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Tuesday, Jul 16, 2024

The New King at Taco Bell

Taco Bell’s new chief executive has his own website.

“The world is moving fast,” it notes. “Whoever leads change will win.”

Mark King’s internet persona provides a glimpse into why the largest Orange County-based restaurant chain—nearly $11 billion in annual systemwide sales and more than 7,100 units worldwide—recently tapped him to take the company’s top slot, vacant more than a year since Brian Niccol left to become chief executive at Chipotle Mexican Grill Inc., now headquartered in Newport Beach.

The company’s parent used phrasing not too far removed from King’s website when announcing his hire; it cited his ability to “rewrite the rules” for brands “to win in fiercely competitive markets” in its latest earnings call, which also reported strong quarterly results at Taco Bell: 231 new restaurants, same-store sales and operating profit up 7% apiece, a bump in margins and 18% higher franchise revenue.

Taco Bell, a unit of Louisville, Ky.-based Yum! Brands Inc. (NYSE: YUM), is headquartered in Irvine.

Since last week, so is King.

When the appointment was announced on July 25, shares of Yum, which also runs KFC and Pizza Hut, have been up about 4.8% to a $36.4 billion market cap.

People Person

King’s appointment caused little stir in restaurant circles, though it was the first time in several CEO shifts that Taco Bell thought outside the bun—and outside the chain, and beyond marketing—for its CEO.

Niccol and prior Chief Executive Greg Creed, now Yum chief, were both longtime Bell marketing execs.

Former Taco Bell Chief Marketing Officer Chris Brandt had followed Niccol to Chipotle last March.

After Niccol’s departure, the chain was led on an interim basis by Taco Bell International President Liz Williams and North America President Julie Felss-Masino. Both now report to King.

King was named chief executive at the end of July and began on Aug. 5. Between those two dates, Taco Bell’s Global Chief Brand Officer Marisa Thalberg resigned.

Site Plan

King’s website, markkinglive.com, is as polished as any corporate site.

Pictures are big, and headings are heavy on buzzwords. He calls himself a “radical leader” and “culture expert,” among other headings.

Quotations include “Let people make mistakes and let them fix it” and “[B]e in pursuit of your own disruption.”

A fair bit culls wisdom an experienced business mentor might share with younger execs or parental counsel offered to one’s kids, drawn from and coupled with several decades of legit business success: the site includes articles from Forbes, Fortune, the Wall Street Journal, CNN and Fast Company chronicling King’s success at TaylorMade Golf and Adidas North America, where King had spent most of his career.

The overall effect reflects elements similar to what several restaurant industry watchers told the Business Journal are likely part of the plan in naming King to lead Taco Bell:

• Maintain the chain’s rep for edgy, innovative presentation.

• Execute operationally at a large global business enterprise.

• Nab emerging eaters in Generation Z for long-term loyalty.

What’s more, King will likely try to tie all those together with ideas—and people—from outside the company, and the restaurant industry to move a solid legacy brand forward.

“If you don’t constantly reinvent yourself, you become a dinosaur,” said Dean Small, founder and chief executive of Synergy Restaurant Consultants in Newport Beach. “So many brands don’t adapt to changing times and taste.”

He credits Taco Bell for a distinctive “brand voice, edgy promotions, innovation and traction with core customers.” King’s role will be to “take the brand into the next 50 years.”

King Making

One read on King’s career reflects that kind of work.

Except for 18 months with Callaway Golf Co. (NYSE: ELY) in the mid-90s, King spent 34 years at TaylorMade; the competitors are both based in Carlsbad. He was president or chief executive of the latter from 1999 to 2014; sales grew from $350 million to $1.7 billion in that time.

TaylorMade parent Adidas AG tapped King in 2014 to lead its moribund North American division; it badly trailed a dominant Nike and other brands such as Under Armour in market share and endorsement deals with pro athletes.

Fortune said at the time that the company’s “North America business is in shambles.”

In 2015, a Wall Street Journal article was headlined “How Adidas Aims to Get Its Cool Back.”

In 2016, Forbes noted changes in company culture—provide purpose, pursue innovation, personal accountability—under King.

By 2017, the Portland, Ore.-based Adidas unit was reporting higher sales, including e-commerce. King told analysts, “Our brand is getting hotter” with much of the growth coming from younger buyers.

The brand pushed into youth basketball and designed a sneaker with rapper Kanye West.

King stepped down in mid-last year; his LinkedIn lists the title “executive emeritus” at Adidas.

Until being named chief executive of Taco Bell, he was also “strategic adviser” to Liu Jianguo, chairman of Honma Golf, a Hong Kong-based public company with $300 million in sales and a U.S. base in Carlsbad, formerly in Cypress.

“I was ready to retire,” said King.

Golf Digest said Honma Golf is “a curiosity” in the U.S. market. It makes ultra-luxe drivers—sets of clubs that can cost $30,000 or more. Japan Prime Minister Shinzo Abe gave President Donald Trump a $3,800 gold-plated driver after being elected president in 2016; the president was photographed using it during a golf round with Abe a few months later.

Taco Bell didn’t make King available for an interview.

Live More

Growth at King’s companies since the 1990s has come with a decidedly 21st century hip, high-energy style from an exec who favors open-collared shirts, colorful socks, and dress sneakers.

Last year, Golf Digest said King, who started at TaylorMade as a sales rep, rose to CEO via “continual success and compelling personality,” was “famous for relentless innovation and equally relentless product launches,” and as CEO, “unveiled products in Steve Jobs-like public performances in front of hundreds of cheering employees and retail partners.”

King was “offensive from the jump,” the golf magazine said, ruffling feathers in old-school circles by advocating adoption of nonstandard approaches to the game, and appearing in 2012 on an episode of “Undercover Boss.”

TaylorMade achieved dominance in golf club drivers on the PGA Tour and with consumers. Adidas AG sold it to New York-based KPS Capital Partners in October 2017 for $425 million.

In 2016, King launched a podcast at Adidas, “Extraordinary Happens: Competing in Sports, Business and Life.” The first guest was company endorser and Green Bay Packers quarterback Aaron Rodgers.

King has a bachelor’s degree in business administration from the University of Wisconsin-Green Bay.

“Nike owned 90% of the pro [football] market,” said Cameron Lamming, president of RAR Hospitality Inc. in San Diego. “Adidas went in and owned every college team.”

Up-and-coming college players were soon walking around campus in the new kicks, and Adidas continued to pursue the new generation, signing six NFL draft picks in King’s first year there.

Grow Young

Industry watchers expect a new youth movement from a legacy brand—only this time Taco Bell rather than Adidas.

Grabbing new GrubHubbers and Gen Z eaters is key to Taco Bell’s growth.

Chicago restaurant consultant Darren Tristano said the fast food brand wanted “fresh blood” from outside its ranks.

Synergy’s Small said, “They’re looking for nontraditional ideas.”

Jeff McNeal, president of consultants Fessel International in Monrovia, said Taco Bell and Adidas have “some of the same DNA” in that the latter has grown hugely popular with consumers under age 20 and the former needs to be.

“Millennials are getting older; the next generation is dining out even more,” he said, “but they don’t eat a meal; it’s pocket change, hang out after school, come at 9 p.m. get a snack, nacho fries—that’s what resonates.”

Taco Bell “isn’t going to win over the parents,” Lamming added. “Their hold on the new generation is going to be ‘we’re funky, crazy, cool, kitschy creation, late-night munchie menu club kind of thing.’”

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