Lunch with Dan and Frank Carney, Pizza Hut Founders

I originally these notes about “lunch with Dan and Frank Carney” back in May of 2006. I’ve posted it here because it’s an interesting story, the Carney brothers don’t make public appearances very often and the lessons Frank said he learned through the experience still ring true today and we can all learn something from them.

I was representing Independence Community College at Wichita State University for a meeting with other community colleges that day. There was some kind of big conference for a bunch of PhDs also at the college that day. Dan and Frank were there to address them over lunch, not us, but they decided to invite us lowly community college instructions to attend. What I learned, besides the information below, is not to ever sit at a table full of PhDs in a huge room full of PhDs if you can help it. The link below to the Pizza Hut “Our Story” still works and has a nice pictorial time line from the Pizza Hut start in 1958 to present.

For all you younger crowd, in 1958, you didn’t find pizza restaurants all over the place in the United States as we do today. There were hardly any. The beginning of Pizza Hut was a huge innovation in its day.

In May of 2006, while attending a conference at Wichita State University concerning setting up a competition for business plan writing, I was surprised and pleased to learn that Dan and Frank Carney (founders of Pizza Hut) were going to be speaking at the luncheon set up for us. (For the history of Pizza Hut, go to: http://www.pizzahut.com/OurStory.aspx)

Here are the highlights from the Carney brothers’ remarks.
• They were brothers in a family of 12 other siblings—neither of their parents nor any previous ancestors had graduated from college
• Their dad quit working while they were still kids at home to start Carney’s Market
• Both Dan and Frank (D&F) worked in their dad’s market
• D&F got the idea for a pizza restaurant as they tried to think of a niche market that might be expandable; they researched franchising in 1958
• They could not get any support from any bankers for the venture
• Got the pizza recipe from a Wichita airman that Dan knew
• Their mother loaned them $600 for the start up
• The Pizza Hut name came about as their original sign was to be a refurbished one with the word “Pizza” already on the sign. There was only room for 3 letters to follow “Pizza”. Dan’s wife commented that the building they were going to use reminded here of the huts you’d see at some vacation destinations, thus the name Pizza Hut
• After painting the walls in the restaurant, they fired up the used oven they purchased only to have it blow up and spew dirt and soot all over the freshly painted walls
• Two public offerings occurred in 1968 and Dan left the company in 1968
• They convinced franchisees to form an association in 1968 so company could deal with one voice
• Growth chart by Frank:
   o 1958 – 1963 1 – 43 stores
   o 1964 – 1968 43 – 300 stores
   o 1969 – 1973 300 – 1000 stores
   o 1974 – 1977 1000 – 3000 stores
• Sold to PepsiCo in 1977; reached 4000 stores and $1B in sales

Frank remained until he saw the larger company sacrifice the quality of ingredients to cut costs. Becoming disgusted with the slide in quality, he resigned. After his non-complete expired, he became a franchisee and continues to be involved with Papa John’s pizza.

Frank had some lessons learned from the Pizza Hut experience:
• Offer a product that you are proud of
• In a bargain, give more than agreed; this builds trust
• Employees will not treat customers better than they are treated [by employer]
• A fast feedback system is essential (you have to see what’s going on quickly, so you can react in time to make the greatest impact)
• In a business like pizza, hire for personality and train for skill
• Let your mistakes and your corrections of your mistakes be visible in the organization
• Give credit where credit is due
• Feeling that you know it all is almost always followed by a huge blunder
• Keep learning
• (From his 12 years as amateur racecar driver; quote from Mario Andretti)
   o If things seem like they’re under control, you’re simply not going fast enough