rants were not alone in their home delivery
service. Although KFC franchisees were reluc-
tant and anticipated operational difficulties,
KFC was planning to add delivery service to
all 500 of its domestic units. Because no other
chicken segment player offered home delivery,
it was an opportunity to preempt its competi-
tors and gain a competitive edge.
Payment Convenience. Fast-food restau-
rants were also experimenting with the use of
bank cards and ATM cards as alternative
methods for payment. MasterCard, which
wants people to use its card for everyday
transactions, estimates that 70 percent of the
people who eat at fast-food restaurants have
a bank card. Arby’s tested the system and dis-
covered that bank card transactions exceed
cash purchases by 30 percent to 60 percent.
As a result, Arby’s installed the system in all
company-owned stores. McDonald’s was
also experimenting with a McCharge card for
use in its outlets.
Expanding Distribution Channels.In
addition to expanding product lines, restau-
rants are also looking for new points of dis-
tribution. Aided by new technology, fast-
food restaurants have moved into many non-
traditional outlets. PepsiCo, which owns
Taco Bell, Pizza Hut, and KFC, will expand
into any outlet where it may tempt hungry
consumers. As a result, PepsiCo’s food serv-
ice brands may now be seen in supermarkets,
convenience stores, movie theaters, student
unions, amusement parks, fairs, hospitals,
airports, and sports arenas. Taco Bell is also
entertaining the possibility of selling pack-
aged meals on supermarket shelves, a poten-
tially lucrative market given that a quarter of
the people aged 35 to 44 are single.
THE RUBIO’S FOUNDING
CONCEPT
Product Line
Rubio’s main draw was its $1.49 fish tacos.
A fish taco consists of a soft corn tortilla,
pieces of deep-fried fish fillet, salsa, white
sauce, cabbage, and a lime. The white sauce
is made up of a mixture of mayonnaise and
yogurt. Although the basic ingredients in the
fish taco are known, because of local taco
wars, Rubio’s batter for the fish remains a
company secret. As a result, the batter was
packaged at a location other than the individ-
ual restaurants. Rubio’s also offered a fish
taco especial, which cost a little more but was
prepared with such extras as guacamole, jack
and cheddar cheese, cilantro, and onion. For
those patrons who do not savor the idea of a
fish taco, Rubio’s menu offered such other
traditional Mexican favorites as burritos,
tostadas, nachos, and nonfish tacos.
Consistent with the company’s desire to sat-
isfy the needs of its customers, menu items
have been added or modified in response to
customer input. All these items, including
the fish tacos, are prepared to order using
authentic Mexican recipes and fresh ingredi-
ents. A copy of Rubio’s 1991 menu is
attached as Exhibit 1.
In addition to providing authentic, fresh-
tasting Mexican food, Rubio’s differentiated
itself by offering a cold food menu, enabling
customers to purchase select ingredients to
prepare their own meals at home. In essence,
customers may purchase the makings for
almost every item on the menu.
Facilities
Rubio’s original restaurant locations were
selected based on Ralph Rubio’s knowledge
of the areas and characteristics of their popu-
lation. Although Rubio’s target market varies
to some extent by store location, on the
whole its market consists of young and mid-
dle-aged upscale professionals and students.
Members of these groups typically value their
health and enjoy such social activities as the
beach, athletic competition, musical enter-
tainment, and dining out. As a result, the
facilities are typically located in fast-growing
retail areas with high traffic and visibility.
Rubio’s also considers the land use mix with-
in a three-to-five-mile radius. As a result, the
restaurants are located in areas with high per-
centages of residential and office or industri-
al uses. Unlike the typical inaccessible mall448 ENTREPRENEURSHIP CASE