organization, Rubio’s was characterized by
centralized management and control. The
company offered extensive training programs
for its managers and employees to ensure ef-
ficiency and standardization in the produc-
tion of its products. This policy was evi-
denced by its thorough and detailed opera-
tions manual. As the business expanded,
managers were provided with a sufficient
degree of flexibility to handle day-to-day
operations tailored to the needs of each indi-
vidual store. Ultimate authority, however,
remained with the Rubio family.
Finances
As a privately held company, the majority of
Rubio’s growth has been achieved with funds
generated from within. Early expansion was
also assisted by bank financing. The compa-
ny’s growth was relatively slow and cautious.
Sales, however, have not been slow. The
combined sales from the 12 restaurant loca-
tions averaged over 10,000 fish tacos per day.
Including sales of other menu items, the
average Rubio’s store had sales of $700,000
during 1991. This figure represents a decline
from 1990, when the average store had sales
of $745,000. Each store unit is, however, de-
signed to handle $1 million in annual sales,
leaving plenty of opportunity for an increase
in sales. Rubio’s goal for the next several
years is to increase the average store’s sales to
over $800,000.
Even with the current decrease in sales, the
stores are quite profitable. To break even, the
typical store must achieve monthly sales of
approximately $30,000 to $35,000. The main
cost difference among Rubio’s facilities results
from different lease costs. Labor and material
costs remain the same across facilities. Food
ingredients represent about 16 percent of the
sales price of menu items. The ingredients
breakdown for the fish taco and the fish taco
especialare presented in Exhibit 4.
A LOOK TO THE FUTURE
Ralph’s belief that the fish taco would be as
popular in San Diego as it was in the Baja
was correct—and judging from the amount
of sales and the number of imitators, it is
here to stay. Although Rubio’s already has 12
restaurant locations, its goal is 50 company-
owned restaurants in southern California
averaging sales of $40 to $50 million annual-
ly. Fast-food industry figures also show that
the Mexican food segment is still experienc-
ing lucrative growth nationwide. Therefore,
Rubio’s plans to continue its expansion into
new geographic markets. Although Rubio’s
has already expanded into Orange County, it
will continue its investigation of northern
California.
Yet as Rubio’s approached its tenth
anniversary, the company faced many deci-
sions and challenges that would affect its
future. First, the company must determine
issues related to future expansion:- Is there a market on the east coast or in
the mountain states for fish tacos? - Is international expansion a viable alter-
native? Assuming that such expansion is
feasible, the company must then deter-
mine how to establish operations in dis-
tant locations. - Should the company consider franchis-
ing, licensing agreements, partnerships,
or even joint ventures? - Should the company attempt to remain a
closely held, family organization?
Alternatively, Rubio’s may focus its
attention on expanding its distribution
channels. - Should Rubio’s manufacture its fast-food
products for distribution in nontradi-
tional outlets? - Should Rubio’s offer a packaged version
of its product in supermarkets and gro-
cery stores? Moreover, given the impor-
tance of limiting or reducing costs,
Rubio’s must also consider the feasibility
of assorted cost-saving investments. - Should Rubio’s centralize the prepara-
tion of some or all of its food products
once the company reaches a specified
number of outlets? - Should Rubio’s integrate into its own
sources of supply?
Rubio’s: Home of the Fish Taco (A) 451