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This article was excerpted from OPEN Book: Leadership. Find more information and resources from OPEN including a podcast featuring Doug Cavanaugh at openforum.com/leadership.

Doug Cavanaugh has a confession to make. “I am a control freak,” he says emphatically. “Hands up. With my restaurants, I’m involved in everything, from the menu to the décor to the design – every aspect of their DNA.” 
He pauses. “But then, I’m the brand champion, so that’s my job.”

Cavanaugh, 54, is chairman and CEO of The Ruby Restaurant Group, the company behind the Ruby’s Diner chain that boasts 43 directly controlled or franchised locations nationwide. It is his laser-like focus on the minutiae of his empire of 1940s-style diners that has elevated them from generic exercises in foodie nostalgia to destination restaurants in their own right. “It’s such a competitive world these days, that the only option left to you, to make yourself really stand out from the crowd, is to be remarkable,” he says, with characteristic ebullience. “We’re always trying to raise the bar. And you do that by concentrating on quality and really sweating the details.”

It is a philosophy that Cavanaugh has wielded from the founding of Ruby’s 27 years ago. Still, despite his ability to wax lyrical about malted milkshakes and trans-fats-free french fries, he is in some ways an accidental restaurateur. A native of Southern California, he was able to marry a background in construction and real-estate development with a passion for renovation when he transformed an old whaling captain’s mansion in Nantucket into the island’s only ocean-front restaurant, the Summer House, which opened in July 1980. Thus “infected with the restaurant bug,” he returned west, gathered his old high-school buddies together, and invited them to invest in his next “crazy idea” – to turn a dilapidated bait shack at the end of the 1940s-era Balboa Pier in Newport Beach into the Ruby’s prototype, “to kind of bring back a taste of the area’s heyday.”

Ralph Kosmides, the only friend who didn’t laugh incredulously that day, is now The Ruby Restaurant Group’s CAO; together, he and Cavanaugh pooled $80,000 and spent a year sourcing authentic 1940s artifacts and remodeling the building themselves. The first Ruby’s – named in honor of Cavanaugh’s mother (“she’s an octogenarian and still kickin’ ”), opened on December 7, 1982; proceeds were a princely $63. “Of course, we were flying by the seat of our pants; we had no guarantee of success,” says Cavanaugh. “But from the very first day, we started with one principle – not to cut corners on quality – and people were smiling as they saw the building and loving the experience when they came in; it was clear that we’d struck a chord.”

It was a chord that quickly resonated. By its second year of operation, Ruby’s sales exceeded $1 million; in the next four years, four more diners opened on the West Coast; and in the 1990s, the Ruby Group presided over 27 openings in Southern California, Pennsylvania, Nevada, New Jersey and Missouri. People responded with eagerness to what Cavanaugh calls the “brand culture,” which encompasses everything from area-themed enhancements to the chain’s standardized vinyl-booth, white-Formica, soda-fountain décor. The culture is also resonant in the standard of the food (Cavanaugh’s godfather ran a restaurant in Los Angeles and acted as Ruby’s original menu mentor) and the caliber and commitment of Ruby’s 3,000 employees. “Every new hire, no matter what their position, watches a 15-minute video explaining the ethos of the company,” says Cavanaugh. “What our roots are, how we developed and where we’re going. It’s an emotional connection we’re trying to create, a visceral bonding, to make it more than just a job.” As a result, he says, Ruby’s can boast staffers who have been on the payroll for up to 20 years. This is no mean feat in the high-turnover restaurant world. “But then, we’re an old-fashioned company,” he stresses. “So many today are obsessed with raising money, going public, spit ’em out, sell ’em off. We’re not. Our motto is, and has always 
been, only the best for our guests.”

For this reason, Cavanaugh keeps a tight hold on his empire. Recruitment, training, product development and accounting are all done in-house, and potential franchisees are vetted thoroughly and personally. “I’ll inspect their facilities myself,” he says. “We could have franchised much faster, but I need to be sure that we’re getting the right blend of access to capital and someone who shares our operational philosophies and passion for the brand, who’ll carry the torch high.” The stakes are very personal for Cavanaugh. “A lot of chains get acquired or controlled by disparate investment groups, and you get the bean counters making decisions about food and style, and it eviscerates the brand,” he says. “I don’t want that to happen to us.” It’s clear that the Ruby’s modus operandi has been shaped by Cavanaugh’s singular vision; what qualities does he think a good leader needs? “Well, there are different kinds of leaders,” he demurs, “but for me, I’m here to serve my team. We believe in the inverted pyramid. You’ve got to try and understand the perspective of your team members; it’s important not to get myopic. There’s no other way of doing it in the hospitality industry. Aside from that, you need a tremendous amount of tenacity. Without that it’s hard to survive.”

But how do you maintain that drive and enthusiasm – not to mention your personal imprimatur as a brand grows and expands? Cavanaugh has given the matter serious thought. “Our culture is the reason that Ruby’s has been successful,” he says, “through the team, and the spirit. So many famous large brands are forced to grow to feed market need and they end up tripping or collapsing completely. We never want to grow faster than our culture can keep pace with; that wouldn’t work for us. And that’s how I try to live my professional life. Complacency is the enemy. It’s not in my nature to take my foot off the gas. Much to my wife’s chagrin.”

That said, Mrs. Cavanaugh might be glad to hear that her husband can foresee a day when the success of Ruby’s might outstrip him. “If we take it to 100 or 200 units, that would require a different skill set to mine,” he says. “I’m a brand builder, not a national developer.” In the meantime, he remains Ruby’s cheerleader in chief, whether extolling the virtues of the latest planned outpost – to be housed in a restored 1930s railway station – or hanging out in the restaurants and getting shop floor feedback on the popularity of the turkey burgers or the latest organic menu options. His advice for fellow would-be entrepreneurial trailblazers? “If you live and breathe and love what you’re doing, it makes the good times really high and it takes the edges off the down times,” he says. “It’s rather hollow, I think, to be motivated by money alone. Sign up to your passion and be prepared to make mistakes; if you don’t fail, you’re not trying hard enough. The thing is not to get frozen by the failure or the fear of doing it. You have to have faith.”

Cavanaugh indulges in a rare pause for breath. Yes, he confirms, he’s still as passionate as the day when his Balboa Pier location first opened for business. “I’m too passionate if anything,” he says. “I generate too many ideas. And I like to do everything immediately. I’m not the kind of guy who likes to schedule something a year down the line.” In an attempt to rein in his zeal, he says, they have a rule in the Ruby’s boardroom: the best idea wins. Happily for Cavanaugh, it’s he who gets to select it. “OK, it’s a benevolent dictatorship.” He laughs. “I guess I’ll always have that entrepreneurial spirit embedded in there, but as things grow, you can’t be as freewheeling as you once were. You have to try and be more disciplined and know when to hold back,” he shrugs and grins, “even if that goes against everything in your nature.”

For more info on the Ruby restaurant group, see: rubys.com