By 1971, Pizza Hut was the world’s No. 1 pizza chain. When PepsiCo bought their business in 1977, founders Frank and Dan Carney collected $32 million between them.
Today, Frank Carney is reliving his glory days at Pizza Hut by helping build another successful chain called Papa John’s. In this interview with Working Smart, Carney, 59, reflects on his success.
WS: Many promising start-up companies fizzle by growing too fast or too slow. In the early days when you were expanding, how did you pace your growth?
Carney: The key moment came about 10 years after we started. There were over 300 stores at the time. We developed an information system to monitor each store’s performance. It was a fast-feedback control system that gave us P&L [profit and loss] not just monthly, but weekly. Armed with that data, we knew how we were doing and how fast to grow.
WS: But you still had to make decisions based on that information. How did you analyze the data?
Carney: The important thing was that our managers knew that we knew how they were doing. That awareness alone led them to improve, because they felt more accountable. What’s better than just tracking information is making sure everyone in your organization understands and works from the same set of numbers.
WS: How did you hire managers who could help you grow?
Carney: You hire for traits and train for skills. We’re in a people business. That means you don’t want people who are going to hide in the back room. I measure someone’s personality in an interview by noting their willingness to talk. I’ll ask open-ended questions and see where they go with their answers. If they give me a one-sentence answer and then look lost, that’s not good.
WS: As Pizza Hut opened hundreds of stores, did quality suffer?
Carney: As you grow, there’s a normal diminution of quality. When you start, you can say, ‘I want tomatoes from this farmer in this valley.’ But as you grow, you have to hire more farmers in more valleys, and the tomatoes may not be as good. Now a typical customer won’t notice a decline in quality of 6 or 7 percent. It’s only when quality falls by 15 percent that most people notice.
WS: If that’s the case, why worry about maintaining high quality as long as it only declines gradually?
Carney: Because a competitor will step in and give the customer better quality for the same price. If you’re not always watching the quality level, then even if the customer doesn’t notice yet, you’re needlessly exposing yourself to a smarter, more hungry competitor who can wrestle away market share.
WS: Speaking of quality, what do you think separates a perfect pizza from an average one?
Carney: You need three things. If you’ve got an acidic bite, it’s because you’re using green tomatoes, instead of getting the sweetness from a vine-ripe tomato. If the crust isn’t cooked right from dough made with purified water, it will harm the pizza. And mozzarella cheese is the best carrier of flavor. These ‘four-cheese blends’ you see on some menus isn’t a selling point, because that means the cheese is cheaper and not as tasty.
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