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Tricon Global Restaurants' exclusive fast-food sponsorship of the "Star Wars" prequel was supposed to represent a defining moment for the company. Instead it's turning into a defining defeat, as Tricon's KFC, Pizza Hut and Taco Bell chains struggle to dispose of tie-in paraphernalia.

"It's not the home run people thought it might be," said Cruttendon Roth analyst Anton Brenner. "There is no impact -- that's the disappointment."


Sales for the second quarter are expected to rise in the mid-single digits for KFC and Taco Bell, and slightly higher for Pizza Hut. Analysts and company insiders had hoped for 10% sales lifts for each brand.

For its part, Tricon contends it's satisfied with the "Phantom Menace" promotion. A spokeswoman said Tricon will comfortably meet second-quarter earnings estimates.

Yet, during the past two weeks, Tricon has scrambled to make changes in its "Star Wars" marketing strategy in an attempt to bolster sales. Some TV spots never made it on the air and others were pulled, said an executive familiar with the situation. Taco Bell is expected to drop all "Star Wars" advertising two weeks earlier than planned.

In addition, each chain has relaxed its food purchase requirement for the toys. At Taco Bell, consumers can now buy 99› collector posters with any food item, rather than only with a large drink, combo meal or Grande Meal. At KFC, $1.99 foam bucket toppers that can be used like Frisbee's are sold with any purchase.


"We may have them until the year 2033," quipped John R. Neal, president of JRN Enterprises, operator of 100 KFC restaurants.

KFC, with a patchy history of toy promotions, is said to have endured the biggest blow, reaching only one-quarter of projected merchandise sales, said one industry executive.

Later this month, KFC's 13-member franchisee advertising committee convenes to contemplate what went wrong with the tie-in, and why restaurants are left with boxes of unsold toys.

"We will have a tremendous postmortem on all aspects of 'Star Wars'," Mr. Neal said. "I suspect that our learning is kind of like what my old granddaddy used to say: 'If it looks like it's too good to be true, it probably isn't.' "

Several franchisees blame themselves, the company and Lucasfilm for a mistaken impression that they would be the only outlets to sell toys. Few expected Wal-Mart Stores to be so heavy with "Star Wars" baubles.

"There was a perception we would have exclusivity with all these components. We believed if you wanted these things, you'd have to come into our restaurants," said an executive with a KFC and Taco Bell franchise.

It is unclear what the sponsorship cost Tricon. The "Star Wars" deal stems from a reported $2 billion pact PepsiCo signed with Lucasfilm in 1996 that also included its Pepsi-Cola Co. and Frito-Lay units. Tricon retained the link after PepsiCo spun it off in 1997.

According to an executive familiar with the deal, Tricon is not committed to sponsor the next two films in the planned "Star Wars" trilogy. PepsiCo, however, is.

Creating advertising was particularly tough for the chains. One big problem: Commercials weren't allowed to show characters eating or holding food. They couldn't even show characters in the same frame with food, because it would detract from the "Star Wars" aura, said one agency executive. George Lucas personally approved each spot.

Mr. Neal said KFC was romanced by the hype. "It's just not the huge experience we were led to believe, or led ourselves to believe. We must blame ourselves. It's nobody's fault but our own."

One veteran toy promotion executive has seen this problem before.

"The real money is made by a Disney or whoever put 'Star Wars' together," he said. "They hit these fast-food chains, who pay through the nose. The chains take a big gamble sometimes and if it bombs, they have a problem on their

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