Doug Cavanaugh Featured

8:00pm EDT March 26, 2007
When Doug Cavanaugh approached a group of friends with the idea of turning an old bait shop on Balboa Pier into a restaurant, all but one thought he was crazy. More than 20 years later, that one believer, Ralph Kosmides, is now executive vice president and co-founder of The Ruby Restaurant Group, the company that controls or has franchised 41 Ruby’s Diner locations nationwide, employs approximately 2,500 people and boasts annual revenue of $100 million. As chairman and CEO, Cavanaugh, who named the chain of 1940s-style diners after his mother, has big plans for Ruby’s continued expansion. His top priority, however, is maintaining the culture and atmosphere that he believes makes the brand so special. Cavanaugh spoke to Smart Business about staying true to your roots and why a little discipline is necessary for a growing company.

Protect your culture and your brand. Unless you’re just a box mover and you’re just selling something for the lowest price, where culture doesn’t make much difference and people are just looking to get in and out and get the box for the cheapest amount, you have no option. Your culture is what is going to make or break you.

We franchise throughout the country, and one of the things that makes Ruby’s successful is the essence of our culture. Without that culture, you’ve got just another restaurant. You might as well be a coffee shop. That’s essential for us.

One of the things you have to be careful of is that the brand becomes the guests’. They take possession of it and they hold it very near and dear to them. If you lose the core of what it is that they have an affinity for, you can really turn things upside down. Especially with an older brand, you have to protect the core value of what the guest perceives you as.

Our culture video is something that every new hire, no matter where they are in the company, is asked to watch. It’s about a 15-minute piece on where the company’s roots are and how it developed and where it’s going. We have something called Ruby News that goes to every employee via the Internet, and we try to make sure we’re consistently sending our message on. We’re trying to make sure we’re disseminating that data so the guest gets the impact of our culture.

Communicate from the top. Everybody, all the way to the busboy, has to understand what they’re in charge of and what they’re responsible for. The message has to be very clear and concise. Unless you have that alignment, everything you talk about at the home office is for naught. We don’t sell any hamburgers here on the eighth floor.

We have to make sure our missions and our goals are very well delineated and very well communicated. If you don’t do that, you’ve lost it all. Without alignment, you really don’t have anything. They’re out there on their own, and they really don’t know what they’re trying to execute.

There’s a certain amount of comfort that team members have when they know what their job is in very definite terms. When they feel comfortable and confident, they’re going to do a far better job. In a vacuum, it’s a wildcard; you really don’t know what you’re going to get.

Balance entrepreneurial spirit with discipline. If somebody’s going to create a new division or a new product line, the entrepreneurial spirit goes a long, long way. On the flipside, my skills as an entrepreneur are better set for the foundation of a brand and for the genesis of things.

As a company gets big, you need to become more professionally managed. You always have that entrepreneurial element embedded in there, but you have to get more and more disciplined. You can’t be the cowboy you once were.

The magnitude of everything shifts as the sales get higher. The importance of decisions is magnified as well, so shooting from the hip doesn’t work quite as well as it did in the early days. You don’t want to ever lose your entrepreneurial edge but being disciplined is important, and it creates a more stable environment for the management throughout the organization.

Build buy-in by listening. There’s nothing as valuable as buy-in, and it’s a little tricky these days. You have several different generations you’re working with and their motivations are far different than the baby boomers, and the X-ers are different from the Y-ers, so it is a bit of a dance to keep them all in lockstep.

You just have to listen. We go to great lengths to have roundtables at our restaurants where we will invite the team members to come and talk about what’s affecting them and their job and what we can do to better support them to support the guests. It’s critical for me to know the real story.

I don’t get a chance to interact with our guests that often but these folks are there day in and day out, and they’re far more in touch with what the guests are thinking. If we make a change in a menu or a procedure, that’s when I really have to dive down to make sure we didn’t affect the core of the brand, because that’s the golden goose you can’t mess with.

Create positive tension. The people I’ve found to be most successful are the people who are absolutely, doggedly tenacious and just don’t give up. That makes up for a lot of things.

You don’t have to be the smartest guy in the pile, but the minute you stop innovating, the minute you stop being aggressive, that’s when things get dull. The team can sense that. There’s a certain level of tension that’s healthy for an organization. I don’t mean negative tension, but there’s a level of creative tension that keeps people excited and keeps people interested.

It’s all about new ideas and it’s all about ‘What’s next?’ That keeps people inspired.

HOW TO REACH: The Ruby Restaurant Group, (949) 644-7829 or