Taco Bell, in Symbolic Victory, to Stay in Irvine : Business: Officials say it shows the state can retain jobs. The chain was offered a package of financial incentives.

Marking an important symbolic victory for California’s efforts to keep businesses from leaving the state, Taco Bell Corp. announced Friday that it will keep its headquarters in Irvine, rejecting aggressive overtures from states all over the country.

Offered half-price on its office rent and a $4-million remodeling package by its hard-pressed Japanese landlord, Taco Bell said it would stay in the same 12-story headquarters in Orange County that it had earlier declared to be too small for its expansion plans.

The announcement, which will preserve 1,000 jobs in Southern California, followed a concerted effort by state and local officials to keep one of Orange County’s best-known corporations from leaving the state.

“We are delighted,” Gov. Pete Wilson said. “We think that is very, very good news, first and foremost because this is a very good and aggressive company with very realistic but very exciting plans for future growth. They are also of symbolic importance in that we are specifically trying to woo corporate headquarters in California.”

Taco Bell’s plan to stay brought cheers and high fives from the employees and full-time contract workers who gathered in the huge employee restaurant to hear the news.

In deciding to stay put, Taco Bell executives turned aside a lucrative offer from Texas and a personal sales effort by its governor, Ann Richards. The Texas package included $10 million in tax breaks as well as the standard fare: no income tax, inexpensive land and less onerous government regulations.

Taco Bell, which had been offered dozens of sites in California, Texas and Georgia, also said it shelved well-publicized plans to build a campus-like complex of low-rise buildings with 400,000 square feet of space and room to grow 50%.

The Mexican-style, fast-food chain negotiated the rent reduction and remodeling package from its landlord, Shuwa Investment Corp., according to a Shuwa spokesman. Taco Bell said only that it was too expensive to build a new headquarters elsewhere in Orange County or in Texas, where it had been eyeing property in the north Dallas suburb of Plano.

The company’s decision came despite a legislative committee’s rejection earlier last month of a bill that would provide tax credits to large corporations that moved in or expanded. Assembly Speaker Willie Brown said that lawmakers remain optimistic about pushing through some corporate relief this year, a factor that may have helped to persuade Taco Bell to remain.

“It’s a major victory . . . more symbolic than actual,” Brown said. “If we had lost them, it would have just been another nail in the coffin. We’re slowly but surely reversing the perception that companies ought to leave.”

Local officials also were elated about the news.

Irvine Mayor Michael Ward said the decision shows that “the political winds in California have changed, and leaders are realizing that they not only have to court business to move to the state, but they also have to court those who are already here to remain.”

Employees, nervous about their jobs, were generally jubilant over the decision.

“It’s an emotional thing that’s been hanging on forever,” said Tim Johnson, who designs the signs and image of Taco Bell restaurants. “The rumor mill has been rampant, and so there’s a great deal of relief now.”

Cynthia Tapas, an administrative specialist for Taco Bell, said she almost cried when she heard the news. “It would’ve broke my heart if we left,” she said. “My family is from Sweden and they love coming out here. The first thing they want to do when they visit is go to Taco Bell.”

Taco Bell decided that the “economics of building a new facility just didn’t make sense in today’s environment,” John E. Martin, Taco Bell’s chief executive, said in prepared remarks Friday.

The continuing regional slump in the real estate market has wreaked havoc on Shuwa. The beleaguered Tokyo-based real estate investment company had borrowed heavily to expand its portfolio of properties in the 1980s, at the height of the market. It simply could not afford to lose a major tenant, and offered Taco Bell rock-bottom prices that cut the rent more than 50%.

Taco Bell, which now occupies 280,000 square feet in the high-rise and a smaller adjacent building, may later be able to lease up to four additional floors in a nearby building.

Taco Bell quietly began its search for a new headquarters a year ago. The company wanted to build its own corporate headquarters--preferably a series of interconnecting low-rise buildings arranged in a campus-like atmosphere with room to grow to 600,000 square feet.

The company gathered a team of experts, including the Cushman Realty Corp. and Gensler & Associates architects, to search the nation for a new site.

By late fall, the team was concentrating on sites in and around Atlanta and Charlotte, N.C., as well as Orange County and Dallas-Fort Worth. The Orange County sites included the Irvine Spectrum, Rancho Santa Margarita and two locations on either side of UC-Irvine, one promoted by UCI and the other by the Irvine Co.

By the end of March, the search had been limited to the Irvine Spectrum and the Legacy business park in Plano.

A last-ditch effort by California was mounted March 28 in a meeting at Irvine City Hall. It was the biggest gathering of local and state officials and business leaders to meet with Taco Bell officials. Gov. Wilson three days earlier had talked with Martin by telephone urging him to stay.

Martin said later that until that meeting, the company was “this close” to moving to Texas, but California officials “got religion” and began to offer inducements to keep the company here.

Times staff writer Eric Bailey in Sacramento and Debora Vrana in Costa Mesa contributed to this report.

Ringing Up Profits

Taco Bell has had steady success during the last five years. During that period, net sales nearly dobled while operating profits increased 131%. Net sales and operating profits, in millions:

Net Sales: $2,901.3 (1993)

Operating Profits: $253.1 (1933)

Market Diversity

Taco Bell has proved a a hit both at home and over the border. During the 1988-93 period, average domestic sales per unit leaped 57%. And worldwide system sales more than doubled. Average unit sales in thousands, worldwide sales in billions:

Domestic Unit Average: $925 (1993)

Worldwide Sales: $3.9 (1993)

Restaurant Growth

Mirroring its increased sales and profits, Taco Bell has continued to open more restaurants in the last five years, increasing the number 68%.

1993: 4,921

Nibbles and Bits

Taco Bell accounted for more than 70% of the domestic Mexican-style fast food restaurant market last year.

Of the company’s $ 3.9 billion worldwide sales $3.8 billion was in the U.S.

1993 worldwide sales increased $441 million over 1992 figures.

Much of the increase in 1993 net sales and operating profits resulted from $89 million in sales of additional restaurant units.

Source: PepsiCo Inc.