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FDD Talk: The Johnny Rockets Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on January 22, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Hamburger Franchise



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Johnny Rockets Photo by Bob B. Brown

In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Johnny Rockets franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Johnny Rockets franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Johnny Rockets’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average, median, high, and low gross sales for all domestic Johnny Rockets Traditional Restaurants and Johnny Rockets Sports Lounges that were open and operating for the entire 12-month period of December 30, 2013 through December 28, 2014, organized by venue type (airport, tourist, casino, theme park, downtown, mall, lifestyle/streetfront, military, grocery-anchored center, outlet, power center, strip center, and all reporting franchised restaurants)

Section I – Background Information

Johnny Rockets was first opened on Melrose Avenue in Los Angeles, CA by founder Ronn Teitelbaum (an award-winning men’s fashion retailer) back in 1986, and he started franchising the concept in 1987. He was aiming to recreate the feel of the 1940s and 1950s malt shops and diners he enjoyed as a child. The name originated by combining the timeless Johnny Appleseed story with the classic Oldsmobile Rocket 88.

Decor touches evoking the period include Coca-Cola advertising featuring nearly life-size cardboard illustrations of women in different World War II uniforms, individual jukebox stations, plenty of chrome accents, and vintage-style red vinyl seats.

One of the chain’s trademarks is making a smiley face with ketchup on a paper plate carrying French fries.



Pretty much the entire look and feel of the place is based on a real restaurant in Los Angeles called The Apple Pan, which started back in 1947 and is still operating today.

In 2007, the chain was acquired by RedZone Capital, the private equity firm of Washington Redskins football franchise owner Daniel Snyder, but was then sold to Sun Capital Partners in 2013.

With more than 344 locations in the U.S., Canada, and around the world, here’s how Johnny Rockets keeps things hopping in the restaurant industry:

International Growth

While the number of U.S./Canadian units has been declining for years (2012 = 229, 2013 = 218, 2014 = 214, 2015 = 206), the number of international locations has been growing by around 20 units each year (2012 = 64, 2013 = 82, 2014 = 112, 2015 = 138) in more than 27 countries. Maybe its vintage Americana presentation feels more exciting in other parts of the world.

Interesting Locations

Johnny Rockets has popped up in some interesting places. In 1995, a Johnny Rockets opened at the Reno Hilton hotel and casino in Reno, Nevada. Royal Caribbean International featured a Johnny Rockets location onboard its Voyager of the Seas cruise ship in 1999, and has continued to do so on many of its new cruise ships. Johnny Rockets opened up in the Cedar Point amusement park in Ohio in 2004.

While it was owned by RedZone Capital, Johnny Rockets food stands started popping up in sports stadiums, including Yankee Stadium and FedEx Field (where the Redskins play). In 2008, Six Flags turned its sit-down Adirondack Grill restaurant into a Johnny Rockets. That same year, Johnny Rockets opened in Camp Pendleton, the largest Marine Corps training facility on the West Coast.

More Than a Fast-Food Burger Joint

These are premium burgers – bigger and more expensive than most burger places, and you’re getting a full Americana experience when you eat there, which is probably why they’re so popular overseas.

Adaptability

As you can see from the interesting locations described above, Johnny Rockets takes an extremely flexible approach so that it can work almost anywhere. It’s now starting to roll out a brand new concept, Johnny’s Burger Factory, aimed squarely at capturing the Millennial segment with faster service and customization, as well as new technologies that are both consumer facing (touch-screen ordering kiosks) and in the kitchen (clamshell cooking systems) to speed things up.

This is in addition to its launching last year of the Johnny Rockets Route 66 concept with four formats, including a drive-thru, a drive-in, a food truck, and a movie theater pop-up.

Section II – Estimated Costs

  • Please click here for detailed estimates of Johnny Rockets franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis



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