Marriott Corp., weary of sizzling competition in fast-foods, said it is getting out of several slow-growth restaurant businesses and would concentrate on lodging and contract-services management in the 1990s.
Chairman J.W. Marriott Jr. said the company was negotiating to sell its 600-outlet Roy Rogers fast-food chain as a single entity. The company's 430 family restaurant units - including Bob's Big Boy, Wag's, Bickford's and Howard Johnson's - are on the block and probably would be sold piecemeal, he said.Layoffs are expected, although the Washington-based company said it could not say how many would occur.
"McDonald's and Burger King captured the national fast-food market while we were concentrating on capturing the national hotel business," said Marriott during a press conference at the company's flagship Marriott Marquis hotel.
Marriott now operates 530 hotels and motels under the names Marriott, Marriott Suites, Residence Inn, Courtyard and Fairfield Inn. The chairman said the company plans to double that number by the mid-1990s.
The company also announced the sale of its airline catering division, a business Marriott dominated but now believes has little growth potential, to a mangement-led investor group for $570 million.
With the sale of the restaurant division and airline catering, the 63-year-old company will be stripped of its two oldest businesses.
Marriott representatives said the businesses to be exited represented about $1.6 billion, or 20 percent of the company's annual sales in 1988 and about $120 million, or 20 percent of its pretax profits.
While the 99-cent hamburger wars that erupted between fast-food outlets in 1989 eroded profit margins and eventually prompted the company to pull out of the business, Marriott said the company would retain its more profitable airport and turnpike-system food outlets.
Additionally, Marriott said the company would concentrate on building and managing as many as 150 senior residence homes in the 1990s, an area that is expected to experience rapid growth as the U.S. population ages.
"We are positioning the company for earnings per share growth of 15 to 20 percent a year," said Marriott.
Analysts said such ambitious goals could not have been realized under the weight of the company's restaurant and fast-food divisions, where growth has been essentially flat for several years.
"I don't think this is a defensive move," said Pavlos M. Alexandrakis of Argus Research. "They are getting out of an industry they don't think they can (dominate)."