New Face, Future for Ruby’s Diner

nmxdke-b88381735z.120150416173141000gd396457.10The Irvine chain’s new CEO will condense the chain’s menu and craft new concepts

By Hannah Madans, The Orange County Register
http://www.ocregister.com/articles/ruby-658341-restaurant-new.html
(c)2015 The Orange County Register (Santa Ana, Calif.)

Scott Barnett, the interim chief executive at Ruby’s Diner, has only been on the job for a few weeks, but he’s already tried every item on the chain’s expansive menu.

Barnett replaced the chain’s founder Doug Cavanaugh in March, making him the company’s first new CEO in its 33-year history. Cavanaugh will remain as Ruby’s chairman.

A personal friend of Cavanaugh, Barnett has a long history in restaurants. He’s the former president and CEO of Rusty Pelican, founding president and former CEO of Bubba Gump Shrimp Co., and has served as a consultant for investment banking projects in Hong Kong.

Barnett said his goals include improving Ruby’s by condensing the menu while upholding the restaurant’s standards.

The renewed economy and cheaper gas has been a boon for family restaurants like Ruby’s.

Restaurants like Ruby’s saw 3 percent growth in 2014, a “huge improvement” over sluggish gains in the years immediately after the recession, said Darren Tristano, executive vice president at market research company Technomic.

“The low prices of gas are really starting to help the family-style segment,” he said. “It’s giving more low- to middle-income consumers more money to spend, and as long as gas prices remain low, the restaurant business is going to continue to improve.”

He added that low menu prices are something that helps a restaurant like Ruby’s do well.

“They do have good quality offerings in a theme restaurant, which is something that consumers are looking for, and their price points are relatively good for the California market,” Tristano said.

Meanwhile the fast-casual restaurant sector — an area Barnett sees as having tremendous growth opportunity for Ruby’s — grew 13 percent in 2014.

Barnett spoke to the Register about his experience in the restaurant industry and what he hopes to bring to Ruby’s, a chain named after Cavanaugh’s mother. His answers have been edited for length and clarity.

Q. Why did you want to be involved in the company?

A. The brand is extremely strong. It has great brand equity in the markets in which it operates. Many years ago, I almost went to work with Ruby’s as their vice president of operations. I ended up running Rusty Pelican as CEO instead. Doug (Cavanaugh) is a friend, and he really wanted someone who had a significant amount of experience as a professional manager who could help him transition the company from an entrepreneurial style into a more seasoned manner — and given that we’ve had a long relationship and are friends, it made sense.

Q. You have held many notable jobs in the restaurant industry. What did you learn from each of these positions and what will you bring to Ruby’s?

A. At Bubba Gump Shrimp, I was fortunate to be dealing with a well-known brand with tremendous reach worldwide. The challenge was to deliver on that brand in the manner that people were used to it from the movie. It was all about learning about brands that have a lot of power and seeking ways to deliver on the promise of the brand.

At Rusty Pelican, it was also a well-known brand that had encountered a number of issues. I learned a lot about how to act in a capital restrained environment, team building, starting from the ground up and a company turnaround.

In Hong Kong, I learned from the other side what it was like to be involved in restaurant investments and to help restaurant companies maximize their returns based on our investment criteria.

Q. Did you always know you would end up in the restaurant business?

A. No. I started working in restaurants many years ago, while I was going to school, because I had to pay my own way. I was a cook, a bartender, a busboy, a dishwasher, a valet parking attendant.

When I left college, my intent was to go to grad school but I picked a summer job working in a restaurant and the rest is history. Never went to grad school.

Q. What will you change at Ruby’s?

A. We’re going to dramatically reduce the menu. We are looking at some of the internal operations and the internal policies and procedures and see which work and which can be improved upon. I’m trying to bring some methods I’ve used and learned about in the past that I think can improve upon what’s going on here at Ruby’s.

The menu changes are being tested right now in Yorba Linda and Irvine. The test started March 30, right after I started here. I put that in as quickly as possible because I had identified it as a serious shortcoming at Ruby’s. The results so far have been very positive. If the test proves out in about four more weeks, then we’ll do an implementation within the entire system by the end of May.

Q. What other plans do you have for Ruby’s future?

A. We like the look of the classic ’40s diner that Ruby’s is known for and I think that as we move forward we’re not going to lose the roots on which it was built.

We also want to spruce up the looks of many of the restaurants, both the interior and exterior. But we’re operating in a constrained environment, and we have to be economical and creative in how we do that. I don’t want to change a lot about the ’40s diners look. It’s very iconic, almost timeless. I’m talking about repairs, maintenance, things like that.

Q. What aspects will remain the same?

A. So many restaurants and companies over the years cut corners, take shortcuts and in the end sacrifice the most important part of the experience, which is the food and the service. That is one thing Ruby’s has not done and that is not going to change.

Q. It seems like there are a lot of new people coming to Ruby’s, especially from Yogurtland (Ruby’s vice president of franchise development Larry Sidoti is a former Yogurtland executive). Why is this?

A. The fact that many come from Yogurtland is somewhat random. We at Ruby’s have always made an attempt to hire the very best people. And it just so happens that there were a number of people who were available from Yogurtland.

The best way of recruiting is to find people who are friends or have relationships or have recommendations from good people that already work with us. Birds of a feather tend to flock together. Good people want to work with other good people.

Q. Fast casual option Ruby’s Dinette was recently scrapped. Are there any new Ruby’s concepts underway?

A. We haven’t given up on fast casual. I really think it’s a matter of execution and conceptual positioning. We’re reviewing that. It will almost surely be a growth vehicle for the company going forward.

We are still doing fast casual restaurants in airports around the country and a few other places.

Q. When you venture into fast casual again, will you do it at existing Ruby’s locations or open new ones?

A. We would do it in new locations. When people have a Ruby’s, in their minds, it’s their Ruby’s. Most customers like it as it is. It doesn’t make sense to change their Ruby’s into something else. So you look for an opportunity to create a new Ruby’s in a new environment.

Q. What are some of the biggest challenges in making a restaurant chain successful?

A. The restaurant business isn’t that complicated. It’s really about hot food, service with a smile and pleasant, clean, interesting surroundings. If you deliver on those things on a consistent basis with pricing that makes sense, then you’re going to create an experience for your guest. There are also lot of nuances involving location and making sure you hire the right people.

Q. How have minimum wage increases and healthcare mandates affected the business?

A. Increases in minimum wage and health insurance costs and many other employee-related costs are impacting our industry. They’re impacting the industry at a time when most operators have little to no pricing power and the ability to pass on these costs to the customer.

You have to look for creative ways to minimize the costs without impacting the guest experience. And it gets more challenging every year.

Q. Is there something in particular you want to accomplish as interim CEO?

A. I would love to be able to make a difference in terms of the corporate culture. I would like to be able to influence the growth of the company in what is essentially a very capital-constrained environment. I would love to be able to make the Ruby’s experience a memorable one to the guest and that’s not as easy as it sounds.

Q. What is Cavanaugh’s involvement in the company now?

A. Doug is in many ways an idea guy, a concept guy. And he’s highly focused on the marketing side of the business. He’ll continue to be a major contributor in those areas. I’m going to make very few decisions without sounding them off him beforehand. He is the creator of the concept and the guy who is responsible for the success Ruby’s has had over the years.

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