PATH issues for init.d scripts on startup

I have a simple script that starts up a unicorn instance (on Ubuntu 12.04LTS).

#!/bin/sh

case "$1" in
    start)
       echo "starting"
       cd /path && bundle exec unicorn -c /path/config/unicorn.rb -D -E production
      ;;
     stop)
      echo "Stopping Unicorn Instances"
      kill `cat /tmp/unicorn.pid`
    ;;
    restart)
    echo "sending USR2 to all unicorns"
    kill -s USR2 `cat /tmp/unicorn.pid`
    ;;
esac
exit 0

It behaves correctly when called: /etc/init.d/unicorn_boot.sh start

I want it to start on boot, so I ran: update-rc.d -f unicorn_boot.sh defaults

When I now reboot I get the following error:

/etc/rc2.d/S20unicorn_boot.sh: 10: /etc/rc2.d/S20unicorn_boot.sh: bundle: not found

I checked the bundle command, and it's installed in /usr/local/bin, same for the ruby command.

It appears that on boot the PATH does not yet include /usr/local/bin. How can I fix this?

Initscripts are responsible for setting an appropriate path themselves. Set the $PATH variable at the top of the script:

PATH=/sbin:/usr/sbin:/bin:/usr/bin:/usr/local/bin