The Attack on Free Enterprise
If our nation is to recover from economic stagnation and if we want to keep the American
Dream alive for future generations, we need to elect a president who understands the energy and
creativity of our people and the incredible potential of our free enterprise system. We need someone
who has immersed himself in the private sector and seen its potential first hand; who knows that
government-engineered solutions will never equal the pragmatic actions of American entrepreneurs
whose work improves their lives and creates jobs, economic security and prosperity for the rest of us. A
career in government does not impart this knowledge. To understand the potential of free enterprise
and unleash it, at some point in your life, you have to live it.
Nothing makes this point as well as the recent attacks by certain Republican presidential
candidates on our free enterprise system. Incredibly, these attacks come during an election year in
which economic recovery is of utmost concern. Perhaps less surprising, they come from candidates who
have spent the majority of their careers in government, academics or consulting. Surely these
candidates know free enterprise is the only way out of our economic decline. Yet, they have attacked
the very nature of the free enterprise system and Governor Romney’s very successful experience at Bain
Capital. Perhaps of greater concern, their attacks demonstrate a failure to understand how the free
enterprise system really works and what’s needed to restore our economic health.
Our economic health, indeed the future of our nation, is at stake. The United States of America
has become the great nation that it is and a beacon of hope for people around the world because it has
embraced free enterprise. Imagine what this country would be like if we did not have such a system in
place.
With free enterprise, there exists the potential for failure. There are countless economic
success stories that underscore the entrepreneurs’ potential for failure. Nothing motivates successdriven decision-making more meaningfully than the specter and consequences of failure. Yes,
businesses do fail, companies go bankrupt, and jobs are lost. This is true even for companies in which
successful and sophisticated firms such as Bain Capital choose to invest. Through this process,
opportunities open for new businesses with better products, services or plans, companies come out of
bankruptcy proceedings and reach new levels of success, new industries arise and create new jobs. For
this to occur, entrepreneurs have to make the hard decisions that may cause short term pain but have
the potential to lead to long term success. Our experience at CKE Restaurants and Hardee’s is one
example of how this can work to everyone’s benefit.
When our management team took over in 2000, CKE was close to bankruptcy. The Carl’s Jr. fast
food brand had borrowed too much money to purchase the struggling Hardee’s brand and its efforts to
turn Hardee’s around were failing. The investment community believed that CKE’s board brought me in
as CEO because I was an attorney who could either sell the company or take it into bankruptcy. Our
team decided that the best course was to negotiate with our lenders to avoid bankruptcy, fix the
business and return the company to economic health. There were risks but we decided to take them.
We closed hundreds of underperforming restaurants and often sold the underlying properties to pay
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down our debt. Unfortunately, closing restaurants meant that thousands of people lost their jobs. Yet,
this bought us time with our lenders and allowed us to chart a path to growth.
To this day, I regret that we had to close restaurants and eliminate jobs. Had we failed to do so,
however, there might well be no company today, which would have meant that many more people
would have lost their jobs. We made difficult decisions; bought ourselves time; changed Hardee’s menu;
and improved food quality, guest service and advertising. Subsequently, we invested capital to remodel
our restaurants. Performance at both brands improved and the company became profitable.
In 2006, we started building restaurants and began to grow. Over the past five years, we built
hundreds of new restaurants which created thousands of jobs despite the financial crisis. With our
franchisees, we employ about 70,000 people in the US and we have restaurants in 42 states and 24
foreign countries, including Mexico, Panama, Costa Rica and Ecuador. Everyday there is still the risk of
failure but risk motivates us to work tirelessly to make the best decisions for our customers, employees
and investors. This is how free enterprise works and this is why it works.
We took risks and succeeded but there was no guarantee of success. That’s the “free” part of
free enterprise. We were free to succeed and free to fail. Fixing a broken business can cause pain, but
it’s more painful when you fail. Bain and Governor Romney had their failures but they also had more
than their fair share of successes. It’s easy for others who have never been in the fray to criticize one’s
failures and ignore one’s successes. Not everything in the business world comes easily or with the safety
of government protection.
We are all better off—and our American Dream lives on—when we rely on the dynamic energy
of the private sector rather than protectionist government programs. We need a president who knows
this in his heart and mind. If you are opposed to doing what’s necessary to fix a business, how can you
ever fix a nation? If you lack the experience to know what it takes, you should stop criticizing those who
do and get out of their way.
Andrew F. Puzder, CEO, CKE Restaurants, Inc. and co-author of the book Job Creation: How it Works and
Why Government Doesn’t Understand It.
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