Is life imitating art as PepsiCo takes 'Demolition Man' to heart?

Nation's Restaurant News, Nov 29, 1993

In Sylvester Stallone's high-tech shoot-'em-up "Demolition Man" we're treated to a glimpse of the not-too-distant future in which everyone has become passive and "Taco Bell has won the fast-food wars."

While the Mexican quick-service giant may have landed its role in the movie by default - other large chains reportedly declined the highly visible tie-in because of the film's violent nature - there may be an element of fact beneath the celluloid fiction.

Taco Bell and its PepsiCo-owned sister concepts - Pizza Hut and, to a lesser extent, KFC - are notoriously aggressive chains. They approach the foodservice business with a kind of "take no prisoners" attitude. They're in it for the long haul and being No. 2 is not the way they intend to spend their time.

Where other large chains occasionally downplay the idea of competition - McDonald's, or example, is well-known for avoiding rival bashing - PepsiCo chains make no bones about doing whatever it takes to gain and hold market share. It's total war on the foodservice front, and being PepsiCo means never having to say you're sorry - unless you fail.

In fact, the competitive spirit can get so intense at PepsiCo that the sister concepts have even been known to compete with one another - as evidenced by Pizza Hut's surprising interest in developing a chicken product at the inevitable expense of KFC.

To be sure, aggressiveness has not solved all of the problems the three giant chains have encountered. KFC in particular has had its share of difficulties - not the least of which has been its struggle to overcome its deeply entrenched image of being a fried-food chain. However, if the Colonel's Rotisserie Gold product continues to perform as it has done in the months immediately after its rollout, the chicken chain could certainly rise like a phoenix from the cooking oil.

Pizza Hut hasn't been immune to problems either. It all but dropped the ball when Domino's made an end run on the delivery market in the early '80s. Nevertheless, the chain regrouped rapidly and is moving to close the numbers gap. On the other hand, it also hasn't had much success shrugging off its own fastfood image problem - despite the presence of table service at its red-roof restaurants.

The PepsiCo chains also have had some misfires in terms of new concept development. Pizza Hut continues to tinker with its drive-through Fastino's idea. But forays by the pizza chain and Taco Bell into the growing midscale market fizzled with the unsuccessful Pizza Hut Cafe and Salsa Rio Grill tests, respectively.

Nevertheless, where all of that leaves the three chains - at least as measured by total sales and number of units - is at the top of their respective markets. Unquestionably, they will all have to step pretty lively to remain in place - which will aim require the ability to change and evolve. But then they tend to be aggressive about change, too.

Wayne Calloway, PepsiCo's chairman, once summed up that philosophy by saying, "We not only welcome change; we make change happen."

And once again it would appear that PepsiCo is making change happen. Shelving its unsuccessful test concepts - at least for now - the deep-pocketed PepsiCo apparently has decided that when the going gets tough, the tough go shopping. To satisfy its initial craving for entry points into the hot Italian and Mexican midscale markets, PepsiCo went out and bought California Pizza Kitchen, and Taco Bell bought Chevys. More recently, Pizza Hut is rumored to be talking to East Side Mario's officials about possibly purchasing that high-flying Italian chain.

The company's decision to go after a piece of double-drive-through burger market resulted in Taco Bell's purchase and rapid expansion of the Hot 'n Now chain. But now it would seem that PepsiCo is prepared to go a step further - talks are reportedly under way for Taco Bell to purchase the higher-grossing Checkers Drive-In Restaurants.

And the recent acquisition of the 175-unit D'Angelo Sandwich Shops gives Pizza Hut added penetration in the Northeast through combining units and also a powerful new weapon in the battle

To be sure, an acquisition strategy does not always lead to success. General Mills, for instance, has had more luck developing its own concepts than buying existing ones.

But then different strategies work better for different companies, and PepsiCo seems to be deploying its newest resources well while taking full advantage of its deep pockets.

Which brings us back around to the future-shock prediction of "Demolition Man" that every restaurant will soon be called Taco Bell. Obviously, no one really believes it will happen like that. It's highly unlikely that any single chain - or even company - will ever come close to monopolizing the vast U.S. foodservice market.

But PepsiCo watchers can't help sitting back and wondering what the century will hold for the foodservice industry - particularly if the huge conglomerate's aggressive appetites don't slacken. You may not see Taco Bell on every restaurant, but you may well end up seeing PepsiCo behind a lot of them.