Rubio's outlines franchise
proposal
uniontrib.com
Effort geared toward national expansion
By Mike Freeman
STAFF WRITER
January 8, 2000
Rubio's Restaurants Inc. plans to offer franchises for the first time as part of
the Carlsbad-based chain's goal to expand nationwide.
The 91-store Mexican fast-food company, known for its fish tacos, made the
announcement Thursday as part of a wide-ranging conference call with
investment analysts.
"To us, it's a big deal," said Joe Stein, chief strategic and financial officer.
"We've been working on it for over a year."
Rubio's opened 31 company-owned restaurants last year, an increase from its
plan of 28 stores. Ralph Rubio, chief executive, said sales for stores that have
been open for more than a year increased 6 percent in 1999.
But stores opened in new markets, where Rubio's name is less well-known,
failed to reach management's sales targets, Stein said.
Consequently, the company cut its sales projections for stores in less-mature
markets, such as Colorado, Utah and Nevada. The company expects sales at
these new stores to improve once Rubio's brand catches on.
Rubio's stock lost 621/2 cents, or 7.5 percent, yesterday in light trading. The
closing price was $7.621/2.
Following the conference call, John Weiss, an analyst with Thomas Weisel
Partners in San Francisco, lowered his earnings estimates for 2000 from 42
cents a share to 31 cents a share. But he remained optimistic that Rubio's will
remain on course to grow in the tricky, competitive restaurant industry.
Weiss said the decision to offer franchises should allow Rubio's to expand
nationwide faster than if the company built and owned all of its own
restaurants.
Rubio's doesn't expect to open any franchise eateries this year, Stein said, and
it will be very picky in granting franchise territories. The company plans to
seek franchisees who already operate other restaurants in their respective
markets and therefore have local expertise.
In addition, Rubio's also will focus franchise efforts in new markets outside the
Western United States, Stein said.
Rubio's plans to build 36 company-owned restaurants this year, with half of
those in the Southern California market.
Copyright 2000 Union-Tribune Publishing Co. |
