Pepsico Names Top Managers of Spin-Off Restaurants

PURCHASE, NY, June 09, 1997 – PepsiCo, Inc. today announced the top management of the restaurant company it will spin off to shareholders later this year.The yet-to-be-named company, with estimated revenues of $10 billion, will combine the worldwide businesses of Pizza Hut, Kentucky Fried Chicken and Taco Bell. It will be the largest restaurant company in the world in units and second-largest in sales.

Andrall E. Pearson, an operating partner of Clayton, Dubilier & Rice and a highly experienced business leader, will leave the buyout firm to serve as chairman of the board and chief executive officer of the new restaurant company. He will be directly involved in setting overall strategy for the company, establishing corporate performance standards and priorities, and providing the resources needed to compete effectively.

David C. Novak, currently president and CEO of Pizza Hut and KFC and a 10-year PepsiCo executive, will be vice chairman and president of the new company. He will be responsible for operating the businesses and developing its three major brands. All brand organizations and corporate functions will report to Mr. Novak.

“This is a superb leadership team for a powerful, exciting company,” said PepsiCo Chairman and CEO Roger Enrico. “Andy Pearson is a brilliant business strategist with extensive experience in both retailing and consumer products, and he wrote the book on PepsiCo’s people development process. David Novak is probably the brightest, most inspiring restaurant leader anywhere. Together they’ll bring a vast wealth of intelligence, leadership and operating experience to this enterprise.”

Andrall Pearson has more than four decades of business experience in a wide range of industries, including consumer products, retailing and franchising. As a Clayton, Dubilier & Rice operating partner, he has played an important role in the performance improvement of a number of portfolio companies, including Alliant Food Services (a $5 billion distributor), where he is chairman of the board. He also served on several other Clayton, Dubilier & Rice boards, as well as those of May Department Stores Company and Travelers Group. From 1985 to 1993 he was a tenured professor at Harvard Business School.

For a large part of his extraordinary career, Mr. Pearson was president and chief operating officer of PepsiCo, during which the corporation’s sales grew from $1 billion to $8 billion. At PepsiCo he was involved in acquiring and expanding Pizza Hut and Taco Bell, two anchor brands of the new restaurant company. Mr. Pearson earlier spent 16 years at McKinsey & Co., where he was a director and led the firm’s marketing practice.

David Novak brings to the company an exceptional record of building both restaurant operations and top consumer brands. He has been associated with PepsiCo for 20 years, first as an advertising agency executive and later, starting in 1986, as an executive of the corporation. As president and CEO of KFC in the United States since 1994, he has dramatically improved sales and profits. KFC’s nine consecutive quarters of same-store sales growth make it one of the fastest-growing major chains in the United States. Last year Mr. Novak assumed additional responsibility for Pizza Hut in the U.S., which has made major improvements in operations and product quality. Previously Mr. Novak served as chief operating officer for Pepsi-Cola North America, PepsiCo’s $7 billion beverage business in the U.S. and Canada, and as executive vice president of Pepsi-Cola Marketing and Sales. He joined PepsiCo as senior vice president of marketing for Pizza Hut after working as executive vice president of client services at advertising agency Tracy Locke/BBDO, with primary responsibility for the Frito-Lay account.

The new restaurant company will comprise over 29,000 company-owned and franchised restaurants in 95 countries. Its brands — Pizza Hut, KFC and Taco Bell — are the global leaders of the pizza, chicken and Mexican restaurant categories, respectively. Total worldwide system retail sales for the chains were more than $20 billion in 1996.


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