By Julie Jargon
Yum Brands Inc. named the head of its Taco Bell operations as
its next chief executive, promoting a company veteran who has had
success with new products at a time when other parts of Yum's
business have struggled.
The company on Thursday said current Chairman and CEO David C.
Novak will become executive chairman on Jan. 1, handing over the
main responsibility for day-to-day operations to Greg Creed, a
20-year veteran of Yum who has been CEO of Taco Bell since early
2011.
Mr. Novak will form an office of the chairman focused on
corporate strategy that will include Mr. Creed and Sam Su, Yum's
China boss and vice chairman. All Yum divisions will report to Mr.
Creed, who also will join Yum's board of directors.
Taco Bell is the smallest of Yum's three main divisions, with
6,060 outlets as of March, compared with 18,847 KFC restaurants and
15,011 Pizza Huts. The vast majority of Taco Bells are in the U.S.,
while KFC and Pizza Hut are heavily international.
Yum's revenue from U.S. Taco Bell restaurants declined to $1.5
billion last year from $1.8 billion in 2010, the year before Mr.
Creed took over. During that time, Yum's overall U.S. sales
declined 38%, weighed down by a sharp decline in U.S. revenue at
KFC.
Taco Bell has also rung up some significant recent successes
under Mr. Creed, seizing much of the fast-food zeitgeist in the
U.S. with products like Doritos Locos Tacos, with shells formed
from Doritos chips, which has been one of the chain's best-selling
products ever. Taco Bell also came out with a "Taco Fresco" line of
Chipotle-like burrito bowls and other items intended to appeal to
more health-conscious customers.
Mr. Creed also steered the brand through a difficult time in
2011, when a lawsuit accused the company of using filler in its
taco meat. The suit was dropped, but the attention from the suit
hurt sales. Mr. Creed ran ads and letters thanking the plaintiff
for giving Taco Bell the opportunity to explain that its tacos are
all meat.
In the most recent quarter, U.S. same-store sales at Taco Bell
slipped 1%, a slower rate of decline than the company's other
fast-food brands.
KFC sales had boomed for many years, driven largely by its China
business under Mr. Su. But KFC sales in China began to decline in
late 2012 after Chinese media reported on the use of growth
hormones and antibiotics by two KFC chicken suppliers.
China sales bounced back in the most recent period, however, as
the company recovers from food-safety concerns related to KFC
chicken suppliers more than a year ago. The company in March
launched a new menu and marketing campaign in China, and it plans
to tap Chinese celebrities to promote its new products.
Mr. Novak, who has led Yum since 1999, is a charismatic
executive, widely liked by employees. He has led every Wall Street
investor meeting with a cheer, making analysts stand up and form
the words "Y-U-M" with their arms. The author of a book called
"Taking People With You," he has maintained an internal blog in
which he shared photos and ideas gleaned during his trips visiting
Yum locations around the world.
When asked in a 2012 Wall Street Journal interview which
products he favors, Mr. Novak singled out the Taco Bell Fresco
line, saying "I eat that everyday almost, at the company cafeteria
or when I'm in restaurants."
Total pay for Mr. Novak dropped 29% last year to $10 million as
the company said his overall performance for the year missed
targets, according to a March filing. Mr. Su's $10.3 million in pay
for 2013 marked a 38% decline from the previous year.
Michael Calia contributed to this article.
Write to Julie Jargon at julie.jargon@wsj.com
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