PepsiCo Inc. is expected to spin off its $11 billion restaurant business, a move that would create one of the nation's biggest restaurant companies, The Wall Street Journal said Thursday.
The restaurant division includes the KFC, Pizza Hut and Taco Bell chains, and a spinoff would enable PepsiCo to concentrate on its beverage and snack food operations.The newspaper said Pepsi's board was scheduled to meet Thursday in Purchase, N.Y. to discuss the move that could help boost the company's stock price.
A call Thursday morning to PepsiCo was not immediately returned.
Some investors have pushed for a spinoff of the restaurant business since its profits have been sluggish. The restaurant industry overall has suffered due to intense competition and higher food costs.
Several other major corporations, including AT&T Corp. and ITT Corp., have recently split up into separate, publicly traded companies.
"I can't see any good reason for them to be in the restaurant business," said Tom Pirko, president of consulting firm Bevmark LLC, told the newspaper. "It's an anchor pulling through the sand at the bottom of the ocean."
In 1995, the restaurant business accounted for $11.3 billion in sales, or 37 percent of PepsiCo's total. Its Pepsi-Cola soft drink business contributed $10.5 billion in sales, or 35 percent of the total, and the Frito-Lay snack foods business accounted for $8.5 billion in sales, or 28 percent.