With sales projected to equal 4 percent of
the U.S. gross domestic product (GDP), the
restaurant industry is a cornerstone of the
nation’s economy, employing 11.3 million
people (making it the largest employer in the
country outside the government). In close to
30 years, the number of locations that offer
food service has nearly doubled, from
491,000 in 1972 to 844,000 in 2000. This
phenomenal growth has been parallel to the
growth of the restaurant industry’s share of
the food dollar, which has risen from 25 per-
cent in 1955 to 45.8 percent in 2000. (The
average annual spending on food away from
home was $2,030 per household, or $812
per person.) In addition, it is projected that
by 2010, 53 percent of the food dollar will be
spent on food away from home. This indus-
try growth has been driven by the growth in
the number of higher-income households
and the rising need for convenience and
value. On the other hand, the large growth in
sales has helped foster a fiercely competitive
environment, consisting of 844,000 dining
locations. As a result, restaurant owners are
focusing on the physical settings of their fa-
cilities (i.e., design, decor, and atmosphere)
as a basis for differentiation, rather than on
food and service (as has been the focus in the
past).
In addition to a highly competitive envi-
ronment, restaurant owners have several
other challenges to address. Labor, purchas-
ing, and operational costs have continued to
rise, and energy costs, especially in Califor-
nia, have soared. Workplace safety has be-
come increasingly important, as labor laws
have become more stringent, and worker’s
compensation insurance has become more
costly. Use of technology has become wide-
spread in ordering supplies, processing trans-
actions, and providing information (via Web
sites) to suppliers and customers. As a partic-THE GROWTH YEARS
By 2000, Rubio’s enjoyed significant growth
and development. Rubio’s Restaurants Inc.
had become a publicly held corporation that
owned and operated 128 high-quality, quick-
service Mexican restaurants in California,
Arizona, Colorado, Nevada, and Utah.
Known for its Baja-style Mexican food and
signature fish tacos, Rubio’s had undergone
phenomenal growth in the past 10 years,
from 12 stores in 1992 to a planned 138
stores by 2002, and the company franchised
another 14 stores. Rubio’s focuses on offer-
ing a high-quality product at the price and
speed of a fast-food restaurant, and its suc-
cess has been phenomenal, as is evident in its
growth both in number of stores and sales.
Since opening in San Diego County in 1983
as a family-owned restaurant, Rubio’s has
helped define the quick-service Mexican food
segment of the restaurant industry.
Management intends to continue doing so at
a national level well into the future.THE RESTAURANT INDUSTRYThe restaurant industry, which is defined by
the National Restaurant Association (NRA)
as encompassing all meals and snacks pre-
pared away from home, including all takeout
meals and beverages, was expected to achieve
sales of $399 billion in 2001. This represents
an increase of 5.2 percent over 2000 sales
and marks the tenth consecutive year of real
sales growth for the industry. Sales at quick-
service (fast-food) restaurants alone were
forecast to reach $112 billion, or 28 percent
of total restaurant industry sales.456 ENTREPRENEURSHIP CASE
CASE 3
Rubio’s: Home of the Fish Taco (B)
Source:This case was prepared in 2001 by Jennifer
Quinnet (MBA) under the direction of Professor Kenneth
Marino, Department of Management, San Diego State
University.