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 2018 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 2018 FDD
- Section IV – Number of franchised and company-owned Johnny Rockets outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Johnny Rockets’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, median, high, and low unit volume for the 145 domestic franchised Johnny Rockets Restaurants that were open and operating for the entire 12-month period of January 2, 2017 through December 31, 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
1. In early September 2018, Johnny Rockets announced that Mike Nolan will be stepping in as chief executive officer of Johnny Rockets on October 1. Nolan, who served as president for more than a year, is taking over for John Maguire. Before coming to Johnny Rockets in 2017, Nolan served as president of Pieology Pizza. Previously, Nolan was the CEO of Smashburger for about eight months and has worked at Corner Bakery Café, Panera, and Bloomin’ Brands.
2. Nolan said, “I’m incredibly honored to be given the opportunity to lead this storied international brand. Over the past year, I have come to appreciate the universal appeal that this brand enjoys around the world, and I’m truly excited to partner with this team to build an even stronger relationship with our customers and our franchisees.”
Selects ENGIE Insights to Provide Utility Expense Management and Solutions
3. At the end of August 2018, The Johnny Rockets Group selected ENGIE Insights, a leading energy and sustainability management company, to provide strategic utility expense data management and advisory solutions. According to the Energy Information Administration, restaurants are the most energy-intensive commercial building type in the U.S., consuming three times the energy of the average commercial building per square foot.
4. To identify opportunities for increased resource efficiencies and reduce bill complexity, ENGIE Insight will analyze Johnny Rockets’ resource consumption data, centralize data inputs, advise on energy procurement efforts, and develop informed resource management action plans.
5. Joseph Koudelka, vice president of global supply chain at Johnny Rockets, said, “ENGIE Insight has demonstrated it understands the challenges quick service restaurants face today and can help optimize energy usage and restructure energy contracts to overcome them. ENGIE Insight’s analysis of our energy bills and data-driven action plans will not only help us to reduce resource costs, but also enable us to set more ambitious energy efficiency goals.”
6. For restaurants, discrepancies in utility bill frequency, format, and detail make managing bills difficult and costly. ENGIE Insight takes a sophisticated approach that incorporates data management, advisory services, and facility optimization. This innovative approach uncovers opportunities for cost savings and formalizes sustainability efforts. ENGIE Insight will centralize, audit, and process 400 utility bills annually for Johnny Rockets to reduce bill complexity and eliminate processing errors and fees.
7. Further, ENGIE Insight will negotiate optimal contracts for natural gas and electricity procurement in deregulated locations. Martin Sieh, CEO of ENGIE Insights, said, “We look forward to working with Johnny Rockets, providing its corporate locations with our unique mix of data analytics technology and credible expertise to lower resource costs and achieve sustainable business outcomes.”
Brings Back Most Loved Items for a Limited Time
8. To kick off 2018, Johnny Rockets launched a limited-time menu bringing back some fan favorites. The limited-time menu included fresh 100% Certified Angus Beef, thick-cut Applewood smoked bacon, and crispy tots smothered in cheddar cheese.
9. Mike Nolan, president of Johnny Rockets, said, “At Johnny Rockets, we take pride in bringing delicious flavors to our guests. For 2018, we want our guests to ring in the New Year with some of our fan favorite menu items that can be shared for every occasion. That ketchup smile will be there to greet you when you arrive.”
10. According to Johnny Rockets, the following items are some of their customers’ all-time favorites and deserved to be released again:
- Pepper Bacon Swiss Burger – Certified Angus Beef patty topped with Swiss cheese, crisp black pepper bacon, garlic aioli, leaf lettuce, and tomato;
- Cheddar Bacon Chicken Sandwich – Grilled chicken breast topped with Cheddar cheese, thick-cut Applewood smoked bacon, lettuce, tomato, and mayonnaise;
- Loaded Street Philly Tots – Crispy potato tots loaded with thinly-sliced sirloin steak, caramelized onions, green peppers, Provolone, and Cheddar cheese sauce; and
- Chocolate Peanut Butter Shake – Made with premium ice cream, real peanut butter, chocolate syrup, and topped with mini Reese’s peanut butter pieces and whipped topping.
11. Johnny Rockets was founded in 1986 by Ron Teitelbaum in Los Angeles, California. Teitelbaum wanted to open an all-American restaurant that reflected the 1940s-vintage malt shops of his childhood, but wasn’t “gimmicky.” The following year, Teitelbaum started franchising the Johnny Rockets concept and by the next decade, Teitelbaum expanded the chain to more than 60 locations in six countries.
12. In 1995, Teitelbaum sold Johnny Rockets to an investment group led by New York venture capital firm Patricof & Co. Teitelbaum stayed with the company as member of the board until about 1999, when his illness made it hard for him to continue working. Teitelbaum died the following year.
13. Johnny Rockets was sold again in 2007 to RedZone Capital, the equity firm of Daniel Snyder. After the acquisition, Snyder announced that he had plans to expand the chain both within the United States and worldwide. Snyder also had the idea to launch smaller outlets under the name Johnny Rockets Express.
14. RedZone Capital Management owned Johnny Rockets until 2013, when the company was sold to its current owners Sun Capital Partners. Since then, Johnny Rockets has continued to open new restaurants across the world and in 2017 celebrated opening restaurants in 30 countries in 30 years.
Entrepreneur’s Franchise 500
15. Johnny Rockets did not rank on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Johnny Rockets franchise costs, based on Item 7 of the company’s 2018 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 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 175
- Outlets at the End of the Year: 173
- Net Change: -2
- Outlets at the Start of the Year: 173
- Outlets at the End of the Year: 182
- Net Change: +9
- Outlets at the Start of the Year: 182
- Outlets at the End of the Year: 170
- Net Change: -12
- Outlets at the Start of the Year: 28
- Outlets at the End of the Year: 24
- Net Change: -4
- Outlets at the Start of the Year: 24
- Outlets at the End of the Year: 25
- Net Change: +1
- Outlets at the Start of the Year: 25
- Outlets at the End of the Year: 20
- Net Change: -5
Section V – Financial Performance Representations (Item 19, 2018 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 2, 2017 to December 31, 2017 (the end of Johnny Rockets’ last fiscal year) (collectively the “Reporting Franchised Restaurants”).
- Specifically, of the 170 total domestic franchised Johnny Rockets Restaurants operating at the end of the company’s last fiscal year, there are 145 Reporting Franchised Restaurants.
- The domestic franchised Johnny Rockets Restaurants not included in this Item 19 are not included because:
- (i) they were not open for the entire 12-month period, and/or
- (ii) they were located at a professional sports stadium or a university with seasonal operation.
- Specifically, this Item 19 does not contain any information for the 7 domestic franchised Johnny Rockets Restaurants that were not open for the full 12-month period.
- Additionally, this Item 19 also does not include any information for:
- (a) the 8 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 2 domestic franchised Restaurants located at universities as these locations were open for operation approximately 8 months during the 12-month period.
- Additionally, this Item 19 does not include data for 8 domestic franchised Johnny Rockets Restaurants due to data reporting issues and for 19 domestic franchised Johnny Rockets Restaurants that closed during the 12-month reporting period, none of which closed after being open less than 12 months.
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 2, 2017 to December 31, 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 Johnny Rockets 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.