Move over, Ronald McDonald
By STAFF David Kirkpatrick, Michael Rogers, Patricia Sellers, H. John Steinbreder, and Daniel P. Wiener

(FORTUNE Magazine) – Some big players in the fast-food industry are on starvation rations. Wendy's International and Pillsbury's Burger King, both facing slumping per-store sales and falling profits, have been switching ad campaigns and shuffling top management. Meanwhile McDonald's, with a TV ad budget about twice as large as any rival, grows stronger. Will Ronald McDonald be the only healthy survivor? Don't count on it. PepsiCo is also looking good. The soft-drink giant, which owns Pizza Hut and Taco Bell, bought Kentucky Fried Chicken last fall from RJR Nabisco for $841 million. Now it has more quick-service restaurants than anybody else, including McDonald's. PepsiCo plans to use Kentucky Fried's international strength to help it peddle more pizza and tacos in overseas markets, where growth prospects are zesty. ''Almost in every way, the acquisition is better than we thought,'' says D. Wayne Calloway, 51, PepsiCo's chief executive. Kentucky Fried Chicken Chairman Richard P. Mayer, 47, couldn't be happier. ''At RJR,'' he says, ''restaurants were a hobby.'' Calloway and Mayer's initial task: Bring the lunch crowd to Kentucky Fried Chicken, whose sales are mostly at dinnertime. The product they're counting on to do that is Chicken Littles, one-ounce chicken-patty sandwiches that sell for 39 cents each. Chicken Littles have been adding a not-so-little 15% to sales at typical Kentucky Fried outlets. PepsiCo has had trouble getting up to speed in home delivery. Kentucky Fried Chicken has been testing home delivery for almost two years: Business is great, says Mayer, but it's a logistical nightmare since practically all the orders come at the same time -- around 6 P.M. Pizza Hut lost an estimated $20 million last year on its rapidly expanding home-delivery system. Now Pizza Hut ! is aiming to steal more business from Domino's Pizza, the No. 1 delivery chain, and is introducing a traditional, thin-crusted pizza like Domino's.