Ruby’s Outlines 60-Store, Five-Year Expansion Plan
By JENNIFER BELLANTONIO
Ruby’s Restaurant Group is cooking up an expansion plan.
The Newport Beach-based owner of the 1940s-style Ruby’s diner chain said it expects to open up to 60 new restaurants in the next five years, including in Orange County.
The company also has relocated to a larger facility in Newport Beach and is adding five people to its corporate team.
Ruby’s is taking the first half of the year to put new “systems and people into place,” said Chief Executive Doug Cavanaugh, so the company “can get ready for growth.”
“We only want to grow as fast as we can maintain our culture,” Cavanaugh said. “We’ve seen so many other chains grow so rapidly that they can’t keep the culture of their organization.”
The first restaurant in Ruby’s expansion opened last week in Maui. The 38-unit chain plans to unveil up to four new eateries in OC and Los Angeles this year, including one set to open midyear in Rancho Santa Marga-rita. Other sites haven’t been finalized yet.
The company also plans to open up to five restaurants in other states, including Colorado and Washington.
Ruby’s California diners are company-owned and make up half of the chain. Franchisees run those in other states, including Nevada, New York and New Jersey.
The company plans to be selective with new franchisees, Cavanaugh said.
“We’ll choose not to grow until we find the right operator,” he said. “One nice thing about being a privately-held operator is we’re not driven by the market. We don’t have to work quarter to quarter. We can take our time selecting locations and franchise partners.”
Ruby’s expansion is being funded by company cash and money raised from private investors, according to Cavanaugh. He declined to go into specifics.
“We have a great track record with our partnerships (for) providing significant returns,” Cavanaugh said. Ruby’s same-store sales are up 6% from a year ago, he said, though he declined to give the company’s yearly revenue. Industry sources put it at about $70 million.
The 20-year-old restaurant chain, known for its red vinyl booths, Coca-Cola posters and other memorabilia, may bump up against some challenges, according to Alan Liddle, an editor at trade magazine Nation’s Restaurant News. As it gets bigger, Liddle said, Ruby’s stands to start competing more with the industry’s big names.
“You’re talking about competing against the Denny’s and Shoney’s of the world,” Liddle said. “Denny’s has a lot of marketing muscle. They have a lot of sites.”
Ruby’s edge, he said, is that it is seen as “new and exciting” and plays off “old and nostalgic” feelings.
“That’s kind of a nice place to be,” he said.
Cavanaugh said he isn’t shying away from jostling with the big chains.
“We provide better food and better service,” he said. “When you outperform those companies, word of mouth travels very quickly.”
Still, Cavanaugh said that a “small company” centered in Southern California has trouble affording advertising.
“It’s almost impossible for us to get on the airways, even radio,” he said. “So we have to subscribe to more of a guerrilla marketing technique.”
Ruby’s plans to up its budget for local store marketing and community advertising this year, particularly to promote its 20th anni-versary, Cava-naugh said. The company is looking to hire a new marketing head to lead the effort.
Ruby’s already has added two new executives to its team: Chief Operating Officer Fred Le Franc, who hails from El Torito Rest-aurants Inc., and Loret Carbone, who’s title is chief people officer.
“Having some pretty well known players will help them pull in good managers,” editor Liddle said.
The new staff members also mark a shift in Ruby’s way of thinking. Since its founding in 1980 with a store on Balboa Pier, Cavanaugh said the company has been driven by an entrepreneur’s spirit, without any solid management systems.
“In order to maintain the level of growth we wanted, we had to get the organization prepared,” Cavanaugh said. “We’ve turned this thing upside down. I’ve been doing this for 20 years and I’ve never been more excited.”
Ruby’s also will be honing in on performance, Cavanaugh said. Average sales per store are around $2.3 million. He said he’d like to see that grow to $3 million.
One tactic: revamping dinner options.
“Ruby’s is primarily considered a great burger spot,” he said. “We really want to position ourselves as a place that you can come and have an excellent dinner entr & #233;e.”
Ruby’s recently hired a menu consultant to “raise the bar” and make dinner plates “truly exceptional,” Cavanaugh said. The new menu debuts in April.
