PEPSICO FAST-FOOD SPINOFF WIELDS $600 MIL IN AD MIGHT: KFC, PIZZA HUT, TACO BELL TO LINK ON SOME EFFORTS

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PepsiCo's spinoff of KFC, Pizza Hut and Taco Bell into a separate restaurant company last week created a combined ad arsenal of an estimated $600 million, rivaling only that of fast-food leader McDonald's Corp.

The new Tricon Global Restaurants becomes the largest fast-food company in the world in terms of units, with 30,000 outlets and annual revenue of some $10 billion.

For now, each brand will focus on its own marketing strategy. But together, they will use their combined firepower to buy into major sponsorships. The first is a multiyear deal to be the exclusive fast-food sponsor of the NCAA's championship games in 22 sports.

MEETING THIS WEEK

The chief marketing officers of each of the chains are slated to meet together this week to discuss how they might work together.

"We always want to be more efficient," said Randy Gier, chief marketing officer for Pizza Hut. "But we don't want anything that is going to compromise the consumer or our brands."

One franchisee noted that each chain under Tricon will be competing for the same fast-food customers, and that requires separate marketing programs.

"Where the opportunities come in are in management information systems, purchasing and marketing tie-ins with hot properties," said Richard Reese, president of Tacala, Taco Bell's largest franchisee. "On a day-to-day basis, we're competing for the same dollar as KFC and Pizza Hut."

NEW PRODUCTS IMPORTANT

New products will continue to play a starring role at the chains.

The biggest immediate new splash will come from Pizza Hut, and possibly next week. The product is called Edge, a topping-heavy pizza with a smaller crust than a typical pie. It will be launched with a price of $8.99; a second pie will be offered at a discount.

BBDO Worldwide, New York, has Pizza Hut; measured spending by Pizza Hut was $178 million for 1996. Ad plans for Edge were uncertain at press time.

"What we're looking for is a product in which we can use our existing materials in our restaurants to create a new idea or new news for our consumers," said James Schwartz, president of Pizza Hut's largest franchisee, NPC International in Pittsburg, Kan.

PIZZA HUT SALES DOWN

For the first half, same-store sales at Pizza Hut were down some 7% over the same period a year ago, but are showing signs of improvement, said analysts. KFC sales were up 3% to 4% and at Taco Bell were up about 3%, compared with the same period last year.

Taco Bell stands to be next with new products, in the form of dinner platters. A San Francisco test is being expanded into the Northeast next month. Also in the pipeline is a new sandwich for next spring.

Taco Bell spent $174.1 million in measured media for 1996. TBWA Chiat/Day, Venice, Calif., handles.

Y&R Advertising, New York, handles KFC, which spent $161.8 million in 1996. All

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