Pillsbury Accepts Bid for Godfather’s Pizza Chain

In the latest move in its long restructuring, Pillsbury Co. said Monday that it is selling its Godfather’s Pizza restaurants to a management-led group for an undisclosed amount.

The Minneapolis-based food and restaurant company, which has posted lackluster results in recent quarters, had announced March 17 that it planned to sell the pizza chain as part of a series of restructuring moves.

“The sale of Godfather’s is part of a larger strategy to focus on our core businesses,” Pillsbury spokesman Johnny Thompson said. He said these core businesses include Pillsbury’s consumer foods operations and its Burger King fast-food unit.

“With Godfather’s, we were concerned whether it would grow large enough and fast enough to warrant the financial and management resources being thrown into it,” Thompson said. He said Godfather’s has 542 restaurants nationwide.

Pillsbury stock closed down 67.5 cents at 38.375 in New York Stock Exchange trading but analysts said the share movement was unrelated to the sale.

Burger King Problems

Food industry analyst Stephen Carnes of Piper, Jaffray & Hopwood Inc. said the market had already discounted the effect of the Godfather sale. “That’s all history,” he said. “It’s all in the stock. It has been awhile.”

Pillsbury, which has been the subject of recurrent takeover speculation this year, last March announced a $140.9-million charge to its fiscal third-quarter profit related to the planned sale of certain restaurant operations and the closure of some food operations.

Burger King, along with the company’s Bennigan’s and Steak & Ale restaurants, has reported flat or falling earnings since 1986. Pillsbury has sold and closed some less-profitable branches of its Steak & Ale and Bennigan’s restaurant chains.

Philip Smith, who was named chairman and chief executive of Pillsbury in July, said at the company’s annual meeting last week that he is committed to retaining Burger King and said Pillsbury will spend more than $150 million over the next year to upgrade the fast-food chain’s franchises.

Smith also said then that Pillsbury expects to post flat results for its first 1989 fiscal quarter ending Aug. 31. He said Burger King’s net sales had dropped 2% in the first fiscal quarter over the year-ago period.

Executive Shuffle

In its fiscal 1988 year that ended May 31, Pillsbury had earnings of $69.3 million on sales of $6.19 billion, down from $181.9 million on sales of $6.12 billion in fiscal 1987. The fiscal 1988 results include the third-quarter restructuring charge of $140.9 million.

In an effort to shake itself out of the doldrums, the company has made a series of changes in senior management, with the most recent the appointment of Smith to succeed William Spoor as chairman and chief executive officer. Spoor, who served as chairman from 1973 to 1985, was recalled in February to replace his one-time protege and hand-picked successor John Stafford.

In June, Pillsbury announced the resignation of Jeffrey Campbell, the former chairman and chief executive of its restaurant group.