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North County home to broad palate of national chain's HQs

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NORTH COUNTY —— To get a taste of San Diego's North County, just look at the menus of major restaurant chains headquartered here. Meals for the Middle American heartland that populated San Diego. A hint of Hawaii. Healthy salads and soups. And most notably, the signature fast food that reminds the nation of sunny San Diego: Baja-style fish tacos.

In order, that's Carrows and Coco's, owned by Carlsbad-based Catalina Restaurant Group; Souplantation, in Rancho Bernardo; Islands Restaurants, in Carlsbad; and Rubio's Fresh Mexican Grill, also in Carlsbad. (Jack In The Box, the most famous chain restaurant based in the county, has its headquarters about eight miles outside of North County in the Kearny Mesa area.)

With the exception of Rubio's, whose theme and history are intimately linked to San Diego County, these restaurants could easily have been based elsewhere. So why North County? Their executives and restaurant consultant Pam Wischkaemper cite a number of reasons: the quality and ease of living here as opposed to points south, such as downtown San Diego; easy access to the rest of Southern California; and less expensive real estate.

"It has more cachet to be downtown," Wischkaemper said. However, she said, restaurant headquarters aren't where the customers go, so there's no need of fancy cachet. Carlsbad and Rancho Bernardo offer more geographical convenience, as well as lower real estate costs.

Catalina Restaurant Group moved its headquarters from Irvine to Carlsbad in 2003, a move that President Samuel N. Borgese said has gone very well. At the time, one reason for the move was to be closer to the employees who worked there, many of whom were from San Diego County.

"It's worked out great," Borgese said. "We're glad to be down here, I'm a Del Mar resident, and I think Carlsbad and North County in general is a real diamond."

Middle America in a grass skirt

Beneath a Polynesian ambience, Islands Restaurants is heartland America all the way. Burgers are its pride, some with traditional toppings and many with fancy flourishes such as pineapple, guacamole and bleu cheese.

"We're known for our hamburgers," said Cyndi Darlington, director of marketing. "A third of our customers order them. That's really what keeps our customers coming back."

There are also salads, tacos, sandwiches and appetizers such as onion rings and the omnipresent Southern Californian treat: tortilla chips and salsa.

Islands now has 51 restaurants in Southern California, Arizona and Nevada, up from 38 in early 2003. The latest opened in Encinitas on July 26, Darlington said.

Next up: Hawaii, specifically Oahu's Ala Moana Center. The restaurant will open early next year, Darlington said.

The company has also unveiled a new Web site at www.islandsrestaurants.com. In addition to listing locations and providing a menu, the site lets users order takeout food online. It also includes a link to surf reports from the Surfrider Foundation.

Staying fresh

Keep it fresh, know your customers and provide consistent management.

That's the philosophy Borgese brought to Catalina Restaurant Group when he joined the company in October 2003. His mission: to steady Carrows and Coco's Bakery Restaurant, which had gone adrift under a series of previous corporate owners.

"The first thing we did was to go out and survey the customers, and understand who the customers were for each brand," Borgese said.

With that information compiled and analyzed, employees could be trained, menus planned and marketing done in accordance with the expectations.

"We made sure the menus spoke to what guests were saying, and we've changed the menus at both brands recently," he said.

The restaurants, with more than 225 locations between them, have two distinct customer groups, Borgese said. For Carrows, it's family dining, and the competitors are Denny's and iHop.

For Coco's, the customers are more often looking for specialty items, and the competitors are Mimi's Cafe and Marie Callender's.

"It revolves around fresh-baked items, we have a bakery in each one of the restaurants, and the goods are made from scratch daily."

The transformation is not complete, Borgese said, for the simple reason that nothing in the restaurant business is ever complete. Trends change, the customer base changes, and restaurants always have to be aware that what works today may not work tomorrow.

"You're always asking the guests for permission to do something, and you're always testing something," Borgese said.

Updating tradition

Rubio's also changes, but from a specific niche —— a Mexican-themed "fast casual" restaurant. And even more to the point, its signature item has always been the Baja-style fish taco sold by Mexican vendors out of street carts. Founder Ralph Rubio brought the flavorful concoction across the border in 1983 when he opened the first Rubio's, in Pacific Beach.

Today, there are 152 Rubio's Fresh Mexican Grill restaurants in California and five other Western states. These restaurants offer far more than fish tacos; the menu includes lobster and shrimp burritos, grilled chicken salads and quesadillas.

Right now, the fish taco and other "street tacos" are undergoing one of their periodic promotions at Rubio's. These soft-shelled tacos, including pork, carne asada and chicken, are sold for $1 each.

The $1 promotion will continue for an unspecified time, said Sheri Miksa, Rubio's chief executive. The goal is to emphasize the value of Rubio's menu, she said.

"We think now that people are making tough decisions on how to spend their money, and with gas now at the $3-a-gallon level, they can have three of our street tacos for the price of a gallon of gas," Miksa said.

Another new item along the street tacos line, called "street tortas," sell for $2.39.

"Fresh Mexican grilled food has continued to be a crowd pleaser," Miksa said. "A lot of people's palates have expanded, so they're hungry for those flavorful products."

Rubio's is the only publicly traded restaurant company in North County, and as such, the only one required to disclose its finances. Rubio's stock is trading around $9.20 per share, slightly above its price a year ago. Within the last year, the stock has ranged between a low of $7.98 and a high of $13.56. For the quarter ended June 26, Rubio's reported net income of $909,000, or 9 cents per share, compared with 1.047 million, or 11 cents per share, in the same quarter a year ago.

The company's market value of less than $90 million makes it small fry compared to national restaurant operations. But it is getting favorable analyst coverage of late, important for attracting more investors. In February, Longbow Research upgraded Rubio's from sell to buy. In March, Seidler Cos. initiated coverage as hold, then on July 28 upgraded to buy.

Like Borgese, Miksa said Rubio's is happy with Carlsbad as its headquarters. The geography is good, she said, because Carlsbad is convenient to the Orange County and Los Angeles markets, as well as to San Diego. That's important, she said, because so many Rubio's are in those counties. The Rubio's Web site lists nearly 50 locations in the two counties.

Rubio's is still growing in its home county as well, Miksa said. A few weeks ago, Rubio's opened a location at San Diego State University, Ralph Rubio's alma mater.

Souping it up

Like Rubio's, Garden Fresh was founded in San Diego, in 1978 as Souplantation on Mission Gorge Road. The company has nearly 100 restaurants now, run from its Rancho Bernardo headquarters.

Most of these restaurants are known as Sweet Tomatoes, the brand name used outside of Southern California. The reason is historical, said Joan Scharff, executive director of marketing. A now-defunct competitor named Soup Exchange objected to the Souplantation name as being confusing. The settlement was to allow Souplantation its name in Southern California, but outside that area, the name Sweet Tomatoes was adopted.

The dual-name system has been kept because both brands have positive images with customers, Scharff said. In theory, it would be better to have one name companywide, she said, but the effort to put into changing the name simply isn't worth the expense.

No matter what the name, the concept is identical, Scharff said: fresh soups made from scratch and salads lead the list, along with pastas and desserts. There are on-site bakeries that make fresh goods. Menu items may rotate on and off, but the premise doesn't change.

Garden Fresh is experimenting with a new look to drive home to customers just how completely meals are made on site from scratch. Call it the transparent restaurant: Its kitchen will be open to viewing, so customers can see bakers baking muffins and cooks preparing the ingredients for meals. The decor will be rearranged to emphasize the freshness theme, with an ambience resembling a farmer's market, Scharff said.

This prototype design will be shown locally in a new restaurant being built in Chula Vista, as well as in West Palm Beach, Fla., and Phoenix.

As Garden Fresh expands, it will be looking for a larger headquarters, Scharff said, but plans are to stay in the Rancho Bernardo area. With employees living as far south as Chula Vista and as far north as Murrieta, Scharff said Rancho Bernardo is conveniently located along the Interstate 15 corridor. Also, many employees live in the Rancho Bernardo area, she said, herself included.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.

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