Chains of Command


PepsiCo Inc. on Tuesday took another step toward spinning off its $11-billion restaurant business by appointing new presidents at the Taco Bell, KFC and Pizza Hut chains.

The appointments came one day after the soft drink and snack food giant named the chairman and vice chairman of the restaurant company that will be spun off to shareholders later this year.

Restaurant industry analysts noted that all of the newly named executives have strong ties to PepsiCo--and that most made their mark in advertising and marketing rather than restaurant operations.


“They’ve obviously decided that there’s a lot of talent inside PepsiCo’s restaurant operations,” Carlsbad-based consultant Hal Seiling said. “And they’re thinking that hiring Joe from McDonald’s or Pete from Burger King didn’t make a lot of sense.”

PepsiCo named Peter C. Waller to lead its Irvine-based Taco Bell operations, Mike Rawlings to head the Dallas-based Pizza Hut chain and Jeff Moody to run its Louisville, Ky.-based KFC chain. Each executive will hold the title of president and chief concept officer.

On Monday, the company selected Andrall Pearson, a former PepsiCo president, as chairman and chief executive of the restaurant company, which has yet to be named. David Novak, most recently president of the Pizza Hut and KFC chains, was named vice chairman and president of the new company.

The marketing savvy of the new leadership will be tested as the three chains, with 29,000 company-owned and franchise locations worldwide, struggle to report consistent sales and profit growth.

“It’s been sort of like an eight-cylinder car at PepsiCo with only six of the cylinders working,” said Ron Paul, president of Technomic Inc., a Chicago-based consulting firm. “And, unfortunately, it’s not always been the same six cylinders that have been working.”

During the late 1980s and early 1990s, for example, Taco Bell’s sales and earnings continued to grow, while KFC and Pizza Hut occasionally stumbled. In recent quarters, KFC has been on track and Taco Bell seems positioned to reverse a two-year slump.


In an interview Tuesday at Taco Bell’s corporate headquarters building, Waller said that a 4% sales gain at stores open for more than a year--the first such advance in two years--will carry through into the second quarter.

“This isn’t just a one-shot thing,” Waller said. “Our new ‘Batman and Robin’ promotion just started three days ago and sales are off the charts.” Waller was referring to a toy giveaway tied to the latest Batman movie to be released next week.

Waller attributed Taco Bell’s much-needed sales revival to a corporate decision to reemphasize food quality, a major change for the chain that revolutionized the fast-food industry during the late 1980s with its low-cost “value menu.”

“We’ll still deliver value,” Waller said, “but we know that it all comes back to the food. In the past, you’ve heard us talk about pricing and the number of outlets we have. You’re going to hear more now about food--the quality and great taste.”

Waller, who joined Taco Bell 18 months ago after a stint with KFC, succeeds John Antioco, who resigned last week to become chairman of Dallas-based Blockbuster Entertainment. Waller was credited with helping turn KFC around, and has been credited with helping to revitalize Taco Bell’s lagging sales in recent months.

Moody, a 10-year PepsiCo veteran, most recently was a vice president in PepsiCo’s international restaurant business. He succeeds Novak.


Rawlings, an advertising industry executive who worked on PepsiCo campaigns for 17 years, most recently was president and chief executive of ad agency DDB Worldwide’s Dallas group.

In a related matter, PepsiCo officials said Tuesday that they are meeting with economic development officials in California, Kentucky and Texas to discuss possible headquarters locations for the new, publicly traded company.

Individual restaurant chain headquarters, including Irvine-based Taco Bell, won’t be shifted once a corporate headquarters for the new company is determined.


Profile: Peter C. Waller

Company: Taco Bell

New job: President

Previous position: Senior vice president of marketing

Age: 42

Background: Joined PepsiCo in 1990 as managing director for Western Europe, which included establishing Kentucky Fried Chicken’s first restaurants in Paris; two years in Sydney, Australia, as regional marketing director for KFC in the South Pacific and South Africa (PepsiCo owns both KFC and Taco Bell)

Education: Master’s degree, Oxford University

Residence: Laguna Hills

Personal: Married, three children

Source: Taco Bell