FROM THE FIELD Rubio’s Emerges from

EDITOR’S NOTE: When Ralph Rubio opened his first restaurant in San Diego in 1983, his plan was simple: to offer the kind of fish tacos he’d discovered during a college trip with friends. Rubio’s Coastal Grill (originally Rubio’s Fresh Mexican Grill) eventually grew to 200+ locations; but too-rapid expansion and COVID-19’s impact forced the company into bankruptcy in 2020. el Restaurante Publisher Ed Avis spoke with Rubio (no longer president but still involved in many decisions) about the downside of rapid growth, and how lessons learned will help the company move forward as it emerges from bankruptcy.

EL RESTAURANTE: Tell me about how Rubio’s grew in the early days. RALPH RUBIO: There was a point very early on where I was very happy with where we were and where we were going. But as we got into the late ‘90s and started to use the money we’d raised privately to grow from 11 restaurants to 63, I started to realize, “Gosh, this could be a national chain.” I came to find out that’s a lot easier said than done. ER: What mistakes did the company make in its growth plans? RR: Growing continuously geographically was a mistake because there’s a socio-demographic aspect to your customer base. The food culture in Denver is very different than in the Southwest. You have to know that—especially in a business that features a fish taco as a signature product. People in new markets don’t have any clue what a fish taco is, so they think it’s really weird. ER: How did the Initial Public Offering (IPO) in 1999 affect your growth? RR: Going public gave us capital to really grow the business. But the key thing is you have to consistently grow quarter after quarter, and that’s hard to do. Post-IPO, we were growing at a 30 to 50 percent clip in year-over-year units—that was way too fast. We were growing beyond our ability to operate. ER: Was it difficult to profit in new markets? RR: It was hard because we didn’t have the brand equity. In Denver or Salt Lake City, for example, there were a lot of homegrown competitors, along with chains of scale like Chipotle and Panera that are ubiquitous, so people knew who they were. When someone was looking for a job, they weren’t sure what Rubio’s was. It was daunting. ER: You recently pulled out of Florida and reduced your presence in other states. Was COVID to blame or were there other problems? RR: It was probably half and half. We were challenged in Florida because we were too spread out. Denver and Salt Lake were always challenging operationally and from a revenue point of view, but we were making some ground, especially in Denver. Then COVID came and gave us the impetus to retreat. We figured, let’s retreat now and live to fight another day. As we start to grow again, we can look to enter one, two or three of those markets. ER: Rubio’s is emerging from bankruptcy with about 150 locations. How will things be different? RR: That’s a tough question because we’re still in the midst of it. What about our salsa bars? Can we bring them back? Is there going to be such a thing as a buffet anymore? Or a salad bar? There are more questions than answers in terms of what the future looks like. On the positive side, we introduced an Impossible Taco Salad. It’s done pretty well, so we’re going to keep Impossible in the restaurants. We did a partnership with Top Chef judge Richard Blais on a line of street tacos we’re going to roll out this summer. Also, when COVID came we pivoted to digital ordering because we were geared to do that. We’re going to continue to grow revenue digitally [as we move ahead].