As Little Caesars parent Ilitch Holdings consolidates its operations, Chairman Michael Ilitch and his wife, Marian, the vice chairman, have put two of their seven children in charge of daily operations of the sprawling Ilitch operation anchored by the NHL's Detroit Red Wings and Major League Baseball's Detroit Tigers, along with the pizza chain. The family portfolio also includes the Fox Theatre, Hockeytown Cafe and Second City Comedy Club, as well as concessions at Cobo Arena, Joe Louis Arena and Comerica Park.
The Ilitches named daughter Denise, 44, and son Chris, 35, co-presidents. When asked last week on a local Detroit radio station how the co-presidents will resolve disagreements, Denise Ilitch quipped "flip a coin."
The closely held Detroit-based company has been analyzing how best to combine its three businesses for several months, a Little Caesars spokeswoman said. For the near term, the company will parcel out work to individual agencies, which the company wouldn't disclose. Once the consolidation is complete, the company then will conduct an agency review for a single agency to serve all three businesses.
FCB quit the account two weeks ago before the management change, citing a conflict with the Taco Bell assignment handled by FCB's Costa Mesa, Calif., office. Calling the split a mutual decision, the Little Caesars spokeswoman added that FCB also will no longer be working on the Red Wings' or Tigers' accounts. "What we're looking to do is to combine the accounts for the management company so we can have one agency serving them," she said, adding that the sports accounts have not had agencies of record.
The accounts spent more than a combined $21.2 million in national media in 1999, according to Competitive Media Reporting. Local media spending for Little Caesars was not measured by CMR, but executives close to the company said local media spending in 2000 will equal or better the national budget.
Last year, the chain shuttered 400 poorly performing restaurants for "remodeling." Total sales for Little Caesars in 1999 fell to $1.46 billion across 3,700 units, down from $1.65 billion across 4,350 units in '98, according to Technomic. Average store volumes, however grew to $455,000 in 1999, from $440,000.
"Obviously they're retrenching and trying to improve performance," said Bob Goldin, Technomic exec VP.
"The pizza industry is very competitive and we've been pretty flat, but in 2000 we are seeing an upward trend" since making changes to the brand, said the spokeswoman. "Our redesigned stores are a great look, very visible and we're seeing good sales increases with that and just focusing on the basics -- our value."
At the time of the split, FCB had just finished editing new national creative for the struggling pizza chain's "Pizza! Pizza! Plus a Pizza!' promotion to break in scattered markets, which is now running.
Through the years, the Little Caesars account has been labeled difficult by agency creatives. One ex-staffer described working on the account as "the most frustrating experience of my career." Said the ex-staffer, "there were a lot of things that needed to be done on the account. We tried to sell the work we believed in and not just from an advertising standpoint, but from an image standpoint."
During its pitch, FCB knew via consumer research that Little Caesars quality was perceived as needing improvement. The client "wanted to talk about quality [in ads], and we felt they should do something about it [first]," the ex-staffer said.
Little Caesars disputes that there are quality problems, noting the chain is continually working on improving quality.
"The consumer has to have a product worth their money and convenience," the spokeswoman said. "When we focus on value, we include all those things: value, quality, service."
A spokesman at FCB's Southfield, Mich., office said the primary reason the agency resigned the account was the conflict with Taco Bell at its Costa Mesa office, a conflict that existed for at least two years. But it's clear there were other issues at work.
For example, although FCB essentially pitched to Mike Ilitch, his daughter, Denise, took over the brand stewardship shortly after the agency won the account in March 1988, the ex-staffer said.
"Denise had other things going on," he said, adding, "We weren't really given the opportunity to do the work that would be best for them."
The growing Ilitch empire also may have played a role in the split. It took the family two years, or until summer 1998, to close the $145 million private loan to help build the new Tiger Stadium, which opened in April, according to Crain's Detroit Business. Late last year, Forbes rated the Red Wings as the fourth-most-valuable franchise in the National Hockey League, valuing the team at $914 million.
"I think the Ilitches have other priorities and aren't paying as much attention to their core [pizza] business," said an executive at one ad agency with a competing pizza account, who requested anonymity.
That executive added that when Little Caesars was in its golden era in the 1980s, but new competition from No. 1 Tricon Global Restaurants' Pizza Hut and No. 4 Papa John's International has stepped up pressure on Little Caesars.
FCB's Little Caesars account was won from Cliff Freeman & Partners, New York, widely credited with conceiving the well-known "Pizza! Pizza!" ad campaign although the pizza chain's spokeswoman said the company had trademarked the phrase and Caesar character in the late 1970s. At the time, the shop was known as Bozell, and later renamed FCB and brought into the FCB network under a reorganization in September by parent True North Communications.
Since then, the account has gone through a number of downsizings. In 1994, Advertising Age ranked the pizza chain No. 63 among the Top 200 Megabrands, when it spent more than $61 million in measured media.
Little Caesars, however, shifted from national advertising to regional advertising last year. Of the $21 million it spent in measured media in 1999, less than half went to network TV, according to CMR. In 1998, the pizza chain allocated $30 million of its total $37 million budget to network TV. Even when FCB offered smaller-budget ad options, the client declined, said the agency executive.
"We used to have bets on when [the split] would happen," said the agency ex-staffer who worked on the account.