Originally created 05/18/97

Pizza Hut founder now a competitor

Frank Carney, a co-founder of Pizza Hut, is pitching rival Papa John's pies and pans his old restaurant chain in Papa John's first national advertising.

"Sorry guys," Mr. Carney, who has been a Papa John's franchisee for three years, says as he shows up in a new commercial at a fictional Pizza Hut franchise meeting. "I found a better pizza."

Frank Carney has had plenty of defining moments in his life.

Few, though, completed a circle for him, for Wichita, Kan., and for the pizza industry the way Pizza Hut did in 1995. That's when the company Mr. Carney co-founded with his brother, Dan, announced that it was moving its world headquarters to Dallas, severing a connection with its hometown of Wichita.

"When they decided to move, it was a sure thing," Mr. Carney, now a franchisee for one of Pizza Hut's biggest competitors, said in a recent interview. "I called Papa John's and said, `I want Wichita. Let's do it."'

And he has. Mr. Carney has opened his fifth Papa John's store in Wichita.

As the second-largest Papa John's franchisee, he is part of a considerable force in the pizza business, and a growing one. He now operates 42 stores in Kansas, Missouri and Texas.

Today, he is in competition with the international pizza giant he and Dan started in 1958. They built Pizza Hut into a billion-dollar-a-year system with 4,000 stores by 1977, then sold it to PepsiCo. Frank Carney continued as Pizza Hut president and board member until May 1980.

Pizza Hut's decision to move its headquarters was not a good one, Mr. Carney said.

"You never recover from moving the home office, never," he said.

Although a company takes its top management with it when it goes, it leaves behind its support staff, "the people who really know what the company is doing. When you lose that, you never get that back."

The Papa John's commercials come just as Pizza Hut, the industry leader, is trying to break out of a yearlong slump by promoting its $50 million investment in improving its pizzas with tastier ingredients and overhauled ovens.

Pizza Hut was the industry leader despite a 4 percent sales decline last year to $4.9 billion, according to industry researcher Technomic Inc. Domino's Pizza was second at $2.3 billion and Little Caesar was third at $1.8 billion.

Louisville-based Papa John's came in fourth with sales of $619 million, up 35 percent from 1995.

It had never advertised nationally and is spending a modest $5 million to run its ads, which were created by its agency Fricks/Firestone Advertising of Atlanta.

One of the reasons the Carneys sold to PepsiCo, Mr. Carney said, was that the company had a history of leaving its acquisitions in the cities in which they were acquired.

Mr. Carney says competing against the company he helped nurture is like two brothers who play in the same football game but on opposite teams.

Only in this game, Pizza Hut, the biggest player with 7,736 stores, is on defense and Papa John's, with 1,260 stores, is on offense.

From years of playing on the other side, Mr. Carney knows how the competition thinks.

"I wrote the book," he said.

Indeed, Pizza Hut brought pizza to most of the United States, especially to small and medium-size cities, owning the market by 1973.

Today, Pizza Hut is headed in the wrong direction, Mr. Carney said.

"There isn't anything in Pizza Hut that is the same as when I left except the logo," he said. It has created an environment that let Papa John's succeed, Mr. Carney said. One of the reasons, he said, is because it changed focus from quality to variety.

"That's why Papa John's was able to grow," he said.


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