Del Taco Hires President to Guide Expansion Effort

Its financial underpinnings and menu both beefed up, Del Taco Inc. is launching an expansion drive that will combine internal growth with an aggressive acquisition plan.

To make it work, Chairman Kevin K. Moriarty said Tuesday he has hired longtime industry executive C. Ronald Petty to take over daily operations of the Laguna Hills-based chain, a move that frees Moriarty to pursue takeover targets.

Moriarty also said the company has filled its long-vacant marketing director’s post, hiring Annette Shehan, a former marketing executive at Home Base and Jack in the Box. She joins Del Taco next week as vice president of marketing.

Petty, 54, who worked with Moriarty at Burger King Corp., will be Del Taco’s first president in almost five years. Moriarty had handled both daily and long-range management chores since pulling Del Taco out of bankruptcy in 1993.

Industry analysts say the two men--who helped Burger King grow from 1,700 outlets to more than 4,000--are a formidable team.

Moriarty said he wants privately owned Del Taco to double in size over the next two years. “This brand is ready to go into national development,” he said.

The chain now has about 325 locations in 12 states, with most of the operations in Southern California.

His plans for Del Taco do not include a public stock offering, though. “We have sufficient financing and don’t need to go public.”

Hiring Petty “is a big move” that signals the start of Moriarty’s growth push, says Carlsbad-based restaurant industry consultant Hal Sieling. “Petty is one of the best there is at increasing same-store sales and opening new franchise and company-owned locations.”

And that is just what Moriarty wants him to do, Petty said in an interview.

“I’m not a stranger to the brand,” he said, revealing that he has served an advisor to Moriarty ever since his former deputy took over the Del Taco chain in 1990.

“I see huge potential,” Petty said. “Unlike the burger business, there is no national competition except Taco Bell. All the other Mexican food chains are regional and small.”

Petty, a 26-year restaurant industry veteran, most recently was chief executive of Scottsdale, Ariz.-based Peter Piper Pizza Inc., a chain of about 100 entertainment-themed pizza restaurants.

Prior to that, he had been president and chief executive of Miami Subs Corp., a Florida deli sandwich chain; president of the 1,600-restaurant Denny’s Inc. chain, and president and chief executive of Burger King’s worldwide operations.

“He knows the quick service business and is definitely going to be an asset” to Del Taco, says industry consultant Janet Lowder of Restaurant Management Services in Rancho Palos Verdes.

Under Moriarty, Del Taco has grown from a shabby, almost derelict operation into one of the stars of the fast-food industry. Moriarty, in fact, received the prestigious Golden Chain Award from Nation’s Restaurant News last year for his successes at Del Taco.

The former Burger King executive took charge of the faltering taco chain in 1990 and immediately launched a major make-over--from the menu to the color and style of its buildings. “The only thing left from when I got here is the green sauce,” he quipped.

In 1993, he filed a Chapter 11 bankruptcy petition that enabled him to restructure the company’s finances. Del Taco emerged from bankruptcy the same year and was able to pay all of its creditors in full. In recent years, Del Taco’s sales have outpaced the fast-food industry average by a wide margin, industry analysts say.

Moriarty said the company now has $25 million cash in the bank, a $15 million credit line “and $30 million more in commitments [from banks] for our expansion.”