SUSAN DEEMER

Orange County Business Journal

Two Orange County-based restaurant chains with several locations in the Los Angeles area have announced expansion plans.

Ruby’s Restaurant Group of Newport Beach and Johnny Rockets Group Inc. of Irvine are adding several new locations to take advantage of strong overall growth in the U.S. restaurant industry.

Ruby’s, whose outlets are modeled after 1940s diners, has signed an exclusive license agreement to open 25 new dinettes with a subsidiary of luxury hotel operator Host Marriott Corp.

Ruby’s also has plans to invest $9 million to build nine new full-service diners in 1999. At least half the new restaurants would remain company owned-and-operated stores and the remainder would be franchises. Currently, 10 of Ruby’s 33 restaurants are franchises.

“When we opened in December 1982 on the Balboa Pier, we had five employees and I was on the grill with my partner, Ralph Kosmides, on the register,” said Doug Cavanaugh, Ruby’s president and chief executive.

Kosmides is now chief financial officer of the privately held company, which has about $50 million in annual revenues and 1,700 employees. The new restaurants will bring the total chain to 40 diners and 25 dinettes.

Johnny Rockets, whose locations are modeled after 1950s malt shops, plans to open another 20 company-owned stores and 20 franchise stores beginning this May. The expansion is being funded by internal operations as well as several New York-based investors headed by Patricof & Co. Ventures Inc., Generation Partners and Center Cos.

The Johnny Rockets chain, with estimated 1999 sales of $115 million, operates with a simple menu of burgers, grilled-cheese sandwiches, French fries and apple pie. But recent customer demand has prompted a menu expansion.

“We just completed a new kids’ menu program, adding chicken fingers and a hot dog,” said Glenn Hemmerle, CEO and president. “And we are introducing a double burger at six restaurants that we have not had before. In the first three weeks it has become the No. 2 selling burger.”