for Luther`s, but likes pizza and decided after 45 days of looking at the chain to keep Godfather`s.

“The more we saw of Godfather`s, the more we saw there might be real opportunities to bring our fast-food expertise and our pizza expertise and to put some strong management behind the system, which was asking us to help. The pizza category is a growth category, and Godfather`s is perceived to be the best-tasting product,“ Stafford said.

According to Stafford, Godfather`s franchisees welcomed the new boss with open arms.

“The management and the owners of the company store base said: `Boy you guys look like natural parents for us.’ You put pizza technology and your people from your R&D operations in our place and already we are starting to see huge opportunities develop between Pillsbury and Godfather’s,” he said[2].

The statement by Herman Cain that Godfather’s Pizza had been on the edge of bankruptcy when he took over was mostly a lie. PolitiFact checked and instead of exposing the lie, declared that the company was widely considered troubled when Cain took over. It is difficult not to see this as a cover-up of Cain’s falsehood. Instead of giving the facts of the situation, Politifact simply gives Cain’s version of the situation when he took over:

Cain was an executive with The Pillsbury Co. when the company bought Godfather’s in 1985. The purchase was almost incidental, according to press reports from the time. Godfather’s was part of Diversifoods Inc., a conglomerate that included more than 300 Burger King franchises. Pillsbury wanted the Burger Kings, and the chain of more than 800 Godfather’s pizza restaurants came with it.

“The value of Diversifoods was its ownership of the Burger Kings, and the deal made sense without Godfather’s,” John McMillin, an industry analyst, told the Chicago Tribune shortly after the deal. “Pillsbury got Godfather’s for nothing, and some said they got what they paid for.”

The chain’s problems included franchisee lawsuits, an overly long menu and a dejected workforce. Even its TV ads seemed hapless, showing a car full of executives driving around, unable to find a Godfather’s. (“Find one. It’s worth it,” the ad lamely concluded.) As Cain said later, the chain had “had one foot in the grave and the other on a banana peel.”

Press reports at the time Pillsbury bought Diversified Foods do say that Pillsbury had no interest in Godfather’s Pizzas. However, when you are bargaining to buy a company, it is a good strategy not to show interests in the assets that you really want. Its like going to a yard sale and seeing some antiques that you know are worth thousands of dollars in an old bag with a lot of junk. You say that you’re really interested in the junk, but since the antiques are already there, you might as well take them too for an extra buck or two. Obviously, Pillsbury would have just negotiated for the Burger Kings, if that was all they wanted.  Horn and Hardart actually outbid Pillsbury for Diversified Foods, offering over $400 million to Pillsbury’s $392 for the 375 Burger Kings and supposedly worthless 875 Godfather’s Pizzas. Horn and Hardart sued Pillsbury claiming that executives at Pillsbury had bribed officials at Diversified Foods to win the company.

Economically, the deal made no sense unless Pillsbury was expecting profits of $20 million a year or more from Godfather’s in the near future. Note this about Pillsbury at this time. It is from FundingUniverse company profile and History:

Pillsbury’s business boomed during the 1970s, as Spoor solidified Pillsbury’s strategy and made several smart purchases. Green Giant and other frozen-food companies gave Pillsbury a much larger share of the food industry and more consistent earnings. Profits in 1976 were divided almost evenly between three groups: consumer foods, agricultural products, and restaurants. By 1984, the agriproducts group had shrunk to only 4 percent and restaurants provided 53 percent.

By 1984, Pillsbury was making more than half its profits, 53%, from its restaurant businesses. The profile continues:

Pillsbury owed much of the credit for its extraordinary growth to its restaurants. By expanding Burger King’s operations and hiring Donald Smith from McDonald’s, it became the second largest fast-food chain operator. The purchase of Diversifoods–at $390 million Pillsbury’s biggest acquisition–included nearly 400 additional Burger King outlets as well as Godfather’s Pizza, Chart House, and Luther’s BarBQ. Pillsbury decided to compete with McDonald’s not in size but in per unit sales. As Burger King continued to grow, franchising became more common and only 20 percent of the restaurants remained company owned.

John M. Stafford inherited a healthy company when he was appointed president in 1984. Each year between 1972 and 1986, the company set records for both sales and earnings. Pillsbury had a reputation for quiet, conservative growth, despite nearly doubling its earnings between 1980 and 1985, from $100 million to $190 million.

With total earnings being about $190 million and that being 53% from restaurants, we can estimate that they were making about $100 million a year in profits from their restaurants. How much could Pillsbury expect to make more in profits if they purchased 375 more Burger Kings to add to the nearly 4,000 they already owned. Cain tells us the answer in an article from December 5, 1983’s Computerworld.

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.

Burger King was not Pillsbury’s only restaurant chain, so we may assume that Pillsbury was making about $80 million from its Burger Kings of its $100 million restaurant profits. Making 14% of $80 million, we can assume that Cain’s 400 Burger Kings were making about $11.4 million in profit. We can say that Pillsbury could have expected at best about $10-15 million in profits a year from the additional 375 Burger Kings bought from Diversified. Making $15 million a year and paying $390 million for 375 Burger Kings means that Pillsbury could have expected to make back their $390 million investment in 26 years. It would have been a totally absurd deal for Pillsbury without the Godfather’s Pizza restaurants. If Pillsbury had expected to make roughly $25 million from Godfathers (as forecasts from Diversified indicated), then they could be making $15 million (from 375 Burger Kings) and 25 million (from Godfathers) or $40 million per year. This, along with the 100 or so other restaurants that Diversified was selling meant a recovery of their full purchase price of $390 million in about 8 years. Only with expected profits of $20+ million or so per year from Godfather’s does the deal really make any sense.

We should also note that Pillsbury management had been looking at buying a large Pizza chain for a year and a half before it bought Godfather’s. According to an April 23, 1984 article in Nations’ Restaurant News (“Power Shift at BK heralds major diversification drive – Burger King” by Joe Edwards):

Campbell disclosed that Burger King plans to acquire or develop another fast-food, nonbeef chain. Haagen-Dazs ice cream stores, which Burger King’s parent Pillsbury acquired last year, already report to Campbell.

Two Burger King officials indicated Campbell is most interested at this point in the fastfood pizza segment but has not made any decision…

Campbell said he is interested in starting a new “convenience restaurant” chain, one tht does not specialize in hamburgers. A Burger King Spokesman defined “convenience restaurants” as dining concepts that include, but are not limited to, fast food.

Burger King will either develop a new concept or acquire “a small, successful chain and develop that,” spokesman John Weir said. “It might be fish, it might be chicken, or it might be pizza.”

Campbell “feels the pizza area is somewhat intriguing,” Weir added.

Buying a Pizza chain made sense for Pillsbury, now making half its profits from its restaurants. Pizza was possibly the most rapidly expanding food product in the mid-80’s. Just four months after purchasing “Godfather’s Pizzas,” in December, 1985, Pillsbury, the number one seller of frozen pizzas in the world, bought out the number two seller Jeno’s Pizza. Pillsbury paid an estimated $120 million dollars for Jeno’s which was doing sales of $125 million a year in 1984. It is a little difficult to believe that Pillsbury would purchase a frozen Pizza company doing $125 million a year in sales, but Pillsbury, the second largest fast food restaurant owner in the United States, was uninterested in purchasing the fourth largest Pizza Restaurant chain in the country, which was doing $325 million a year in sales.  According to Pillsbury officials, they, somehow, almost by mistake, ended up buying Godfather’s Pizza. Buying Godfather’s and Diversified’s other restaurants was the largest single purchase Pillsbury had ever made. The line that Godfather’s was incidental to the deal smacks of corporate managers wanting to cover themselves if anything went wrong with their decisions. Sure $20-25 million a year in profits in the near future might have been forecast by Diversified’s owners, but what if profits were near zero as they had been in the past year. The safest course was to say that they were really interested in just the Burger Kings. That way they could say that they still made a good deal if they were forced to sell Godfather’s at its approximately $150 million value that they had paid for it.

In any case, instead of giving us a real financial analysis of the situation, the PolitiFact article simply gives us a smart aleck quip from the Prudential analyst McMillion about Godfather’s Pizzas being valueless. It comes from a Chicago Tribune article written more than two years after Pillsbury bought Godfather’s, [3]. This Chicago Tribune article is simply one of a stream of Cain publicity pieces that praises and glorifies Cain for his great work at Godfather’s without any hard facts, evidence or critical analysis. McMillion was simply echoing the company management line about not paying anything for Godfather’s and Cain’s line that Godfather’s was on the edge of bankruptcy.

The PolitiFact article adopts Cain’s propaganda in talking about what he did with the advertising, saying “He declared the company’s advertising account up for review, pitting ad agencies against each other in a bidding war.”

The “hapless” ad that PolitiFact referred to with people looking for a Godfather’s was produced by Dailey & Associates, the people who created the Wendy’s “Where the Beef” ad, one of the most famous and successful restaurant ads of all time. Upon, taking over Godfather’s, Cain essentially fired them and replaced them with an ad company[4],J. Walter Thompson, that he had worked with at Burger King. The Daily agency was “stunned” according to Ad Week (April 28, 1986, Matthew Lewis).   This was an $8 million dollar ad campaign which was essentially a no-bid contract. Cain selected four companies and gave them a week and a half to come up with an advertising campaign. He ended up selecting his old company as the winner. This would be considered an ethical violation at many companies and would be a criminal offense for a manager of a government agency. There was no bidding involved, Cain simply picked the ad he liked, which just happened to be from the only company that he had worked with before. Its like picking four women for a beauty contest including your girlfriend and then selecting your girlfriend as the winner.

We won’t go more deeply into the ad situation since PolitiFact did not charge itself with investigating ethical misconduct by Cain or reviewing the quality of advertisements, but only on Cain’s claims to turn the company around from alleged bankruptcy. If the ads Cain had been more successful than the ads he replaced, there would have been some reason perhaps to credit Cain, but there is no evidence that they were. Cain went through four different Ad agencies in his first two years at Godfather’s. None of them produced successful ads.

All that PolitiFacts needed to do was to look at the optimistic company outlook that Cain himself gave when he took over Godfather’s to see that it was not a company on the verge of bankruptcy. Rather, according to Cain, it was a company that had simply slipped from being the third largest to the fourth largest pizza company over two years and now was in an excellent position to start growing again.

This is what Cain reported about the conditions he found at Godfather’s one week after being named the new CEO on April 9, 1986[5]:

 “Godfather’s is not dead,” Cain said. “We’re alive and well, and we’re going to come back in a very strong way.” Once No. 3 in the pizza restaurant business, Godfather’s has slipped to No. 4, behind Pizza Hut (4,000 restaurants), Domino’s (2,500) and Little Caesar’s (1,000).

After a week as president of Godfather’s Pizza, Cain said he already knows that the company does not need a “major overhaul of the talent here.” He said the current headquarters management is excellent and deeply committed to the success of the chain, a part of Pillsbury Co. since last summer.  

Compare this bright and optimist tone to Cain’s later pronouncements in September 1987, a year and a half later, that Godfather’s Pizzas had “one foot in the grave and the other on a banana peel” when he arrived[6].  A week after arriving, Cain gave full credit to his predecessor, Henry V. Pettis for giving him a company in good shape with a promising future[7]:

 Despite the setbacks, Cain said, the past year has been a time when Godfather’s has taken steps, such as settling the franchise lawsuit, that will pave the way for improvement in the future.

He said his goals are to increase sales 10 percent a year for the next three years and to make a profit in fiscal 1987.

Once profits return, the number of restaurants will grow again as current and future franchise holders see that the chain can make money again.

Cain gives much of the credit for the past year’s progress to Henry V. “Pete” Pettis, who headed Godfather’s from January 1984 [sic] until this month.

He said Pettis moved the headquarters back to Omaha and held the firm together until Pillsbury acquired its parent company, Diversifoods Inc. He led a campaign that convinced Pillsbury to keep Godfather’s rather than to sell it.

Pettis made strides toward mending relationships with franchise owners, Cain said. He said Pettis’ decision to step down and to go into business for himself was a mutual conclusion reached by Pettis and by Jeff Campbell, chief executive for Pillsbury’s Burger King, Godfather’s and Quic Wok fast – food divisions.

Pillsbury Ownership Godfather’s headquarters staff signed a poster – size card for Pettis, now displayed at the company receptionist’s desk, that reads, in part: “We are excited about our future with Pillsbury, and want you to know that we are behind you 100 percent in making Godfather’s Pizza what we all know it can be the No. 1 Pizza Chain in the Country.” Pettis is acting as executive vice president and will be an adviser to Cain, remaining at least on call for several months, Cain said.

Note Cain’s goal to increase sales by 10% over the next three years and make a profit in 1987. Sales fell over the nest three years from $275 million in 1986 to $260 million in 1987 to 242.5 million in 1988. We may presume that the company was not profitable in 1987 and that is the main reason Pillsbury put the company up for sale in 1988. They had given Cain his shot and he had failed to turn the company around or to bring about the profits they had expected. They obviously did not think that Cain was going to turn the company around anytime in the near future.

In Part 3, which I plan to have up next week, we will see how Cain repeatedly made highly suspect claims about how the company was doing. Along with these unverifiable and misleading claims, he kept promising bigger and better things for Godfather’s Pizzas. His promises never materialized. For part 3, click here.

[1] May 19, 1985, Leib, Jeffrey, The Rise and Fall of Godfather’s Pizza, N.Y. Times

[2] December 23, 1985, Gorman, John, Chicago Tribune, Pillsbury—Fat, Sassy and Very Profitable

[3] September 28, 1987, Gorman, John, Godfather’s Gets Well on Some Fatherly Advice, Chicago Tribune.

[4] May 7, 1986, Jordon, Steve, and Batson, Bill, Godfather’s Selects Chicago Advertising Firm, Omaha World-Herald (NE)

[5] April 9, 1986, Jordon, Steve,  Janda, Richard, “New ‘Godfather’ Plans Boost in Pizza Market,” Omaha World-Herald (NE).

[6] Above, note #2.

[7] Above, note #4.

Checking the Fact Checkers on Herman Cain and Godfather’s Pizzas

An article printed by PolitiFact.com called Did Herman Cain turn around Godfather’s Pizza? did not check the facts. In fact, it found no facts and therefore printed opinions instead. 

Pizza is Cain’s biggest selling point. He says his track record running Godfather’s Pizza, a chain that once billed itself as “the cure for the pizza emergency,” shows he has the ability to run the country. The 620-store chain was on the brink of bankruptcy when he arrived in 1986, he says, and he “turned it around with common-sense business principles.”

 A PolitiFact examination of Godfather’s, based on interviews with industry analysts and company officials, shows Cain is largely correct. The chain wasn’t literally preparing paperwork for bankruptcy, but it was widely considered troubled. Cain changed that by uniting the franchisees, overhauling the chain’s advertising, and getting his team focused on its core mission: pizza.

Ms. Holan immediately catches Mr. Cain in a lie. “The chain wasn’t literally preparing paperwork for bankruptcy, but it was widely considered troubled.” There is a big difference between a company widely considered troubled and a company near bankruptcy. Almost every large company in the United States at one point or another has been widely considered troubled. It is not unusual for a company that does not meet financial expectations, to be widely considered troubled. Being widely considered troubled does not mean a company is going bankrupt or anywhere near going bankrupt. Here are the facts about Godfather’s Pizza.

The company had been among the fastest growing pizza chains in America and a great success from its start in 1973 until 1984, two years before Pillsbury appointed Cain as a manager. According to the N.Y. Times (May 19, 1985).

 IN 1973, William M. Theisen’s Omaha beer parlor, Wild Willy’s, was doing a booming business with the pizza place next door: Through a passageway between the two establishments, bar patrons were able to order pizza to go with their beer – and even Mr. Theisen became hooked on the thick, rich pies. Soon, he and his neighbor joined forces to form Godfather’s Pizza – and when the 27-year-old Mr. Theisen bought out his partner shortly afterward, he was full of big plans for his favorite pizza.

Within 10 years, he turned Godfather’s into the country’s third-largest pizza operation in sales, behind pizza Hut and Domino’s. It became a chain of nearly 900 company-owned and franchised restaurants with more than $300 million in annual revenues, including $121 million from the company-owned outlets alone. Trade journals ranked it No. 1 in sales growth for fast-food chains in 1977, 1978 and 1979. It had one of the highest returns on investment in the fast-food business between 1979 and 1982. In those years, 641 restaurants were added.

On September 27, 1983, Donald M. Smith and Chart House incorporated purchased 800 Godfather Pizza Restaurants for $306 million dollars.

Two years later, Pillsbury Inc. bought the franchise for an undisclosed amount. Herman Cain was put in charge of Godfather on April 1, 1986.  Thus Cain took over a company that had been worth $306 million two and a half years before. Two and half years later on Sept 20, 1988, Cain and his management group bought the company for about $30 million.

 (FORTUNE Magazine) – After making his employer an offer it couldn’t refuse, Herman Cain, 42, the president of Omaha-based Godfather’s Pizza, is leading the fast-food chain away from Pillsbury’s restaurant group in a management-led buyout estimated by security analysts to be worth about $30 million[1].

The real question that the fact checkers did not discover or investigate is how did a company worth $306 million, 30 months before Herman Cain was put in charge, come to be worth $30 million, 29 months after he was put in charge? The question is how did  the company lose 90%, some $276 million, in value during this time and how much of this loss occurred while Cain was running the company? Cain naturally apportions all the blame to his predecessors and claims the company was near bankruptcy when he took over. The real question thus becomes how much Godfather’s Pizza was really worth when Cain started running it.

Until 1984, Godfather’s Pizza was one of the most profitable Pizza Chains in America. It was still making profits in 1984, Although, at that point, the new owners of Godfather’s Pizza, Diversified Foods, made some errors and the financial picture becomes complicated.

As noted, Chart House bought 800 Godfathers Pizzas in Oct 1983. Chart House which already owned 375 Burger King units among its 517 hamburger, steak, barbecue, and Mexican restaurants in 30 states became Diversified Foods Inc. after buying Godfather Pizzas.

While Godfathers did expand to 900 restaurants in 1984 and sales grew to $365 million from $340 million in 1983, profits according to Donald M. Smith, new president of Diversified Foods Inc., plummeted from 121.8 million to $18.6 million. This was due to the disastrous introduction of a pan pizza. The Los Angeles Times reported:

The company blames the earnings drop in part on the costs of product development–especially its multimillion-dollar entry into the pan pizza market, which one restaurant analyst called an “overwhelming disaster[2].”

Despite the setback, things were not looking that bad for Godfather’s Pizza. On September 14, 1984, the Wall Street Journal reported[3]:

Godfather’s currently is rolling out a new deep-dish pizza that is expected to replace the current variety by next month. Management itself admits the old product, which the company hastily introduced earlier this year, was too costly to prepare, inconsistent from store to store and “too doughy, too buttery and too rich.” In tests, Godfather’s says consumers preferred its new, lighter pizza 4-to-1 over Pizza Hut’s deep-dish version, and the pie is far easier to make. Mr. Smith says advertising expenditures to promote the new pizza will rise, as the company tries to woo back customers.

If Diversifoods succeeds in overcoming its difficulties with Godfather’s,  the company hopes to go after Pizza Hut and other competitors with a vengeance. To compete over the long term, Godfather’s must increase the number of markets where it has as many or more stores as its competitors, Mr. Smith says.

That potential is very attractive to some investors. Michael Culp, an analyst at Prudential-Bache, notes that while Pizza Hut currently has more than 4,000 stores in this country, Godfather’s has fewer than 1,000. “They can open a couple thousand of these restaurants over the next few years” if they can raise volume and get profit margins in line, he says. Mr. Culp thinks 75% to 80% of Godfather’s annual growth will come from physical expansion…

This is an investor’s analyst saying in the Wall Street Journal that Godfather’s Pizza could be competing with the largest Pizza company in America Pizza Hut over the next few years. This is 18 months before Cain took over. It is a month before David M. Smith offers a management buyout to stock holders, a $525 million dollar offer to buy the nearly 900 Godfather Pizzas plus 525 other restaurants held by Diversified Inc. The offer was terminated soon thereafter and the board of directors got rid of Smith on Jan 3, 1985[4].

Moving ahead about six months, problems continue, but the outlook for Godfather’s Pizza is still optimistic about ten months before Cain takes over. A May 19th, 1985 New York Times article describes the troubles[5]:

Its operating earnings plunged 94 percent in 1984, to $978,000. Late that year, some franchisees, rebelling against management, started withholding royalty fees. In February 1985, Concept Development Inc., the chain’s largest franchisee with 125 restaurants, filed a $44 million suit against Diversifoods, charging that it “diminished Godfather’s name and market recognition,” causing “the chain to splinter into a noncohesive group of independents.”

Despite this, the assessment for the future is positive and there is no talk of bankruptcy. The article notes that things were getting back on track

             Despite its problems, however, Godfather’s is now trying to regain its wings as a highflier. John M. Creed, who replaced Mr. Smith as Diversifoods’ president in January, says that the chain has shelved any expansion. It has dismissed about 25 percent of Godfather’s corporate staff and is closing unprofitable stores. It is introducing new products, such as thin-crust pizza and pizza by the slice, and it is starting to offer home delivery.

Diversifoods has hired a new president for Godfather’s – its third since January – and under Henry V. Pettis, Godfather’s is now trying to foster the kind of strong ties with franchisees that Mr. Theisen used to build the company. And that seems to be working. Mr. Creed said that many franchisees were beginning to pay royalty fees again.

These actions, Mr. Creed said, should enable Godfather’s to break even by the end of the year, “with the potential to make money.”

In other words, Godfather’s Pizzas had record profits in 1983, a small profit in 1984, and according to the company president in May of 1985 would break even in 1985 “with the potential to make money”.

In August of 1985, Pillsbury bought Diversified Foods Inc., including 873 Godfather’s Pizzas plus 375 Burger Kings and some other smaller restaurant chains, for $390 million dollars[6]. It is difficult to say how much Pillsbury paid for the Godfather’s Pizzas and how much they paid for the other restaurants. In 1983, Godfather’s had done $340 million in sales and had sold for $306 million, in 1984, it did 365 million in sales, and in 1985, it did $325 million in sales. While sales had dropped 5% from 1983 to 1985, it is hard to see why this should have caused a drastic change in the company’s value.

Most importantly Pillsbury was showing commitment to the franchises’ future According to an August 20, 1985, N.Y. Times article, “Pillsbury Keeping Godfather’s Pizza”:

Sales at Godfather’s, the nation’s third-largest pizza chain, after Pizza Hut and Domino’s, slipped badly last year as the company tried unsuccessfully to roll out a deep-dish pan pizza. A Pillsbury spokesman said: “We understand the pizza business. We have the nation’s No. 1 frozen pizza in Totino’s and we’ll bring the resources to Godfather’s to make substantial improvement there.” Godfather’s owns 209 restaurants and franchises an additional 664 restaurants.

They had cause for optimism. In official filings, Diversified Foods had done these projections for the future of Godfather’s Pizza:

           For the years 1986 through 1990, the strategies developed figures for three different scenarios: an aggressive plan, a moderate one and an aggressive one without Godfather’s.

In 1986, Diversifoods would have earned about $59 million with Godfather’s and $47 million without it in cash flow. Fifty-nine million dollars yields a 15% pretax return. The $12 million difference between keeping and dumping Godfather’s expands from there.

By 1990, Diversifoods could have been grossing cash flow of $146 million under the best circumstances with Godfather’s, $116 million with Godfather’s under moderate conditions and only $116 million in the best case without Godfather’s.

In terms of cash flow, Pillsbury could make back its investment by the end of the decade.

Earnings per share make a similarly convincing case to keep Godfather’s. Based on a best-case scenario including Godfather’s, Pillsbury paid about 10.6 times next year’s earnings. But without Godfather’s, Pillsbury’s purchase price would be a far less economical 13.2 times.

But it is pretax cash flow that really matters in an acquisition. And in those terms, Pillsbury should be getting more than 20% returns on its invested capital in three years[7].

Not only was Godfather’s Pizza not anywhere near bankruptcy when Pillsbury Inc took it over, but they had projections showing that the company would be making profits of up to $12 million (59 – 47 million) in 1986 and expanding profits up to $30 million (146 – 116 million) in 1990.

Within five months there was more reason for optimism. Pillsbury settled the lawsuit with Concept Development Inc., the franchise owner that had sued Diversified Foods for mismanagement for $44 million dollars. Pillsbury agreed to buy 18 more Godfather’s Pizzas from Concept Development for $2 million dollars[8].

Godfather Pizzas was never in danger of bankruptcy, but it did have serious management problems in 1984 and 1985. However it made a small profit in 1984, probably had a small loss in 1985 and was expected to return to making good profits from 1986 to 1990. Then Herman Cain took over.

While we cannot precisely tell the value of Godfather’s Pizza at the time Cain took over, we can give a ballpark estimate based on facts presented in Rick Telberg’s Sept 15, 1985 article, How Pillsbury ‘stole’ Diversifoods for just $390 million, published in National Restaurant News. He writes:

If projections developed by Diversifoods Inc. executives prove true, then Pillsbury Co.’s $390 million payment for the Burger King franchisee and Godfather’s Pizza franchisor will look like a firesale bargain in a few years.

According to internal business plans Diversifoods furnished Pillsbury during secret negotiations, the big packaged-foods marketer acquired the ailing restaurant conglomerate for about six times next year’s gross cash flow.

The norm, if there is any in the restaurant business, is about seven times cash flow, a price established, more or less, by Denny’s Inc.’s $734 million management buyout in January.

In addition, the projections suggest that Pillsbury would have been foolish to dump Godfather’s. In each of three possible scenarios, a Godfather’s divestiture would have reduced Pillsbury’s returns on the deal.

Besides, there are few companies capable of acquiring Godfather’s that would also have the deep pockets needed to wait for a turnaround. And, if Pillsbury sold Godfather’s, the company could have armed a potential enemy, blocking its long-stated desire to enter the pizza business.

Pillsbury’s acquisition ended one of the saddest sagas in the restaurant business–the brief life and painful death of Diversifoods.

Diversifoods was formed in January 1984 through the merger of Burger King franchisee Chart House Inc. of Lafayette, La., and Godfather’s Pizza Inc. of Omaha.

But almost as soon as the ink was dry on the deal, valued at about $700 million…

If just after buying Godfather’s Pizzas for $309 million, the company was worth 700 million, Godfather’s Pizza represented 309/700 of the worth of the company, about 44%. Taking 44% of the purchase price of $390,000 by Pillsbury, we get 171.6 million. However, we do have to take into account that Godfather’s Pizzas revenues dropped 5% from 1983 to 1985 and profits were marginal in 1984 and 1985. We can take away another 10% to account for that, bringing us to a value of about $155 million. We should also take into account the loss of around 100 out of 873 stores when Pillsbury settled its lawsuit with the renegade franchise owners Concept Development Inc. While this represents 12% of the franchise, we may assume they had slightly better than average units and take away another 15%. This still leaves us with a value of roughly $130 million as the value of Godfather’s Pizzas when Herman Cain took over in April 1986. The figure $130 million also seems about right for a company projected to potentially make $12 million in profits the following year, rising to $30 million five years later.

In a January 2, 1985 article in Nation’s Restaurant News we read, “Analyst Tami Preston said that Alex. Brown & Co. has valued the Burger King division of Diversifoods at $150-$155 million.” Even if we assume a huge 15% increase in value eight months later, at the time Pillsbury bought Diversified, that brings the value of the Burger Kings up to a maximum of $180 million. Substract the $180 million for the Burger Kings from the $390 million total price, we get $210 million for all the non-Burger King restaurants[9]. Godfather’s represented over 900 of the 1100 remaining units at Diversified. Besides Godfather’s, there were 65 Luther’s barbecue restaurants, 55 Chart Houses and Moxie’s gourmet Burger restaurants.  If we assume that the 900 Godfather’s were only worth twice as much as the other 200 restaurants, that still gives us around $140 million for the Godfather’s and $70 million for the others.

When Godfather’s was sold on September 20, 1988, the New York Times reported, “The purchase price was not disclosed, but analysts estimated it at under $100 million[10].” If these analysts were still valuing the 560 stores at near $100 million in late 1988, after two and a half years of no profits and declining sales, they certainly would have valued the 720 stores that Cain took over in April, 1986 at $125 million or more.

In part one, we have seen that despite what Polifact said about Cain mostly telling the truth about inheriting a company near bankruptcy, Godfather’s Pizza was never near bankruptcy. He was inheriting a company that was expected to do well by its previous owners and Pillsbury, its new owner. This surely should be considered an outrageous lie by Cain. In part two, we will see what Cain did with this promising company and how Cain turned a company probably worth about $130 million into a company worth $30 million in two and a half years time. Click here for part two.

[1] Oct. 24, 1988, Stephen Madden,  Pizza to Go, Fortune Magazine

[2] April 9, 1985, Leslie Berkman, Godfather’s Pizza Chain to Return to Omaha Base

[3] September 19, 1984, Rotbart Dean, WallStreet Journal,  Diversifoods Attracts Long-Term Interest As Restructuring Efforts Begin to Take Shape

[4] Kochak, Jacque White, The rise and fall of Diversifoods. (includes related article on Godfather’s Pizza)., Restaurant Business v85.(Oct 10, 1986): pp120(6).

[5] May 19, 1995, N.Y. Times, Jeffrey Leib

[6] Telburg, Rick, Nation’s Restaurant News / Sept 9, 1985 How Pillsbury ‘stole’ Diversifoods for just #390 million

[7] Ibid.

[8] March 20, 1986. Pillsbury Unit Settles Suits With Concept Development Inc.Wall Street Journal [New York, N.Y]

[9] January 2, 1985, Jeffrey, Don, Trouble stalks Don Smith: Diversifoods staggered by sales slump, buyout bomb, Nation’s Restaurant News 19 (1985)

[10] September 20, 1988, Berg, Erick N, N.Y. Times, Godfather’s Pizza Sold By Pillsbury.