Industry News | January 1, 2000
Yo Quiero Second Place
By Robin F. DeMattia
It's true what they say about not burning bridges in business—you never know when you'll work with someone again.
Take, for example, Kevin Moriarty, chairman of Del Taco, Inc., and Ron Petty, the company's new president. When Petty was president and chief operating officer of Burger King Worldwide several years ago, he was Moriarty's boss. Since Petty joined Del Taco last December, their roles are reversed. But they don't let organizational charts get in the way of their jobs, or their friendship.
"Ron is one of those people—I can count them on one hand—who influenced my life and my career," Moriarty says. "He's taught me so much." Moriarty had needed that support since taking the helm of the struggling Del Taco in 1990. While Petty served as a personal advisor, touring restaurants four times a year with Moriarty and offering suggestions, Moriarty turned the company around. He reformatted the menu, strengthened the balance sheet, and infused capital. In five years the chain more than doubled its annual sales per average unit ("The Contender," QSR March/April 1998). Now, the company is not only surviving but poised for growth.
"Ron and I planned all along to rejoin forces and chase this thing big-time," Moriarty says. "It's Batman and Robin, and we're off to the races. We have unlimited capital, and nothing's holding us back now."
Petty shares Moriarty's enthusiasm and says the time was right for him to join his friend in his crusade. "Kevin has done a great job with this brand," he says, "and he has the financial package and cash flow that can allow an aggressive expansion mode. My coming in gives Kevin time to spend with acquisitions while I work with the internal growth and franchise business."
Petty was familiar with Del Taco, but he did find a few pleasant surprises when he came on board. "The opportunities are bigger than I thought," he says. "I'm really pleased with the operations side of the business and the potential in the markets we're continually growing." Del Taco had 325 stores at the end of 1998, including two hundred that are company-owned. While Moriarty once boasted of having one thousand stores by the year 2000, he says a more realistic figure is 20 percent growth in 1999, not including acquisitions. "We're now in twelve states," says Petty, "and we want to grow those markets before opening in new ones." The chain will focus on the west coast before expanding geographically. Moriarty says he's talking to a number of potential targets, but declined to be specific about growth and acquisition opportunities.
Neither man is intimidated by the amazingly popular Chihuahua, spokesdog for segment giant Taco Bell. "For twelve years I developed new countries for Burger King overseas," says Petty, "and one of the things I learned in that process was I always wanted to go into a new country second, not first, after [a competitor] had created awareness and buying power. The great thing we've got is that Taco Bell has created the quick-service Mexican category in the United States. All we have to do is take advantage of that with a better product."
Petty says Del Taco is well positioned to meet the challenge. "We have a better tasting product and more variety on our menu than does our major competitor," he says. "We have a system in which both the company and the franchise restaurants are doing well. And we're comparable to the number-one guy in the segment in average unit volume."
Petty plans to grow Del Taco by streamlining some processes in the development and franchise areas and by focusing on training. "At the end of the day," he says, "the moment of truth is when the customer comes to the front counter or drive thru." He also says brand position in new markets is a key priority—that means getting the word out ahead of time so a restaurant can open with high volumes.
Both men are optimistic about the future of the Mexican quick-service category, as well as their company. "As the number-two brand," Moriarty says, "it's not a life-and-death struggle between Taco Bell and us. There's plenty of business out there."This article originally appeared in QSR Magazine. All rights reserved.
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