Carney, Frank

(1938-)
Houston Pizza Venture

Overview

A giant in the pizza industry, Frank Carney, along with older brother, Dan, founded the Pizza Hut chain in Wichita, Kansas, in 1958. Although neither brother knew anything about making pizza, they acted on the suggestion of a local real estate agent who convinced them pizza was going to be the next big thing in the restaurant business. The Carney brothers managed to find someone to teach them how to make pizza only two weeks before their first store opened. Despite their lack of basic knowledge about pizza and business in general, Frank and Dan Carney by 1977 had molded their business into an empire of more 4,000 outlets with annual sales in the billions. Pizza Hut was sold in 1977 to PepsiCo Inc. for more than $300 billion, although Frank stayed on as Pizza Hut president and a member of the PepsiCo board until 1980. After more than 20 years in the pizza business, Frank Carney was glad to turn his attention to new possibilities, determined never to return to pizza. He turned down numerous pleas to lend his support to fledgling pizza ventures, but when a good friend prevailed upon him to sample the product being turned out by John Schnatter, founder of Papa John's International, Carney couldn't refuse. Very much impressed with the Papa John's product, Carney threw his very considerable weight behind the young company's promotional campaign and signed on as a franchisee. Today, under the umbrella of four different companies—Houston Pizza Venture, Devlin Partners LLC, P.J. Wichita LLC, and P.J. Nor–Cal LLC—Carney operates a franchise chain of more than 120 Papa John's outlets. Not surprisingly, his shift in allegiances in the pizza business brought him into sharp conflict with the current owners of Pizza Hut.

Personal Life

Frank Carney was raised in a large, close family with six sisters and brothers. He must have decided early on that there was something special about growing up with plenty of company, because he and wife Zenda have eight children of their own. Today, with most of the children grown and on their own, the Carneys maintain a long–distance relationship as Frank travels frequently between his scores of Papa John's franchise operations, while wife Zenda, an associate producer of television specials, lives and works in Santa Monica, California.

Carney was born in Wichita, Kansas, on April 26, 1938. One of seven children, he attended local schools and helped out in the family grocery business after school and on the weekends. When Frank was only 10, his father died, but before his death Carney's mother promised her husband that she would see that all of their children got a college education. After completing high school in 1956, Frank began attending classes at the University of Wichita, which has since changed its name to Wichita State University. A couple of years later, Frank and older brother Dan, also a student at the University of Wichita, became involved in a business venture that took so much of Frank's time that he eventually dropped out of college.

Carney's family never really let him forget his mother's promise to his father that all the Carney kids would finish college. All his sisters and brothers had earned their college degrees, leaving Frank the only one who'd not yet fulfilled their mother's vow. In 1997, when he accepted Wichita State University's Board of Trustees Award, he mentioned his mother's pledge and said he hoped she'd be proud of his accomplishments even though he'd never finished college. Shortly thereafter, a college official got in touch with Carney and urged him to finish work toward his bachelor's degree. Before long he was back in the classroom, at work on the 33 credit hours he needed to complete his degree. About half of the classes were taken by telecourse, which allow the student to view most of the lectures and receive assignments on videotape, with occasional on–campus meetings. In December 2000, Carney received his bachelor's degree in general studies.

Career Details

The business venture that eventually forced Carney out of college was the launch in 1958 of a little pizza business Frank and Dan Carney called Pizza Hut. A local real estate agent, who'd read in the New York City press of pizza's growing popularity along the East Coast, convinced the Carneys that they might make a fortune in pizza if they hopped on the bandwagon early. At that time, few in Wichita, Kansas, knew much about pizza. Borrowing $600 from their mother, the Carney brothers located a vacant store, not far from the family's grocery business. Neither Frank nor Dan knew anything about making pizza, but "two weeks before we opened, we found someone to teach us how to make it," Carney later told Nation's Restaurant News. As for the company name—Pizza Hut—that now can be found on the chain's more than 10,000 stores worldwide, that was the inspiration of Dan's wife, Beverly. The sign above the Carney's first hut–shaped building could not accommodate any more than eight characters, so Beverly decided that "Pizza Hut" was a good fit for the venture, in more ways than one.

Wichita quickly embraced Pizza Hut, and long lines formed outside the Carney's first outlet. Perhaps because the local Kansas market had never really seen pizza like the Carneys were selling, with fresh toppings and plenty of herbs, the business took off quickly, allowing Frank and Dan to open five more outlets by the end of their first year. The first store was pulling in weekly sales of about $1,500, a lot of money in the late 1950s.

Despite the enormous success of Pizza Hut in Wichita, it was difficult for Carney and his brother to expand their business beyond the metropolitan area of the Kansas City where they opened their first stores. The brothers' idea of franchising the operation won little sympathy from Wichita bankers, who doubted the profitability of such a concept. But the Carneys were not dissuaded. Eventually they began franchising the Pizza Hut name for an initial fee of $100 and a monthly royalty of $100. Some of the college friends who had helped out in the first of the Carney's Pizza Hut outlets later decided to become franchisees themselves. At the end of Pizza Hut's first decade in business, the chain had grown to 310 locations, serving more than a million people weekly. "We never had a reason to stop growing," Carney later told Your Company. In 1969, Pizza hut went public, and two years later it became the undisputed leader in the pizza business worldwide.

Nearly two decades after the Carney brothers launched the first Pizza Hut in Wichita, PepsiCo Inc. in 1977 acquired the empire it had become for $320 million in stock paid to Pizza Hut shareholders. The Carneys, who owned 10 percent of the company's stock, pocketed a cool $32 million. Frank was asked by PepsiCo to remain as Pizza Hut's president and to serve on PepsiCo's board of directors as well. Carney did so until 1980, when he left both posts and the pizza business for good. Or at least that's what he thought at the time.

Chronology: Frank Carney

1938: Born.

1956: Entered University of Wichita (later called Wichita State University).

1958: Opened, with brother Dan, first Pizza Hut store.

1961: Dropped out of college.

1969: Named president of Pizza Hut.

1973: Given added responsibilities of chairman and CEO at Pizza Hut.

1977: Carney brothers sold Pizza Hut to PepsiCo for $320 million.

1980: Stepped down as Pizza Hut president.

1994: Joined franchise family of Papa John's International.

2000: Earned bachelor's degree from Wichita State University.

For the next eight years, Carney was involved in a number of enterprises, none of which had anything to do with pizza. He made some investments in real estate, oil and gas exploration, as well as the automotive, rental, recreation, and food service businesses. In 1988 he was persuaded to join Western Sizzlin' Inc. as chairman, and from 1991 to 1993, he served as that low–cost steak restaurant chain's chief executive officer. In 1994 he was named vice chairman of TurboChef Inc., a company involved in the design, development, and manufacture of high–speed cooking systems for the food service industry.

After leaving Pizza Hut in 1980, Carney consciously avoided anything to do with the pizza business, turning down a number of offers from pizza companies that sought to involve him once again in the business. In a 1998 interview with Nation's Restaurant News, Carney said: "I had no desire to get back into the pizza business. I never saw anything that was compelling enough to get back in. . . ." However, when close friend Martin Hart asked Carney to join him and former Hardee's Chairman Jack Laughery in a franchise venture with Papa John's International, Carney decided to at least give the fledgling pizza company a taste test. He sampled the Papa John's product and liked what he tasted so well that he decided to go ahead with the proposed franchising venture. He bought into his first Papa John's franchise in 1994.

In addition to his belief in the Papa John's product, part of the new pizza company's appeal to Carney probably lay in the similarities between its beginnings and his launch of Pizza Hut with brother Dan in the late 1950s. John Schnatter, chairman and CEO of Papa John's International, launched his company in the broom closet of his family's tavern in Jeffersonville, Indiana. As Carney's stake in the Papa John's business grew, it began to make sense for him to throw his weight into the company's promotional efforts, which he did with a bang in 1997. In Papa John's first major national TV ad campaign, Carney appeared at a fictional meeting of Pizza Hut franchise holders and announced, "Sorry, guys, I found a better pizza." The folks back at Pizza Hut were understandably unhappy about Carney's outspoken switch in loyalties. The ruffled feathers at Pizza Hut headquarters were not smoothed down at all by Carney's criticism of the operation's product. He told Nation's Restaurant News: 'Pizza Hut has great marketers, but customers are telling them that they don't have great pizza. They have to fix that. In my opinion, they are better marketers than operators. They need to take a lot more care . . . that each element is superior, use better ingredients and make better pizza.' Pizza Hut's corporate spokesman, Jay Allison, begged to differ, arguing, "We go out of our way to give the customers what they want and what they ask for." Tensions between the two pizza purveyors were further exacerbated by Papa John's use of the tagline "Better Ingredients, Better Pizza" in its advertising.

By the middle of 2001, Carney had shares in nearly 130 Papa John's stores through the four holding companies—Houston Pizza Venture, Devlin Partners LLC, P.J. Wichita LLL, and P.J. Nor-Cal LLC—he'd created for that purpose. Carney is president and a partner in all four companies. He announced that his companies planned to take shares in 53 more Papa John's franchises over the next five years.

Social and Economic Impact

Despite some of the controversy accompanying his return to the pizza business, Carney is enjoying his life immensely. "I'm probably having more fun now that ever before," he told Nation's Restaurant News. "It's more fun than anything I've ever done. It's kind of like a replay. The difference is like being a parent and a grandparent. The first time everything was new. This time I'm more experienced, more relaxed."

Carney's brother Dan, his partner in the original Pizza Hut venture, has gone on to become a venture capitalist, but Frank is happy to be doing what he's doing, much to his own surprise, considering that he fought a return to the pizza business for almost a decade and a half. In 1998, he told an interviewer for Your Company: "I wanted to relive the best time of my life—growing Pizza Hut. I'm lucky to ride two horses like this in a lifetime."

When he isn't on the road, checking out one of his Papa John's franchises, Carney enjoys spending time with wife Zenda, his eight children, and many grandchildren. He serves on the boards of directors of Intrust Financial Corporation and Intrust Bank N.A. Previously he served on the boards of Southland Corporation, Chi-Chi's Inc., Scandia Down Inc., Safelight Glass Company Inc., Rent–a–Center Inc., National Recovery Systems Inc., and Steamboat Springs Ski Corporation. Carney is a past president of the International Franchise Association, as well as the Wichita Chamber of Commerce. In 1974, he was named Man of the Year by the Multi–Unit Foodservice Organization, which in 1986 honored him with its Pioneer of the Year Award. In 1991 he received the Hall of Fame Award of the International Franchise Association.

Sources of Information

Contact at: Houston Pizza Venture
8312 Louetta Rd.
Spring, TX 77379-6734
Business Phone: (281) 251-8855

Bibliography

Conkling, Judith. "Pizza Magnate Returns to WSU to Complete His Degree." Wichita Business Journal, 30 April 1999.

Elan, Elissa. "P.J. Wichita LLC: Pizza Hut's Founder Says He's Found a Better Pie at Papa John's." Nation's Restaurant News, January 1998.

Geiszler–Jones, Amy. "Pizza Magnate Has Success, Now a Sheepskin." InsideWSU, 18 January 2001.

Greenwald, John. "Business: Slice, Dice, and Devour: Papa John's Uses Sweet–Tasting Sauce and Tangy Ads to Win Market Share in the Pizza Wars. Can Anyone Stoppa the Papa?" Time, 26 October 1998.

Nance–Nash, Sheryl. "A Look Back/Pizza Hut: How Two Brothers from Wichita Created the World's Largest Pizza Chain with $600 and a Little Basil." Your Company, 1 February 1998.

Sarnoff, Nancy. "Papa John's Suffers Costly Defeat in Pizza War." Houston Business Journal, 28 January 2000.

Zimmerman, Malia. "New Guy in Town Knows How to Make a Pizza and a Profit." Pacific Business News, 14 May 1999.