Was Herman Cain a good CEO?

[therealUT]

If anyone has net income figures for Cain's tenure as CEO of Godfather's Pizza, I would like to see them. Thus far, this is the most comprehensive article I can find regarding the performance of Godfather's Pizza under Cain's watch:

B.C. (Before Cain):

1983: $340 million[1] (pre-tax earnings – $18.7 million)[2]. (sales per store – $432,000)[3]

1984: $365 million (911 stores)[4] (pre-tax earnings – $978,000)[5]

1985: $325 million[6] (720 stores). Note: Cain has kept annual profits and losses secret from this point on.

Pillsbury assigns Herman Cain to run 725 Godfather’s Pizza Stores in April 1986:

1986: $275 million[7] (640 stores)(sales per store – $402,000)[8]

1987: $260 million[9] (605 stores) (sales per store – $414,000)[10]. Note, while sales at Godfather’s dropped 5%, national Pizza sales “soared nearly 10 percent” in 1987[11]. In November, 1987, Cain predicted that in three years, Godfather’s would have over 1,000 stores. “‘We will exceed 1,000 units,’ he says, adding that ‘it may be exceeded by one unit or by 600.’”[12]. Cain’s prophesy of 1001-1600 stores by 1960 failed. The number of stores actually fell from 605 to 512.

1988: $242.5 million[13] (563 stores) Pillsbury sells Godfather’s Pizza to Cain and management group in a leveraged buyout for $30 or 40 million[14].

1989: $225 million[15] (509 stores)

1990: $229 million[16] (512 stores)

1991: $231 million[17] (511 stores) (sales per store – $440,000)[18]

1992: $242 million

1993: $249.5 million

1994: $244 million[19] (514 stores) (sales per store – $490,000)

1995: $260 million (525 stores)

1996: $265.5 million (540 stores) (sales per store – $500,000) Cain becomes CEO of the National Restaurants Association in 1996, but was still on Godfather’s Management Board.

1997: $270.8 million[20]

1998: $280 million

1999: $280 million

2000: $288 million[21]

2001: $280 million

2002: $287 million (560 stores) (sales per store – $502,200)[22]. Cain steps down from Godfather’s Management Board

2003: $304 million[23]

2004: $313 million[24]

Inflation from 1985 to 2001 was 64.5%. In terms of 2002 dollars, the $325 million sales of 1985 would be the equivalent of $534 million at the beginning of 2002. The final sales in Cain’s last year with Godfather’s Pizza was $287 million total. When we compare it with the year before Cain’s arrival, adjusted for inflation, we find that sales at Godfather’s Pizza dropped 46% during Cain’s association with Godfather’s Pizza.
...
The goal of a management buyout is generally to quickly return a company to profitability and sell it at a profit. Cain was unable to accomplish this in the next seven years that he ran the company. When his run as CEO ended, he was still heavily leveraged to the bank for at least the $30 million dollars his management group had borrowed in 1988 to buy the company. This is from an article in Nation’s Restaurant News in January, 1995.

“My next goal is for Godfather’s to reach its goal of financial independence,” he says. Still heavily leveraged, the company has reduced its debt but still has some way to go. “I want to retire debt in order to allow us to grow the way we want to[25].”

Cain took over the fourth largest Pizza company in America with no debt and a great promising future and in ten years turned it into the eight largest pizza company in America, one with so much debt, it could not be sold. It is certainly true that he “turned around” the company as he likes to say.

Complete Godfather’s Pizza Sales Figure from the Herman Cain Years Notes to Aphrodite

 

[TennesseeJet]

Ever been to a godfather's pizza.....me either.

 

[DinkinFlicka]

Imagine Little Caesar's meets CiCi's.

 

[VOLatile]

Was Herman Cain a well CEO?*

 

[WA_Vol]

Papa John's and others put them out of business.

 

[NEO]

There's alot of missing data in here that would need to be known ... and I don't know it and it appears neither does anyone else. I'm also not taking the time to search.

But ...

were the spaces owned or leased.

When the stores were closed were there buy-outs that had to be made on the lease or where they actually expiring.

Were the leases gross or triple net which would would impact how high the buy-out might of been on the leases.

If owned, the properties could have been sold which would create revenue instead of debt as the case would be if leased.

Example one CEO comes into situation with 50 stores that need to be closed that our owned properties and owned equipment along with slight profit margins that allow each store to be repackaged and sold to a mom and pop .... ceo is hero because he cut the bad stores and created immediate cashflow

example two CEO walks into sitauation with 50 stores that need to be closed that re all 20 year leases, leased equipment and cannot sell top a mom and pop do to having nothing to sell of value and ends up eating the lease knowing that in the long run it is better to cut the lose, write it off as a loss on your Corp, and use that loss to not have to pay taxes on gains in the future and therefore strengthening the company in quarters to come.

you have to know which situation he walked into to know how bad or good he handedl it.

 

[RespectTradition]

There's alot of missing data in here that would need to be known ... and I don't know it and it appears neither does anyone else. I'm also not taking the time to search.

But ...

were the spaces owned or leased.

When the stores were closed were there buy-outs that had to be made on the lease or where they actually expiring.

Were the leases gross or triple net which would would impact how high the buy-out might of been on the leases.

If owned, the properties could have been sold which would create revenue instead of debt as the case would be if leased.

Example one CEO comes into situation with 50 stores that need to be closed that our owned properties and owned equipment along with slight profit margins that allow each store to be repackaged and sold to a mom and pop .... ceo is hero because he cut the bad stores and created immediate cashflow

example two CEO walks into sitauation with 50 stores that need to be closed that re all 20 year leases, leased equipment and cannot sell top a mom and pop do to having nothing to sell of value and ends up eating the lease knowing that in the long run it is better to cut the lose, write it off as a loss on your Corp, and use that loss to not have to pay taxes on gains in the future and therefore strengthening the company in quarters to come.

you have to know which situation he walked into to know how bad or good he handedl it.

Don't try and confuse us with your facts or questions! Gross income is the only thing that matters! Ask any Cain detractor.

 

[therealUT]

There's alot of missing data in here that would need to be known ... and I don't know it and it appears neither does anyone else. I'm also not taking the time to search.

I agree that there is plenty of missing data. Without the data though, persons are just taking Cain on his word that he was a good CEO.

 

[volinbham]

I agree that there is plenty of missing data. Without the data though, persons are just taking Cain on his word that he was a good CEO.

That and the fact he wasn't canned. Looks to me that he was in the position long enough to conclude he was competent. Combine that with NRA, Fed, etc and I think it's fair to conclude he was good at business. Doesn't make him POTUS material but that hasn't stopped the last 2.

 

[volinbham]

this is the kind of crap that torpedoes the source

1985: $325 million[6] (720 stores). Note: Cain has kept annual profits and losses secret from this point on.

He can't keep it "secret". If they were privately held it doesn't have to be reported publicly but the board and owners know.

Another example:

Note, while sales at Godfather’s dropped 5%, national Pizza sales “soared nearly 10 percent” in 1987[11]. In November, 1987, Cain predicted that in three years, Godfather’s would have over 1,000 stores. “‘We will exceed 1,000 units,’ he says, adding that ‘it may be exceeded by one unit or by 600.’”[12]. Cain’s prophesy of 1001-1600 stores by 1960 failed. The number of stores actually fell from 605 to 512.

Would be illustrative to add competitive data - Papa Johns was new and in ascendency. Domino's was growing. How about Pizza Hut? Pizza Inn? Shakeys? other chains where you go vs have it delivered?

 

[NEO]

I agree that there is plenty of missing data. Without the data though, persons are just taking Cain on his word that he was a good CEO.

If he was a democrat, and you were a republican, someone right now would be asking "are you trying to hint the man kept his job so long because he was black?"

just saying.

 

[therealUT]

That and the fact he wasn't canned. Looks to me that he was in the position long enough to conclude he was competent.

I do not agree that length of tenure directly correlates with competency. I would rather see the actual financials for Godfather's Pizza during Cain's time as CEO.

I also do not take his word to mean anything.

If he was a democrat, and you were a republican, someone right now would be asking "are you trying to hint the man kept his job so long because he was black?"

just saying.

I am neither a Democrat nor a Republican, so I cannot comment on the accuracy of your statement. He kept his job for a while.

If we are simply grading merit on how long one can keep a job, then why look outside of D.C.? There are enough Senators that have kept their positions for a long time.

 

[volinbham]

I do not agree that length of tenure directly correlates with competency. I would rather see the actual financials for Godfather's Pizza during Cain's time as CEO.

I also do not take his word to mean anything.

You'd need more than the financials - you'd need the external and internal environmental climate along with the competitive situation for context. You'd also need to examine the decisions made within that context not just the results.

Apply the same scrutiny to any candidate's resume and you end up at the same place.

Personally, I'm not a Cain fan for POTUS but the analysis posted is pretty much worthless AFAIC and tenure is at least as good the analysis posted. Tenure and positions held over multiple decades allows me to conclude the guy is pretty decent at executive positions.

 

[NEO]

I do not agree that length of tenure directly correlates with competency. I would rather see the actual financials for Godfather's Pizza during Cain's time as CEO.

I also do not take his word to mean anything.



I am neither a Democrat nor a Republican, so I cannot comment on the accuracy of your statement. He kept his job for a while.

If we are simply grading merit on how long one can keep a job, then why look outside of D.C.? There are enough Senators that have kept their positions for a long time.

Trust me TRUT you're comparison of a board member (who the CEO answers to) and a politiciand (who answers to people who don't even follow the facts 90% of the time) is about as horrible a comparison as you have ever done.

 

[RespectTradition]

Trust me TRUT you're comparison of a board member (who the CEO answers to) and a politiciand (who answers to people who don't even follow the facts 90% of the time) is about as horrible a comparison as you have ever done.

Corporations are out to make money. The don't hang onto people long term who cost them money. That means, the people in the best position to determine if Cain was a good CEO or not, are the very people who chose to keep him so long.

 

[joevol320]

i would like to know what hussein did in being a community organizer? how much money was hussled from private companies.

 

[therealUT]

i would like to know what hussein did in being a community organizer? how much money was hussled from private companies.

I have never argued that I thought Obama was either qualified for the job or that he had some glorious track record.

 

[golfballs]

the bottom line is profit margin. net income can drop - probably what happens after you shut down all those locations.