Taco Bell Replaces Top Exec; Chihuahua Out Too

Taco Bell Corp., struggling to reverse a dramatic decline in sales, replaced its top executive Tuesday and is muzzling its quirky spokesman, the talking Chihuahua.

The moves were announced by parent company Tricon Restaurants International Inc., which also said sales at Taco Bell restaurants open at least a year tumbled 6% in the second quarter, the largest quarterly decline ever for the nation’s largest Mexican-style fast-food chain.

“I realized that fundamental change at Taco Bell was necessary,” said Tricon Chairman David E. Novak, whose company also owns the Pizza Hut and KFC chains.

Emil Brolick, a 12-year veteran of Wendy’s International Inc., replaces Peter C. Waller, president of the Irvine-based Taco Bell chain since 1997. Novak would not say whether Waller had been fired, saying only that he “will be leaving the company to pursue other interests.” Waller couldn’t be reached for comment.

Also departing is the Chihuahua, famous for mouthing the words “Yo Quiero Taco Bell” (I want Taco Bell) in the company’s television ads.

Taco Bell is hiring a new ad agency to overhaul its marketing efforts, replacing TBWA Chiat/Day, which introduced the Chihuahua after winning the chain’s $200-million advertising account in 1997.

Novak said Taco Bell does not expect the Chihuahua to play a prominent role in new advertising campaigns. “He may have a cameo role, but I wouldn’t be surprised to see advertising that didn’t have him,” Novak said.

He said Brolick, 52, helped boost same-store sales at Wendy’s, the nation’s third-largest hamburger chain, by introducing several new products. He was senior vice president of strategy at the Dublin, Ohio-based company, which posted a 7.9% gain in same-store sales last year and reported that sales have climbed 3.3% so far this year.

Still, industry experts expressed surprise at the selection of Brolick to run Taco Bell, which has nearly 7,000 stores nationwide.

“You would think they would search for somebody with chief-executive experience,” said Randall Hiatt, president of Irvine-based restaurant consulting firm Fessel International. “They’ve traditionally had the management depth to do it internally.”

Waller, who had been an executive at Taco Bell and KFC, became president of the Mexican-food chain in 1997 when PepsiCo Inc. spun off its restaurant holdings.

Taco Bell’s decision to shelve the Chihuahua ads apparently stems from concerns that they were not focusing enough on menu items, Hiatt said. But in the process, Taco Bell “has kind of downplayed a successful ad campaign that was on everybody’s mind,” he said.

TBWA Chiat/Day denied that its creative work had lost its bite.

“It worked best when we had strong product to advertise,” said Tom Carroll, president of TBWA Chiat/Day’s Los Angeles office. “

The ads, introduced in early 1998, turned the Chihuahua and the tag line into a national phenomenon. Consumers lined up to buy plush Chihuahua toys at Taco Bell stores, and late-night talk show hosts incorporated the dog into monologues.

Early in 1999, Novak said, “People only get tired of boring ads. If we can keep it exciting, [the Chihuahua] can last forever.”

But the dog has faded from Taco Bell ads in recent months, and the chain instead has used its commercials to focus low pricing designed to drive business.

Taco Bell said Tuesday it would return all of its advertising to Foote, Cone & Belding Worldwide’s Southern California office. FCB has been handling media buying and regional advertising for Taco Bell, and the agency handled all of the chain’s advertising during the late 1980s and early 1990s. Taco Bell described that as the “strongest growth period” in its history.

Also Tuesday, Tricon reported that second-quarter profit from continuing operations rose 16%, to $113 million, or 76 cents a share, beating estimates of 71 cents. Results were boosted by cost-cutting and strong sales at Pizza Hut. Sales at KFC and Taco Bell declined.

Louisville, Ky.-based Tricon announced the moves after the markets closed. Its shares slid 4%, or $1.28, to close at $27.50 on the New York Stock Exchange.