Taco Bell Considers Moving Headquarters Out of O.C.
Taco Bell, moving ahead in its search for a larger headquarters, announced Thursday that it is talking with officials in Atlanta, Dallas and other locations as well as in its hometown of Irvine. And it told employees that they’ll hear more about their fate late next month.
The fast-food company’s 800 corporate employees heard at lunchtime meetings that the company will decide by Nov. 30 whether to build new corporate offices. If Taco Bell decides to abandon its gleaming 12-story office tower, employees were told, they’ll hear as early as March where they’ll be working--in Orange County or elsewhere.
“I think every developer in the country is tracking those guys,” said Don Koll, chairman of Koll Co., a Newport Beach development company that once owned the Taco Bell headquarters building. “They are the prettiest girl in town right now.”
Rumors about the fate of Taco Bell are swirling because the company is considering what to do when its lease expires in November, 1996. The company, founded in Southern California 31 years ago, occupies 280,000 square feet in Irvine but is seeking more space to accommodate its ambitious expansion plans.
Taco Bell Vice President Rudy Pollak confirmed Thursday that delegations from Dallas, Atlanta and North Carolina are wooing the company. He also said he has had some conversations with Irvine city officials but has heard relatively little from other county and state agencies charged with keeping jobs in California.
“I’ve received two phone calls, maybe three” from local economic development officials since Sept. 15, when The Times chronicled Taco Bell’s real estate search, Pollak said.
The mere fact that Taco Bell is talking to out-of-state agencies is “of real significance,” said Terry Hartman, president of the Irvine Chamber of Commerce. “If they leave it’s a real slap in the face. It means we’re not doing (things) right in California anymore.”
The city of Irvine and the Irvine Chamber have been in contact, Pollak said, and the office of state Assemblyman Tom Umberg (D-Garden Grove) asked the city of Santa Ana to alert Taco Bell to its enterprise zone.
Orange County Chamber President Thomas Wilck said Thursday that he recently placed a call to Taco Bell President John Martin, but hasn’t heard back.
“We think there are very good reasons for them to stay, and we want to review those reasons with them,” Wilck said. “I don’t know what a chamber or city can do, but where it has to start is with talking to them, finding out what their concerns are.”
Taco Bell, a subsidiary of Pepsico Inc., rents its Irvine headquarters from ShuwaInvestments Corp., which has declined to comment on lease negotiations. Taco Bell, with 70,000 employees worldwide and $3.3 billion in annual sales, has said it will need more office space to accommodate its growth plan, which calls for an expansion from 4,200 restaurants to about 200,000 locations by the year 2000.
Out-of-state interest in Taco Bell’s real estate needs has been driven solely by news media reports, Pollak said. “We haven’t solicited any of these contacts,” he said. “But given the magnitude of some of the incentives, you can’t help but take a good hard look.”
Irvine Chamber President Hartman said Taco Bell’s acknowledgment of talks with out-of-state agencies is in part “a leveraging tool, part of the negotiating process” by the company.
But given that Taco Bell officials have three years to make a decision, Hartman said, he thinks “they’ve got a diverse list of targets, and it sounds like they’re going to go shopping for some concessions or deals.”
“There are definitely things we can do” to entice Taco Bell to remain in Irvine, Hartman said. “But it’s not just Irvine. We’ve got to have the county involved, and we need some state involvement when it comes to business retention.”
Development officials in Dallas and Atlanta would not comment on inducements they will offer to lure Taco Bell. But officials in both cities made it clear that Taco Bell’s corporate headquarters operation is the type of business they’re going after.
“These are high-tech, high-dollar jobs,” said Bill Crane, marketing director for Forward Atlanta, an economic development agency. “Once the CEO moves his or her headquarters, it’s not long until other parts of the company are moved to be closer to them.”
“We market ourselves to the West Coast, and specifically Los Angeles and Orange County, on a regular basis,” said Reid Rector, senior vice president for economic development at the Greater Dallas Chamber of Commerce. “As part of that process, we’ve maintained contact with Taco Bell.”
The development executives said that Southern California, along with northeastern states and Toronto, are the main targets for development raids. “There’s been an exodus in those three areas,” Crane said.
Twenty years ago, Atlanta pitched “cheap land and a warm climate year-round,” Crane said. “But now we’re telling them that we’ve got a world-class airport, a communications network without rivals and the fact that 80% of the nation’s population is two hours or less away by airplane.”
Dallas scored a coup in June when Transamerica Insurance Group agreed to transfer most of its Southland operations to the Dallas-Ft. Worth area, resulting in the loss of more than 1,300 jobs. About 1,000 of those jobs are in Woodland Hills, but the company also has about 200 employees in Orange County.
Koll questioned whether Taco Bell, which was founded 31 years ago in Downey, is serious about moving from Southern California. “I think they are using leverage to try to get a better deal,” Koll said. “I would do it if I were them. . . . I think if they get an equal deal somewhere else they will stay.”
Pollak said Thursday that the company has developed two options to solve its real estate needs: building a new complex or finding space in an existing building in Orange County or elsewhere. If the company determines on Nov. 30 that it will build a new structure, “in March, 1994, I will tell them the location,” Pollak said.
That timetable would give Taco Bell nearly three years to build a new corporate headquarters building, Pollak said.
That timetable would be modified should Taco Bell forgo a new building and instead look for space in an existing building. If Taco Bell determines that its needs can be filled by an existing building, employees probably wouldn’t learn the new location until late in 1994, Pollak said.
Taco Bell’s strategy is designed to give it flexibility in the current, stalled real estate market, Pollak said.
Some local real estate observers suggested that Taco Bell look no farther than the East Tower at Koll Center Irvine North. Because of an overdue $50-million construction loan, Connecticut General Life Insurance is foreclosing on the property built by the Koll Co. and Columbia Savings and Loan. Connecticut General plans to sell the office tower on the steps of the Orange County Courthouse in Santa Ana on Oct. 18.
The 12-story polished granite building would be an excellent site for a company headquarters, said Pat Murphy, senior vice president of marketing for the Koll Co. The building includes a full basement for storage purposes, a dedicated service elevator and nearby shops, restaurants and dry cleaning.
Times correspondent Debora Vrana contributed to this report.
Irvine’s Largest Employers
Taco Bell is Irvine’s sixth-largest corporate employer.
Company Main Business Employees Fluor Corp. Engineering, construction 2,830 Baxter Healthcare Corp. Medical devices and supplies 1,600 Allergan Inc. Pharmaceuticals 1,550 McCaw Cellular Communications services 1,437 Communications Inc. Parker-Hannifin Corp. Aerospace and 1,410 biomedical products Taco Bell Corp. Fast food 800
Sources: Irvine Chamber of Commerce, city of Irvine business licenses
