In this FDD Talk 2017 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 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Johnny Rockets franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Johnny Rockets’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average, median, high, and low unit volume for the 150 domestic franchised Johnny Rockets Restaurants that were open and operating for the entire 12-month period of January 4, 2016 through January 1, 2017, 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
15 Things You Need to Know About the Johnny Rockets Franchise
New Menu Offerings
1. In early July, Johnny Rockets announced a few new menu changes for its dine-in restaurants across the U.S. The restaurants are now offering Certified Angus Beef, never frozen, cooked-to-order patties for their hamburgers. Johnny Rockets has paired the patties with a fresh toasted brioche bun with a range of toppings, including thick-cut Applewood smoked bacon strips and Smokin’ Chipotle sauce.
2. Johnny Rockets is also now offering a savory Gardein Black Bean Burger or a Boca Burger (at select locations) as a protein alternative. Customers also have the option to substitute the brioche bun for an Udi’s Gluten Free bun.
3. In addition to the new burger choices, Johnny Rockets has added Nathan’s Famous all beef hot dogs, featuring a choice of savory toppings from relish and chopped onion to all-meat chili and Wisconsin cheddar cheese, to its menu. The kids’ menu was also expanded with the addition of mini burgers made with Kings Hawaiian rolls. Johnny Rockets has also released a new shareable appetizer, Loaded Street Tots.
4. The new menus now include nutritional and calorie count information as mandated by government regulations. James Walker, President of Operations and Development for Johnny Rockets, said, “These changes emphasize our commitment to the quality premium burgers that the Johnny Rockets brand is known for, as we strive to meet the evolving tastes of our loyal customers with an expanded range of flavorful, healthful menu choices.”
2.0 Restaurant Prototype
5. Prior to the nationwide rollout of Johnny Rockets’ new menu over the summer, the company unveiled the revamped menu and an updated, modern look for its restaurants at an Orange County, California location. In early February, the burger chain opened its first updated restaurant, dubbed a 2.0 prototype, which has done away with the brand’s signature dancing servers and jukeboxes and replaced them with iPad-powered menus and table-side finished shakes.
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6. As Johnny Rockets tries to move away from its nostalgic roots, the chrome and red vinyl chairs have been switched out for contemporary tables and bar stools with wooden finishes, pendant lighting, and dark gray booths.
7. Although customers are encouraged to place their orders with the new iPads, servers can still input orders for guests. Take-out customers can now order from a self-serve kiosk at the entrance of the restaurant. Walker said that the changes aren’t meant to downsize staff, but instead they allow servers to focus more on the customers.
8. The Orange County location debuted the new Johnny Rockets menu (which started rolling out nationwide in July), which features more premium ingredients such as brioche buns, Certified Angus Beef burgers, scratch-made pickles, sliced Roma tomatoes, and leaf lettuce. At the time, Walker said that the new menu at the Orange County location would serve as a test before the chain rolled out the new items to other locations.
New International Locations
9. In May, Johnny Rockets opened two new international locations — its second restaurant in Italy and an airport location in Jakarta, Indonesia. The restaurant in Jakarta’s Soekarno–Hatta International Airport Terminal 3, is the first Johnny Rockets airport location to use the 2.0 design, which features new décor and high-efficiency kitchen equipment. PT. Riyanti Investama International brings the first Diner 2.0 to the Jakarta airport after opening five Johnny Rockets across Indonesia.
10. Following the success of the first Johnny Rockets in Italy, which opened in October 2016, a second restaurant was opened in early May in Lonato del Garda. This location is operated by Giangiacomo Groppetti of Groppetti Holding Ltd., who also operates the first location in Italy. Groppetti has also acquired the rights to Switzerland to further expand Johnny Rockets’ European presence.
11. Johnny Rockets was founded in 1986 by Ronn Teitelbaum in Los Angeles, California and was “crafted as a ‘nongimmicky’ recreation of the 1940s-vintage malt shops of [Teitelbaum’s] childhood.”
12. The restaurant’s themed décor featured vintage Coca-Cola advertising, nearly life-size cardboard illustrations of women in World War II armed services uniforms, individual jukebox stations, chrome accents, and red vinyl seats. Johnny Rockets is also known for making a smiley face with ketchup on a paper plate when serving french fries.
13. In 2007, Johnny Rockets was acquired by RedZone Capital, a private equity firm of Daniel Snyder. At the time of the acquisition, Snyder announced plans to expand the chain both in the U.S. and globally, including the launch of smaller outlets known as Johnny Rockets Express. RedZone Capital sold Johnny Rockets to Sun Capital Partners in 2013.
14. Johnny Rockets started franchising in 1987 and today there are over 360 locations around the world.
Entrepreneur’s Franchise 500
15. Johnny Rockets has only appeared on Entrepreneur’s annual Franchise 500 list twice in the last decade. The company ranked on the 2015 list at No. 207 and the 2016 list at No. 295.
Section II – Estimated Costs
- Please click here for detailed estimates of Johnny Rockets franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Johnny Rockets’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
- Except as noted below, Johnny Rockets’ Item 19 includes financial performance information for all of the domestic (U.S. and U.S. territories) franchised Johnny Rockets Restaurants that were open and operating for the entire 12-month period of January 4, 2016 through January 1, 2017 (the end of Johnny Rockets’ last fiscal year) (collectively the “Reporting Franchised Restaurants”).
- Specifically, of the 181 total domestic franchised Johnny Rockets Restaurants operating at the end of the company’s last fiscal year, there are 150 Reporting Franchised Restaurants.
- The 31 domestic franchised Johnny Rockets Restaurants not included in this Item 19 are not included because:
- (i) they were not operational for the entire 12-month period, and/or
- (ii) they were located at a professional sports stadium or a university.
- Specifically, this Item 19 does not contain any information for the 18 domestic franchised Restaurants that were not open for the full 12-month period.
- Additionally, this Item 19 also does not include any information for:
- (a) the 10 domestic franchised Restaurants located at professional sports stadiums as these locations were open for operation approximately 100 days (for those Restaurants located in professional baseball stadiums) and 20 days (for those Restaurants located in professional football stadiums) during the 12-month period, or
- (b) the 3 domestic franchised Restaurants located at universities as these locations were open for operation approximately 8 months during the 12-month period.
Part 1 – Average Unit Volume of Reporting Franchised Restaurants by Venue
- The financial performance information contained in this Item 19 represents the average unit volume of the Reporting Franchised Restaurants for the 12-month period from January 4, 2016 to January 1, 2017.
- As described further below, the average unit volume for the Reporting Franchised Restaurants is organized by venue type.
- Johnny Rockets calculated the average unit volume numbers based on sales reports submitted to it by the Reporting Franchised Restaurants. It has not audited the reports for purposes of this Item 19.
- The financial information contained in this Item 19 does not include any financial performance information for:
- (i) domestic franchised Restaurants that opened or closed during the 12-month reporting period;
- (ii) any corporate or affiliate-owned and operated Restaurants;
- (iii) stadium locations;
- (iv) university locations;
- (v) Johnny Rockets Drive-Thru Restaurants;
- (vi) Johnny Rockets Mobile Kitchens;
- (vii) Johnny Rockets Sports Lounges (which Johnny Rockets no longer offers franchises for); or
- (viii) Johnny Rockets Express Restaurants.
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