“I opened my own deli, it was like Subway before Subway, even built the counter in my dad’s garage. And I did it for two years and I was pretty successful. I now had enough money that I could pay my whole way through college… So I sold my business.”
–House Majority Leader Kevin McCarthy (R-Calif.), interviewed by Gerald Seib of the Wall Street Journal, June 16, 2015
Just about every politician has an origin story – the tale they tell over and over about a key moment in their life that spurred them on. It becomes part of their regular pitter-patter on the stump and often ends up as a line in just about every newspaper biography.
For McCarthy, it’s a story of how he was a small business entrepreneur at the tender age of 19, using lottery winnings to start a deli that he then sold to finance his way through college. While in college, McCarthy began working for a member of Congress whose seat he eventually won. Seven years later, he became House majority leader.
That’s a remarkably successful run in politics, but McCarthy often refers to his days running a deli.
For instance, in 2011, he told the Faith and Freedom Coalition Annual Conference: “It taught me about regulations; taught me about every person I hired, I paid as much Social Security as they did; taught me those challenges I never forgot.” He also mused during a House debate: “When I think back to those days of the risk I took, I wonder if in today’s environment, could I do the same? Unfortunately, the answer is no, I could not. I cringe at the thought of today, of the regulations, the challenges that small businesses face.” Or, as he put it in a newsletter to constituents: “It reminded me of when I operated Kevin O’s Deli, where I experienced one of the greatest challenges to running a small business: overregulation by government.”
A recent Washington Post profile of McCarthy as President Trump’s “friend and fixer” included a refence to his deli experience: “‘My wife once got me ‘The Art of the Deal,’” Trump’s best-selling 1987 book, for Christmas, McCarthy said, adding that he was an entrepreneur early in his career, when he used $5,000 he won in the state lottery to start a deli, Kevin O’s.”
That reference prompted a complaint from Michelle Pettigrew, a Fact Checker reader who lives in California: “The truth is, Kevin McCarthy has been a federal or state government employee for his entire adult life beginning with working in Rep. Bill Thomas’s district office from 1987 to 2002.”
She sparked our interest by including a photocopy of a 1986 review of McCarthy’s deli in the Bakersfield Californian, which she said she obtained by going through microfiche editions of the paper. So we dug into the records and conducted interviews. McCarthy also gave a 45-minute interview to answer our questions.
Here’s what we found, with the assistance of Washington Post researcher Alice Crites and other documents provided by Pettigrew.
With the passage of three decades, it’s sometimes hard to separate facts from memories, so we are not offering a Pinocchio rating. Readers can draw their own conclusions.
Here’s what the Feb. 21, 1986, review by Peter Tittl said: Kevin O’s “is located in a corner of McCarthy’s Yogurt… The full official name is Kevin O’s Delicatessen but that’s an exaggeration. The deli is only a counter and refrigerator in McCarthy’s dining room.”
McCarthy’s Yogurt on Stine Street, one of the first frozen yogurt shops in Bakersfield, was owned by Kevin McCarthy’s uncle and aunt and managed by his cousin Tom. Tittl, in an email, recalled that the deli “wasn’t really distinct, all part of the operation with separate ‘Kevin O’s Deli’ signage.” Indeed, we found official California business documents for the yogurt shop, but no documents for the deli.
In 2013, McCarthy posted a card on Facebook that he said his uncle had found.
Tittl noted that “because it was humble I combined it [the review] with another new sandwich shop at the time.”
That actually worked out well for McCarthy. The sandwiches at the other shop were described as “ordinary” whereas at Kevin O’s “the sandwiches there are better, and the owner is a really friendly guy.” McCarthy’s edge was a sandwich bread, Dutch Crunch, that was baked fresh every day by a local baker. McCarthy credits Tittl’s review with sparking a boom in business.
Although McCarthy often calls his shop “Subway before Subway,” there was already a Subway shop in Bakersfield, which opened its first store on Oak Street in Bakersfield on Nov. 17, 1984, according to a 2009 article in Bakersfield Magazine. Subway began baking fresh bread in every store in North America in 1983.
Let’s back up a moment. Almost five months before the review appeared, the California lottery had started. At the time, McCarthy says, he attended a community college and made money by going to car auctions in Los Angeles, bringing them back to Bakersfield and then flipping them to private buyers for a profit – a practice he acknowledges was probably illegal.
On the second day of the lottery, McCarthy was headed on a road trip to San Diego with a friend and pulled into a grocery store. He walked out with two scratch-off tickets and handed one to his friend, Nick Bikakis. “If that ticket says $5,000, I will give you $100,” he said, according to Bikakis.
The odds at the time, according to lottery officials, were 40,000 to 1.
Bikakis recalls he scratched off the winning ticket; McCarthy remembers he did. In any case, McCarthy suddenly had $5,000, though besides Bikakis, he also gave $100 each to his sister and brother and took his parents out to dinner. He remembers they ordered Steak Diane.
He says he invested most of the rest of the winnings in the stock market, in one stock – Fur Vault, a then-hot company that sold discount furs. “I want to take risk,” he says he told stock brokers. In a couple of months, he says he had gained about 30 percent on his investment. He says he then sold the stock to open a deli.
“He was a hustler, a go-getter,” recalled Bikakis. “He was an entrepreneurial type when the rest of us were going to college.”
On numerous occasions, McCarthy has described these events as taking place when he was 19. He even corrected Gerald Seib of the Wall Street Journal during a 2015 public event when Seib said he was 21 when he opened the deli. “No, no, I was 19,” McCarthy interrupted.
Numerous news stories have taken him at his word. But the California lottery started on Oct. 4, 1985, when McCarthy was four months shy of turning 21. The week McCarthy became majority leader, in August 2014, the biography on his website was changed to make it clear he was 21 when he opened the deli, but he still slips into old habits.
“You know, I started my first business when I was 19 years old,” McCarthy said on the House floor on April 27, 2016.
Over the years, depending on the audience, McCarthy has emphasized distinct aspects of his story. Sometimes it’s about taking risks, such as investing in the stock market, which he says gave him the money to start the business.
“So at the end of the semester I decided I wasn’t going to go back to school. I took my money out of the market, refinanced my current car. I had about $15,000 to $20,000 then. And I went out to buy a franchise. But no one really sells a 19-year-old a franchise. So I didn’t stop with that and I created my own deli,” McCarthy told the City Club in Los Angeles in 2015.
Other times, McCarthy emphasizes how financial institutions helped pave the way.
“One thing I will say, my history of getting here might be different than a lot of the others,” McCarthy told other lawmakers during a House committee debate on financial reforms in 2009. “When I was 19 years old I started my first business, no financial institution was going to lend to me. I did it on credit cards. I did it with a financial entity even loaning me the money to buy the meat to sell [at] the deli, the icemaker and beyond.”
“As a former small-business owner — a deli here in Bakersfield — I know that there is risk involved in turning a new idea into a successful business. There is no reward without some risk. My small business, like many small businesses, was started on credit,” he said in a 2012 weekly Republican address.
Or, McCarthy may highlight how government regulations got in his way.
“I soon learned if you’re a small business owner, you’re the first one to work, the last to leave, the last to be paid,” he told Fox News’s Chris Wallace in a 2014 interview. “You learn what regulation does to your business and the challenges. You wonder where common sense is.”
“I’d gotten interested in politics at the deli,” he told Los Angeles Times in 2003. “If I just tried to put a sign outside my shop, a little guy would pull up from the city and give me a note saying I had to go get a permit.”
“Those lessons that I learned back at Kevin O’s Deli have never left me. The higher the taxes, the less you have to pay your employees and the less you have to invest in new businesses,” he said in 2011.
Finally, he usually closes the story with a happy ending. “I was successful enough to have enough money to pay my way through college. So, I sold my business because I wanted to finish college,” he said during the interview with Wallace.
“I tell the story for two reasons,” McCarthy told The Fact Checker. “I tell the story so people realize I don’t give up on things. I tell the story so they realize I am willing to take a risk. So they will look at you, not just, ‘Oh, you are a member of Congress.’”
Yet there are no ownership or sales records that can be located for a Kevin O’s Deli in Bakersfield, according to the California Department of Tax and Fee Administration. On Stine Road, only a sellers permit can be found for a McCarthy’s Yogurt, owned by Patricia and Thomas McCarthy, with a start date of Nov. 11, 1982, and a close-out date of April 30, 1989. (There is also a permit record for the couple’s second yogurt shop.)
The shop, with the name of McCarthy’s Yogurt and Deli, was sold to Ron Russell and Perry McMasters on April 6, 1989, according to the bulk transfer record. McMasters said that they made payments on a loan but after six months they returned the note because business was too slow and they could not reach an agreement with the McCarthy family to move the location. The shop never reopened.
McMasters, who grew up in the neighborhood, said he would travel on his bike every day to the yogurt shop as a teenager and remembers the deli as an 8- by 10-foot section of McCarthy’s Yogurt, with a Telly Savalas poster hanging up.
McCarthy says he refinanced his car, “taking cash everywhere I could,” to buy the refrigerator, the slicer and other items before the opening. He also made payments on an icemaker because he wanted “special ice.” He says he paid rent for the space from his cousin, which was the suite next to the yogurt shop in a shopping strip. He said the deli had its own rear exit, for deliveries, and a wall was removed between the two suites to open up the space to the yogurt shop. That way, his customers could use the tables and chairs in the yogurt shop.
McCarthy said he paid his employees, not the yogurt shop, and he does not understand why there is no record of the business. He recalls vividly having to be prepared for unexpected food prep inspections. He also recalls spending $200 on a sign that the city made him take down after seven days.
“I am a 20-year kid that doesn’t have a business degree but wanted to be an entrepreneur,” he recalled, adding that his bookkeeper is no longer alive. “I know I got a business license. …Could I have incorporated and saved on tax? Probably.”
Michelle Willow, one of the employees, said she did not remember if the paystub came from the deli or the yogurt shop. “It was a small shop, probably two or three people if I remember correctly,” she said. “Kevin was fantastic. He was a young man successfully running his own business. It was a great experience. I never imaged that Kevin would be where he is today.”
McCarthy often says he ran the business for two years before selling it and using the money to go to college. But Michael Lukens, a spokesman for Cal State Bakersfield, says that school records show McCarthy started school on Jan. 5, 1987 – one year after the deli opened. He graduated two years later.
There was no tuition at Cal State universities for in-state residents at the time, just maximum fees of $338 per quarter, including the cost of books. McCarthy says he lived at home when he attended college. He says money he received from the sale of the business meant he did not need a job, so he could offer to work for free in Rep. Thomas’s office after being turned down for an internship.
“I had enough money from the business to pay my way as long as I went to Cal State Bakersfield,” he said. “But I also got paid for another year so I didn’t have to work.”
Does he remember what he got from his cousin from selling the business?
“No, I’ve got to call him and ask,” McCarthy said. “I know I got a payment, and then I got payments for a year.”
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