Del Taco’s Armstrong, Leader of Buyout, Resigns

Wayne W. Armstrong, who led an estimated $150-million management buyout of Del Taco/Naugles Inc. seven months ago, has resigned as president and chief executive, company officials said Tuesday.

Armstrong, 51, had been with Del Taco 13 years, the last 10 as president. He resigned for “personal reasons,” said Paul Hitzelberger, vice president of marketing for Del Taco, the nation’s second-largest Mexican-style fast-food chain.

“It’s a surprise, but we clearly wish Wayne the best,” Hitzelberger said. “He’s probably going to put his feet up and take it easy.”

Armstrong will be replaced by Kevin Moriarty, 42, a former executive vice president and general manager of the North-Central and Western divisions of Burger King U.S.A. Moriarty, also one of five members of the company’s executive committee, was responsible for about 2,500 stores, or half of Burger King U.S.A.

Armstrong told company officials of his decision to leave shortly after returning from a recent trip to Europe, Hitzelberger said. He was not available for comment Tuesday.

Armstrong and that three Del Taco vice presidents--Hitzelberger, Harold Fox and John Crofton--acquired the privately held chain from Newport Beach restaurateur Anwar Soliman in January.

The company was formed in 1988 when Soliman bought and merged 25-year-old Del Taco, a private company, and 20-year-old Naugles Restaurants, which was then owned by Los Angeles-based Collins Food international. Del Taco, headquartered in Costa Mesa, operates 305 Del Taco and 34 Naugles restaurants in California, Arizona, Utah, Nevada, Illinois and Missouri. The annual revenue of the privately held firm exceeds $200 million.

GE Credit Corp., which reportedly was unhappy with Soliman’s efforts to position the two chains at the high end of the Mexican fast-food market, financed the acquisition. GE Credit officials were not available for comment Tuesday.

Armstrong has sold his 20% stake in Del Taco to the company, Del Taco spokeswoman Hatti Hamlin said. Moriarty said he will buy some of that stock but will not own as large a share as Armstrong did.

While Moriarty left a much larger company to take over operations at Del Taco, he said Tuesday that he viewed the change as “an enormous challenge. It’s a stand-alone company; it doesn’t have the support of a corporate headquarters. I’m very excited about it.”

Burger King, the nation’s second-largest hamburger restaurant chain, has just completed a year-long overhaul after its purchase by Grand Metropolitan PLC of Britain.

Moriarty will begin work at Del Taco today.

Mike Mooslin, president of MDM Restaurant Group of Santa Ana, a restaurant franchise broker, also said that Armstrong’s resignation was unexpected. He said he had an appointment scheduled with Armstrong for next week and that Armstrong had not yet canceled the appointment.

Mooslin, a former Naugles president who left before its merger with Del Taco, said that Del Taco is apparently healthy and that Armstrong didn’t leave because of financial problems.

Industry specialists say that Del Taco’s new marketing campaign has been competing effectively with major rival Taco Bell.

And with the South Coast Air Quality Management District outlawing new drive-through restaurants beginning in 1994, Del Taco’s properties “are going to be worth their weight in gold,” he predicted.

However, he said he has heard that Del Taco franchisees have complained of competition from company-owned stores, which Mooslin said are too close to the franchise operations.

Hitzelberger, however, said there has been no pressure from franchisees.

He said Del Taco is expanding, with three new outlets opened so far this year--in Victorville, San Bernardino and at the Naval training center in San Diego--and three more are scheduled to open by the end of the year.

The company also will announce today the addition of a 49-cent hamburger and a 69-cent cheeseburger to its menu, Hitzelberger said.

He said sales and customer count are up by more than 10% from last year because of new marketing initiatives instituted since the January buyout that Armstrong engineered.

In January and February, the company lowered some prices and brought back former menu items that had been discarded under Soliman’s program to upgrade the menu.

During his 16 years with Burger King, Moriarty’s various responsibilities at Burger King have included sales, marketing, training, franchise negotiations and operations, finance, real estate and construction.

He served as New York area manager of Burger King, then as vice president of the Chicago Region. Before joining Burger King, Moriarty, a Brooklyn native, was a self-employed restaurateur in New York.