Triarc Takes PepsiCo Empire-Building Tack

Talented Team Trying to Revive RC Cola, Arby's

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What do you get when you combine cola, denim, roast beef and gas?

Triarc Cos., an amalgam of consumer marketers Royal Crown Cola Co., Arby's and recently acquired Long John Silver's Restaurants, as well as a textiles manufacturer and a propane business. The conglomerate was created last year under the direction of New York investors Martin Pelz and Peter May.

In the past year, Messrs. Pelz and May have imported some impressive marketing talent to revitalize Arby's and RC Cola, both suffering from "years of neglect" and sparse ad spending under previous owner DWG Corp., Triarc executives say.

"If you walk into a room, I would say there's an awareness factor of Arby's and RC at 90%," said a Triarc spokesman. "But no one knows how to get to them. The brands just hadn't been marketed."

Heading up the renovation of Arby's roast beef sandwich is a brigade of PepsiCo veterans recruited by President-CEO Donald Pierce, including Senior VP-Marketing Terry Davenport. Heavy executive recruitment and an overhaul of Arby's marketing infrastructure late last year caused industry observers to wonder what Arby's was cooking up under its 10-gallon hat.

The results became visible last month with a $35 million "Go West" campaign from W.B. Doner & Co., Baltimore, Arby's first national marketing effort in its 30-year history. The cowboy-theme ads position Arby's slow-roasted meat sandwiches against fried menu items elsewhere, targeting consumers' healthful yearnings.

New management's goal is formidable: to make Arby's one of the nation's top five restaurant chains within the next five years, raising average unit sales to $1 million from roughly $640,000 and doubling the system to 5,000 units worldwide.

Much of the growth is to be outside the U.S., where Arby's operates only 156 units, mostly in Canada and Mexico.

The company plans to multiply that number tenfold by 1999 under the direction of International President Robert Briggs, who served in a number of posts at international heavyweight KFC Corp.

Arby's has more room for domestic expansion than many bigger fast-feeders. Despite its Wild West image, Arby's is still underdeveloped in the West and Northeast, said Mr. Davenport. The acquisition of Long John Silver's will help both brands penetrate new markets; some observers believe the move was primarily a real estate deal for Arby's.

"You can imagine the time and effort it takes to acquire 400 to 600 new sites," said Ron Paul, president of restaurant consultancy Technomic, Chicago. "This was a way to make it happen faster."

The 900-unit Long John Silver's chain has a fairly low marketing profile (Temerlin McClain, Dallas, is its agency) and a smaller target audience than other quick-service dinner concepts. Arby's decision to adopt a seafood chain just as it refocuses on its core equities gets mixed reviews.

"The timing is strange from an advertising standpoint. The new campaign has barely started and they're already contemplating a major change in Arby's business," said Michael Connor, an analyst with Fahnestock/Christopher, New York. "But from a conceptual standpoint it makes a great deal of sense. Arby's gets two-thirds of its business from lunch-Long John is just the reverse. Co-branding is the direction the industry is going."

Royal Crown, the No. 3 cola marketer, was facing some major challenges of its own when Triarc purchased the company and brought President-CEO John Carson aboard in April 1993.

A stodgy value-price image, minimal marketing support and new competition from a growing range of beverage alternatives caused a major loss in RC's share of the $49 million soft-drink market. RC, which enjoyed a 5% share 10 years ago, now has about 2%.

But the company has taken aggressive action to turn the tide.

"John Carson is really shaking things up," said a spokeswoman, playing on RC's new "shake things up" tagline. "He's reorganized the company, and the changes have affected nearly every aspect of the business."

Don Lenehan, senior VP-marketing, this summer brought in a new team of experienced marketing executives with resumes from major competitors including Coca-Cola Co., Dr Pepper/Seven-Up Cos. and Cadbury Beverages.

A $15 million ad campaign for RC Cola and Diet Rite began in the spring, aimed at Generation X. In July, RC's citrus Kick brand got its first new ads in years with five 15-second spots in seven markets from GSD&M, Austin, Texas, directly targeting Pepsi-Cola Co.'s Mountain Dew drinkers.

New promotions for RC, Diet Rite, Kick and Nehi have teamed the company with Harley-Davidson, MTV: Music Television, Fox Broadcasting Co. and others. New packaging with more contemporary graphics and point-of-purchase materials are giving RC Cola and Diet Rite better on-shelf visibility.

Could it be that Triarc, with its plans to build an international soft-drink and fast-food empire, is becoming the next PepsiCo? If the metamorphosis is to happen, it will come slowly; Triarc in the first quarter of 1994 posted its first profit in more than two years.

"New management has been making the right moves," Mr. Connor said. "It'll take a while for those efforts to bear fruit."

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