Executive Insights | May 2012 | By Barney Wolf

David Novak’s Global Vision

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The direction is positive, says James Schwartz, chief executive of the nation’s largest franchise, NPC International, which owns 1,200 Pizza Huts and cobranded units.

“Yum has done a great job of listening to the [Pizza Hut] franchisees and the needs of the franchisees,” he says. “They provide the insight, strategy, and ideas. We provide the voice of reality.”

Novak sees Pizza Hut growing from 6,000 to 8,000 U.S. units in the next decade, helped by smaller stores for less-populated communities. And Taco Bell, which he calls the “nation’s second most profitable chain,” can grow from 5,000 to 8,000 stores if sales grow.

Taco Bell sales suffered last year after a lawsuit—later withdrawn—over the amount of beef in its products. Now it has several new initiatives, including First Meal, a breakfast menu being tested at 800 restaurants. The units open at 8 a.m. instead of 10 a.m.

“We don’t expect it to be booming sales initially, but we think it will build a foundation that will allow us to ultimately have a really significant business,” Novak says.

Taco Bell’s late-night business grew by adding incremental hours, and Novak expects the same for morning. Earlier hours can be added as sales build, potentially becoming 24/7.

Other innovations include the Doritos Los Tacos, which feature Doritos taco shells, and higher-priced Cantina Bell menu items, including $5 burritos, tacos, and bowls inspired by Miami-based celebrity chef Lorena Garcia.

KFC remains “our biggest challenge,” Novak says. “The good news is we have a new leader in place who has a lot of confidence with the KFC franchisees.”

So far, the new KFC U.S. president, John Cywinski, has shown a willingness to reach out, say Selden and Burke. And a new marketing campaign, based on KFC’s fresh items, was greeted with optimism because it extols existing products.

While Yum will spread Novak’s teachings in 2012, he vows this will not be a one-year effort. “This is something we’re going to drive home year after year,” he says. “It institutionalizes our cultural values.”

Part of Yum’s culture is social responsibility, especially as a global company that feeds the world. Toward that end, the company selected the United Nations World Food Programme as its charity. That includes the proceeds from Novak’s book sales.

“We wanted to have a program that we could galvanize the whole world around,” he says.

Novak’s book and speaking appearances promoting it have some observers wondering if he’s on the cusp of retiring and hitting the speaking circuit. The Yum CEO says he’s just displaying his passion for the company and its opportunities.

“When you do something like this, you’re not coasting,” he says. “You’re driving at 100 miles an hour. I never worked harder in my life.”

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