Rubio's Turns to Franchisees

Monday's announcement calls for Rubio's to continue expanding its store count by 10% to 15% for three to five years. Based on its current count of 151 restaurants, that could mean about 15 to 23 new locations in 2006 and 30 to 40 locations per year in a few years. The numbers are modest by today's expansion standards, but they mark a new direction for Rubio's, which has grown conservatively in recent years and has depended more on company-owned expansion than franchisees. In fact, when the 152nd Rubio's restaurant opens next week, the chain will still include only five locations owned by franchisees and the remainder company-owned sites.

In Rubio's third-quarter conference call in November, however, management hinted that it felt the company's format has grown more attractive to franchisees because of the chain's improved performance in 2004 after some disappointing years. In that quarter the company reported its highest revenues and earnings ever and continued a string of four consecutive quarters of record earnings per share.

The new focus on growth and franchising at Rubio's comes after the promotion of Sheri Miksa from COO to president and CEO in November to succeed Ralph Rubio, chairman and co-founder--and the hiring early this year of longtime fast-food restaurant exec Carl Arena as VP of development. Arena, who was with Johnny Rockets Restaurants before joining Rubio's, spent most of his career with the Carl's Jr. Restaurant chain, a unit of CKE Restaurants Inc.

Miksa said Monday that Rubio's will concentrate on building a "pipeline of high potential sites" this year to establish a foundation for growth in 2006 and beyond. The company has commitments to open four new units in existing markets in 2005, but she indicated the real growth will come in the three- to five-year expansion that will begin in 2006.

Besides growing, the chain plans to begin a multi-year program to alter the image of its existing restaurants, according to Miksa, who says that the 22-year old restaurant concept needs to be updated. She says Rubio's, which bills itself as a fast casual format, plans to "re-image" at least 20% of its restaurants this year.