While first-week sales of its much-hyped Grilled Stuft Burritos seem promising, it's too early to say whether the product will pull sales out of the doldrums. Franchisees invested in new grills to make the crispy wraps, and insiders expect menu tests for quesadillas and rice-based items to be next to take advantage of the investment. Later this month the chain will announce its tie-in promotion for the Paramount Pictures film "Tomb Raider."
Nonetheless, after Taco Bell posted a 6% drop in first-quarter sales at stores open at least a year, the agency on the $215 million ad and merchandising account is one step closer to the endangered species list, said executives close to the company. April same-store sales fell 2%, March sales fell 4% and February sales were down 6%.
"Those rumors are unfounded," said a Taco Bell spokeswoman who declined further comment. At press time, FCB CEO Brendan Ryan was unavailable for comment.
The embattled Mexican fast-food unit of Tricon Global Restaurants is still struggling to improve sales despite numerous promotional efforts, and FCB is running out of time, said executives close to the company. Sibling concepts KFC and Pizza Hut registered 2% and 3% gains, respectively, for the first quarter. But Taco Bell has been Tricon's biggest problem, consistently posting negative comparable sales in recent quarters.
It seems the agency is getting a grilling as well.
Last week, the top executives on Taco Bell's creative and account teams met in Manhattan with Mr. Ryan, who has become more active in trying to boost the creative output.
Executives familiar with the team say players are being shifted to bring in new blood. "When Brendan Ryan has to run meetings in [California], something's wrong," said one executive close to the agency who said the shop has one last chance at boosting sales before the company looks elsewhere.
"They've pretty much taken their creative as far as they can," said one former Tricon executive.
Creative had primarily featured Gen Xers inside the restaurants shouting mid-chew declarations such as "Zesty!" and "Saucy!" But creative took a detour with a celebrity cameo by Sports Illustrated covermodel Elsa Benitez to help launch the Grilled Stuft Burrito.
That was a hard-fought idea coming after rounds of concepts, said the former Tricon executive. The idea originally was supposed to be much steamier, but was given a cold shower as one of Tricon's advertising tenets is no sexual innuendo, said another executive close to the agency.
FCB, Taco Bell's long-time field agency, won Taco Bell's national ad account last year on an interim basis after the chain parted with Omnicom Group's TBWA/Chiat/Day, Playa del Rey, Calif. FCB later was officially awarded the business.
HEAT ON BROLICK
One former agency executive said Taco Bell President Emil Brolick favors FCB and recently added the merchandising assignment to the agency. But pressure from Tricon CEO David Novak to show improvement in sales puts additional heat on Mr. Brolick. Plus, Mr. Novak has rejected numerous requests to soften sales goals, added the executive.
Meanwhile, sales at sibling concepts KFC and Pizza Hut are holding steady or improving. Omnicom's BBDO Worldwide, New York, handles advertising for both. BBDO was handed the KFC business on an interim basis after Mr. Novak brought in Cheryl Bachelder as president and moved the advertising from WPP Group's Y&R Advertising. Despite repeated denials by Tricon executives, people close to the company said BBDO's current success will make it easier for Mr. Novak to hand the agency a hat-trick.
"I believe Emil has zero interest in running [that is, working with] BBDO because that will mean in effect that David is running the business," said the former agency executive. "He will only do it if David forces it, and Emil knows that if the business goes to BBDO, that [BBDO Worldwide Vice Chairman Phil] Dusenberry will work with David."
Mr. Brolick was not available for comment at deadline.
What seems to be a wildcard is the arrival of Greg Creed as Taco Bell's new chief marketing officer from Tricon's international unit, which works with WPP Group's Singleton Ogilvy & Mather, London, for all three brands.
The ultimate factor will likely be sales, according to an executive close to Tricon, who said the company hasn't found a product to reverse its sliding transaction trend since rolling out the Gordita in 1998. "If something happens with Grilled Stuft, then maybe they can breathe life into the account, but right now it's way south for Taco Bell. Who knows how much more patience Emil is going to have and whether he makes changes because his job is in jeopardy."
Contributing: Alice Z. Cuneo