Rax restaurant chain from the 1980s

Rax was a fast growing fast food restaurant chain in the 1980s. It was based out of Columbus, Ohio, and it was a direct competitor to Arby’s. The chain still exists today. But the total number of stores in Ohio, Illinois and Kentucky where it survives is lower than the number of stores they once had just in the St. Louis metropolitan area.

Origins as Restaurant Administration Corporation

Rax was founded as Restaurant Administration Corporation, a company that owned and operated franchises from other restaurants. After several years of. Running other franchises, in the early 1970s, they decided to launch their own restaurant concept. Originally they called it Jax Roast Beef, but trademark issues led them to switch the name to Rax.

Rax grew very quickly throughout the 1980s. Although it was never nationwide, it did have stores in about 24 states.

They specialized in roast beef sandwiches, and branching out from that specialty was ultimately the restaurant’s downfall. They were proud of being the first fast food chain to have a salad bar and a greenhouse in their dining area. The greenhouse was distinctive, at least until Wendy’s copied it. But eventually, both chains found that although customers said they liked the greenhouse concept, if Arby’s was a couple of miles closer or 50 cents cheaper, people generally weren’t going to pass up Arby’s in favor of Rax solely on account of the greenhouse.

The salad bar distraction

The salad bar was popular, but it was a nightmare from a logistical and loss prevention standpoint. During a slow period, you could run the rest of the store on three employees. But you had to have someone on the salad bar basically 10 out of the 12 hours the store was open. You could have an hour gap between shifts and you could give the person on the salad bar a 30 minute break. But the salad bar also needed a dedicated opener and closer. The rest of the store took two people to open and close, and in a pinch, one other person could open the store. It was harder to close with fewer than two people just because closing is more unpredictable than opening.

So the salad bar consumed an inordinate amount of labor compared to the total amount of revenue it brought in, and it was a loss prevention nightmare. If the person running the salad bar had to run to the back room to resupply, nothing stopped a customer from wandering over to the salad bar and grabbing a handful. A couple of my former regulars confessed to me that they did it, and they saw other people doing it. I never caught anyone doing it, so obviously they were pretty discreet about it. But if they were doing it, other people were doing it too.

While it was against health regulations to do it, people would sometimes take their plate back up to the bar and load it up and walk out the door with it. One time I caught someone doing that and said something, and regretted saying anything. The person left, but they came back 30 minutes later with a friend, and they demolished the salad bar. By demolished, I mean they picked up pans and dumped them into other pans, onto the floor, or whatever was convenient. Their rampage probably lasted less than a minute, but it took me well over an hour to clean up it also meant we didn’t sell any more salad bar trips that night, and it probably wasted a minimum of $30 or $40 worth of food.

People complained that we charged $3.89 for unlimited trips to the salad bar, but you’ll never convince me we were consistently profitable with it. I never saw the books, because I left before I was 18. But three sandwiches brought in the same revenue as the salad bar, and it took less than a minute to make a sandwich. Food cost on the sandwich was probably lower, and the labor cost was probably 1/10 as much.

The grill distraction

And Rax responded to the inefficiencies by adding more inefficiency. They added a grill so they could make hamburgers. But that means during the lunch and dinner rushes, you had to dedicate one employee to the grill. Then they added cheesesteaks and chicken fajitas to the menu. They were popular, but customers complained about the price. The thing was, the food cost on those sandwiches was considerably higher, and you couldn’t make a sandwich a minute.

Eventually, management figured out the grill was losing money, so they discontinued all of the grilled sandwiches. It was non-popular decision, but it was necessary.

Making matters worse, the stores were getting run down and starting to look outdated. Rax withdrew from some markets to try to reduce overhead. But I think scaling back to a smaller number of menu items would have yielded better results rather than ceding entire markets to Arby’s.

Mr. Delicious

The final nail in the coffin was the Mr. Delicious ad campaign. Mr. Delicious was a cartoon character depicting an obnoxious middle-aged man who tried to be funny, but mostly the jokes were just offensive. Our store manager quit because she found the ad campaign offensive.

I’ve heard analysis that blamed Mr. Delicious for the chain going into bankruptcy, but I do wonder how much damage was left to be done at that point. It was a terrible ad campaign, but a merely mediocre ad campaign wouldn’t have saved it. I’m not convinced a great ad campaign would have saved it.

Joint ventures

One of the plans to try to save Rax was entering into joint ventures with other chains. The two most persistent rumors were sharing store space with Red Burrito and/or Miami Subs. Red Burrito ended up doing a shared arrangement with Hardee’s. That venture seems to have been fairly successful, at least in store locations that have enough traffic. But Hardee’s was always a higher volume operation then Rax, and it was open longer hours. It seems like a better partner for a specialty operation like Red Burrito than Rax would have been. Combining two low-volume specialty operations would not have had the same economy of scale.

A joint venture with Miami Subs seemed like a good idea at the time. The fastest growing fast food chain at the time was Subway, so it seemed like a concept someone else could be successful with as well. Miami Subs never became a serious competitor to Subway on a national scale, so it’s easy to conclude that a joint venture with Rax would have failed. But I guess it’s possible the joint venture with Rax was a missed opportunity.

We heard a fair number of rumors as it became more and more clear the company was in trouble. We heard rumors involving Wendy’s and Hardee’s as well.

Rax vs Arby’s

Rax tried to position itself as a slightly more upscale Arby’s. But their core menu items were extremely similar. Rax on a good day was better than Arby’s. But if Rax was having a bad day, Arby’s was better. Arby’s was more consistent.

In recent years, I’ve seen Arby’s doing some of the things that got Rax into trouble, introducing items that stray from their core menu items, and I recently saw a sign that said they have burgers now.

The key difference has been Arby’s introduced to the items for a limited time and was up front from the beginning that they were for a limited time. That could be why they have been a bit more successful straying from their roots.

But I do think the Rax restaurants of the 1980s and early 1990s is a cautionary tale against trying to do too much with too little.

Rax Restaurants today

Rax went bankrupt in 1992 and greatly curtailed operations, even in its original market of Ohio. The ultimate destiny of the former Rax locations varied, depending on who was looking to expand into that market at the given time. Most of the Missouri locations became a Fazoli’s, a Hardee’s, or an Arby’s. In Ohio, a lot of them became Tim Hortons.

A total of six Rax restaurants survive today, with four in Ohio, one in Kentucky and one in Illinois. A former Rax manager was able to keep a small number of stores operating and bought the name and the rest of the intellectual property out of bankruptcy.

If you want a bit of a blast of 1980s or early 1990s nostalgia, the logo and the menu are basically unchanged from 1992. It demonstrates that scaling back its ambitions might have been a successful plan if the original ownership had tried it back in 1989 or 1990.

Dave Farquhar

David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.