PepsiCo Ousts Longtime President of Taco Bell

By GREG JOHNSON

Oct. 11, 1996 12 AM PT

TIMES STAFF WRITER

IRVINE —

PepsiCo Inc. on Thursday ousted longtime Taco Bell Corp. President John Martin in favor of a convenience store executive, signaling yet more change in the hotly competitive fast food industry.

Martin’s departure marks the end of an era at Taco Bell, which was a small, regional player when Martin arrived here as president in 1983. As he transformed Taco Bell into an international powerhouse, Martin also wove the company into Orange County’s civic, charitable and social fabric.

“I don’t know where John goes from here, but he’s definitely someone we had a very good relationship with,” said Dennis J. Aigner, dean of UC Irvine’s Graduate School of Management, where Taco Bell funds an endowed professor. “Taco Bell has been a long-standing corporate sponsor here, and the endowed chair is just icing on the cake.”

Martin, 55, on Thursday was shifted to parent company PepsiCo’s casual dining division, where his first duty as chairman and chief executive could be to sell off the California Pizza Kitchen, Chevy’s and East Side Mario’s chains, which, analysts say, don’t fit into PepsiCo’s stable of fast-food restaurants.

Martin wasn’t available to comment on Thursday, but restaurant industry observers said it was unlikely that the Irvine resident would have to leave Orange County because he has been overseeing PepsiCo’s casual dining chains from Taco Bell’s headquarters.

Aigner described Taco Bell as “a solid corporate citizen” that isn’t going to go away” despite Martin’s departure.

Taco Bell recently hosted its third annual golf tournament to benefit Hoag Memorial Hospital Presbyterian, underwrote part of the Orange County Performing Arts Center’s 10th anniversary and will sponsor this Sunday’s Irvine Barclay Theater appearance by singer/songwriter Don McLean.

Martin also stirred up considerable controversy in 1994 when word leaked out that Taco Bell might join the wave of corporate defectors leaving California for less-expensive pastures.

The company’s 1,000-person corporate staff eventually stayed put, but only after state and local government officials intervened.

Thursday’s move sparked immediate speculation among restaurant industry observers that Martin is now positioned to take more than just a management role at the three chains that, in Martin’s estimation, have solid futures.

“If at the end of the day Martin figures that it’s best for PepsiCo to sell the casual dining restaurants, maybe he would lead a group that spins them off,” said Randall Hiatt, president of Fessel International, an Irvine-based restaurant industry consultant. “He’s certainly a very credible executive.

Martin’s replacement at Taco Bell is John F. Antioco, 46, most recently chairman and chief executive of Circle K Co., the Phoenix-based convenience store operator. Antioco guided the 2,500-unit chain out of bankruptcy in 1993, took the company public in 1994 and left in May, shortly after engineering Circle K’s sale to Tosco Corp. for $710 million.

Martin’s departure came just two days after McDonald’s Corp. tried to rev up stalled sales by appointing Chief Financial Officer Jack M. Greenburg to the newly created position of chairman at its McDonald’s USA operation.

Like McDonald’s, Taco Bell is struggling to ramp up sales at locations open for more than a year--an important measure of success in the restaurant industry. While the chain remains profitable and its revenue is growing, most of the advances are driven by the opening of new stores.

“Taco Bell definitely has been the poor performer in PepsiCo’s restaurant portfolio in recent quarters,” said Ron Paul, president of Technomic Inc., a restaurant industry consulting company. “But John Martin has had a good, solid run. He accomplished a lot while he was there.”

Janet Lowder, a Rancho Palos Verdes-based restaurant industry consultant, described Martin’s 13-year tenure at Taco Bell as “an extraordinary performance. Look back just five years ago and you’ll see what he’s done. Thirteen years is an awfully long time in this business.”

Martin, 51, is credited with building Taco Bell into 6,490 locations worldwide and $3.5 billion in revenue.

He drew praise from Harvard University and USC business school professors for the ground-breaking “value menu” that Taco Bell introduced in 1990, and for behind-the-scenes operational changes that boosted Taco Bell’s profitability.

But Taco Bell, like McDonald’s and other major fast-food operators, has been hamstrung in recent quarters by stalled sales.

“It’s important to remember that this is a cyclical business,” Lowder said. “You can’t win forever.”

Two weeks ago, PepsiCo Chief Executive Roger Enrico pledged to pump up corporate earnings that have “fallen short” by strengthening revenue and profit at its restaurant operations, including Taco Bell, KFC and Pizza Hut. Enrico also said he would review the possibility of selling off the California Pizza Kitchen, Chevy’s Mexican chain and its East Side Mario’s eateries.

Enrico said that PepsiCo was “delighted to add a strong leader like John Antioco to our restaurant team. His great depth of experience in retailing will be enormously valuable in positioning Taco Bell for solid long-term growth.”

Retail industry observers credit Antioco, who wasn’t available for comment on Thursday, with reviving Circle K, which entered bankruptcy in 1990. He arrived on the scene in 1991 and helped fashion the reorganization plan that was approved by a U.S. Bankruptcy Court judge in 1993.

At Circle K, Antioco preached a corporate gospel of “value and convenience, not just the value of convenience.” To that end, he added name brands that previously hadn’t been sold in convenience stores and tried to gussy up the image of Circle K’s convenience stores.

“John was really an innovative thinker at Circle K,” said Steve Kernkraut, a New York-based industry analyst with Bear, Stearns & Co. “He was always willing to try new ideas, he’s a people person, and he knew enough to recruit a great organization to work with him.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Profile: John Martin

Company: Taco Bell

Headquarters: Irvine

Position: CEO/president

New assignment: PepsiCo, Taco Bell’s parent company, as chairman/CEO of its casual dining operations

Age: 51

Education: Bachelor of arts, Middlebury College (Vermont)

Residence: Irvine

Board memberships: California Pizza Kitchen, the Good Guys, Williams-Sonoma, Middlebury College

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RESTAURANT PROFILE