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Taco Turnaround

New zest brought by CEO Kevin Moriarty has spiced up sales and attitude at formerly faltering Del Taco


LAGUNA HILLS — Kevin K. Moriarty picked the perfect place to tell his story--a festive Del Taco restaurant that reflects the kind of upbeat energy that admirers say has helped him transform the faltering chain into a thriving business.

But back in 1990, when Moriarty first decided to take charge of Del Taco Inc., even his 11-year-old son questioned the decision.

Shortly after moving his family from Naperville, Ill., to Mission Viejo, he took his wife and two boys on a tour of the restaurants. They stopped at one dreary Del Taco after another. The outlets were dirty, lightbulbs were burned out and the landscaping was ragged, Moriarty said. With the company then losing $1.2 million a month, even the workers were gloomy.

"Everybody," he said, "was just waiting for the doors to close."

Moriarty, an unsinkable optimist, saw nothing but opportunities. Son Sean saw only doom.

"He said, 'Mom, Dad's gone too far this time. We're all going to end up in the streets,' " Moriarty recalled.

As it turns out, the Moriartys still have housing. And the Mexican-style fast-food chain is in the midst of what some in the industry are calling a stunning comeback.

Since 1990, Del Taco executives say, sales at established stores have more than doubled. And the Laguna Hills company has ambitious plans to expand beyond its Southern California base, building up to 70 restaurants in 15 other states.

To accomplish the turnaround, Moriarty took off in a dozen directions. He unloaded about 50 restaurants, freshened up old stores, built splashy new ones, revamped the menu and worked to bolster employee morale.

"Everything was wrong," he said, "so it took very little genius to start setting it right."

The road to recovery included a hairpin turn--a 1993 bankruptcy from which Moriarty and four other managers emerged as the company's new owners. But now, the industry is heaping praise on the 49-year-old chief executive officer.

Last month, New York-based Nation's Restaurant News presented him with its Golden Chain Award for 1997, considered the industry's most prestigious award.

"Del Taco was a basket case when Moriarty was recruited to take over," Editor Richard Martin said. "By all accounts, he's the kind of guy who can rally the troops when an outfit is under siege."

Lacking the academic credentials of many high-powered executives, Moriarty has used a mix of rah-rah chutzpah and down-home humility to force company changes.

And he's had plenty of help.

Some on his sturdy management team have been in the fast-food business since before they could drive. For example, Shirlene Lopez, the company's newest vice president, was just 14 when she began sweeping floors and wiping tables at a Del Taco in Fountain Valley. Now she's in charge of corporate development and design.

Co-owner James D. Stoops was also 14 when he began making French fries for a Burger King in Midland, Mich. He now oversees operations at more than 200 Del Tacos and seems to be in perpetual motion. To gauge how things are going, Stoops cruises from restaurant to restaurant, placing orders from drive-up windows. He's on the go so much that he doesn't have an office, staff or even a secretary.

All the attention seems to be making a difference. Systemwide, the chain's 300 stores now generate sales of about $250 million annually.

And when company executives talk about the company's success, they are quick to credit their leader, Moriarty.

"He really knows how to motivate the employees and get everybody excited about what we're doing," said Dawn Wallock, vice president of marketing.

Moriarty, a hands-on chief executive who'll grab a rag and wipe a table, moved quickly to make changes at Del Taco.

Within 90 days of taking control, he eliminated 30% of the menu, including the fish taco, bun taco and some carnitas dishes. He has now tinkered with every item on the menu, except the green sauce. Even the French fries have been redesigned.

The benches where customers once sat to wait for their orders have been ripped out. "My theory of fast food is not place your order and take a nap," Moriarty said. "My theory is place your order and here's your order."

People who know Moriarty say his success has hinged on a combination of experience, enthusiasm, vision and a knack for making co-workers feel like team members.

"He's a very paternal and charismatic kind of guy who seems to know how to relate to the rank and file and the upper echelon," Martin said.

After 16 years with Burger King Corp.--the perennial runner-up to industry giant McDonald's Corp.--Moriarty also was adept at playing second fiddle, industry insiders say. So he was able to operate skillfully in the shadow of the much larger Taco Bell Corp., Del Taco's main competitor.

"You might say he learned from experience that being No. 2 is tough," said Hal Sieling, a Carlsbad-based industry consultant. "And you've got to make smart moves."


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