Executive discusses how owner of Pizza Hut, KFC and Taco Bell
adapts to a shifting market
By Julie Jargon
Yum Brands Inc. is at a pivotal moment as it faces what Chief
Executive Greg Creed calls a "once in a lifetime opportunity" to
rethink the company's business model.
The owner of fast-food chains Taco Bell, KFC and Pizza Hut is
preparing to spin off its massive China business into a separate
company that will begin trading on the New York Stock Exchange on
Nov. 1 -- a historic event for a company that introduced fast food
to China in 1987 with its KFC chain.
Now, Mr. Creed is focused on making Yum a leaner organization
that acts as a steward of brands, rather than an operator of
restaurants.
Mr. Creed, 59 years old, is a career-brand builder who has sold
everything from soap in his early days at Unilever PLC to tacos
made out of Doritos, Taco Bell's most successful product launch
ever. The Australian-born Mr. Creed is a gregarious company
promoter who leads Wall Street analysts in a Yum cheer at the
annual analyst meeting. (Except this year, when he says he forgot.)
He spends a lot of time traveling the globe to coach employees and
franchisees on leadership and reward them for jobs well done.
In an interview, Mr. Creed reflected on the decision to separate
the China business, explained how Taco Bell comes up with its weird
menu creations and discussed how Amazon.com has changed the way
customers expect to order pizza.
Edited excerpts:
WSJ: How did you tell your staff about the decision to separate
the China business?
Mr. Creed: We've tried to take them along on this journey. We've
been very transparent, very top down. I first spoke to the top 60
leaders in the company. Then I did a webcast with about 200 senior
leaders. Then I finally did a webcast with the entire company. I
thought it was really important for me to personally tell the
organization.
WSJ: What is your biggest concern for the business now?
Mr. Creed: We're going to have to change from a mind-set of
owning restaurants to putting the running of restaurants in the
hands of our franchisees and we're going to focus on brand
building.
WSJ: You have an activist, Keith Meister, on your board. How has
that changed the way you do your job?
Mr. Creed: I met with Keith in May 2015 when it was announced
that [Corvex] had an ownership on the share register. I spent two
hours with Keith. What I really appreciated was that he said,
"Look, I don't know how to run a restaurant company; that is what
you do and I'm never going to tell you how to run this restaurant
company. I think I can help unlock shareholder value." He has never
offered one operating suggestion, so he has been true to his
word.
WSJ: Did his presence accelerate the China separation?
Mr. Creed: No. We hadn't made the final decision but we had
completed our analysis and we had determined that the separation of
China was the right thing to do. Keith independently reinforced
that.
WSJ: Pizza Hut has been struggling. What's the problem?
Mr. Creed: We've just made it too hard to get a better pizza. We
need to invest more in our technology than we have, so we're
playing catch up.
WSJ: How much technology do consumers expect when it comes to
ordering a pizza?
Mr. Creed: They actually expect it to be really simple.
Sometimes you need a lot of technology to make it simple. Let's be
honest, Amazon is the standard for ordering. If I can go on Amazon
and order a shirt in one or two clicks, then why can't I order a
pizza in one or two clicks?
WSJ: Taco Bell is known for its unique menu items like the
Doritos tacos and Quesalupas. Take us into your product-development
process.
Mr. Creed: It's a very disciplined process. It always starts
with consumer insights. We often look at what's happening outside
of the category. The cheesy core burritos came from an idea from
Ben & Jerry's. Ben & Jerry's have this hard sort of
chocolate up the middle of their ice cream. We were like, "What if
we actually ran a cheesy thing up the middle of a burrito?"
WSJ: An outsider claims to have come up with the idea for
Doritos Locos Tacos (taco shells fashioned out of Doritos chips).
Is that true?
Mr. Creed: It wasn't true. I was in the very first meeting
[about it] with Al Carey [then CEO of PepsiCo's Frito-Lay unit].
[Mr. Carey] went to Home Depot, bought a paint spray gun and
basically fried a Taco Bell taco, and while it was still warm,
sprayed it with their seasoning. I was there when the very first
one was made. We always have people coming out of the woodwork,
unfortunately.
WSJ: Do people ever pitch food ideas to you that you actually
consider?
Mr. Creed: We have a policy of not accepting unsolicited ideas.
It is the only way you can go. If someone writes to any of us, we
don't open it. I send it off to the legal department.
WSJ: People have more choices for where to get food than ever.
What do people want now that they didn't before?
Mr. Creed: If I go back 20 years, food was fuel and then food
became an experience and now it is an experience worth sharing.
We're not in the food business anymore, we're in the
food-experience business.
WSJ: What keeps you competitive in that kind of landscape?
Mr. Creed: We're in 135 countries. We have critical scale and
we've got the ability to understand consumers in all of these
countries. I remember the first time we put guacamole in a burrito
at Taco Bell. There was this big discussion: OK, everybody on the
West Coast loves guacamole. People were like, "I'm not really sure
about this." We put guacamole [in] and someone on the East Coast
sent us a note saying, "What is this green stuff in my burrito?"
Now, guacamole is just growing. If you think about the consumption
of guacamole, it has just changed dramatically. Peoples' tastes are
definitely changing, they are definitely evolving and you've got to
adapt to those changes.
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
October 26, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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