This time they mean it.
Johnny Rockets Group Inc. will change the look and feel and food of the burger chain systemwide with alterations to all aspects of its operations, from color scheme and design to the pickles on its burgers.
The presentation—on display at a new flagship corporate location at The Outlets at Orange—dispenses with the 1950s “sock hop and soda shop” theme in favor of a chrome-and-wood design and foodie upgrades up and down the menu.
Even the jukebox now streams from an outside vendor’s smartphone app.
“We’ve been working on [this] for two years,” said James Walker, president of global operations and development.
It’s a strategic shift after a half-dozen mid-scale, tactical measures—some now de-emphasized or dropped.
And note that it comes courtesy of a remodeled senior executive team.
About 9% of the chain’s 385 restaurants—with $363 million in systemwide sales—sport the new look.
A full makeover will take years; Walker expects two dozen conversions this year, and all new stores will adopt it. He won’t sell the old version, and as current franchise agreements expire, owners must remodel.
Then and Now
Renovations run $75,000 to $275,000 per store—$70 million systemwide; franchisees pay for work on their stores.
Walker said new locations are cheaper to build than the older version due to “cost-engineering of the prototype”—or hammering out deals with vendors.
A standard Johnny Rockets now costs $650,000 to $750,000 to open, excluding real estate; old models could top $950,000.
The franchise fee is $49,000; royalty and marketing fees come to 6.75% of revenue.
Average unit volumes for restaurants open a full year are about $1.2 million, and “once we get into [a remodel] we’ve seen a 30% sales lift.”
Johnny Rockets’ 385 restaurants open at the end of last year included 205 U.S. locations—88% franchised—and 180 overseas. It has nine OC restaurants.
The 385 locations are up from 283 at the end of 2012—one-third of that four-year net increase came last year.
“We had tremendous growth” last year, Walker said.
The chain was in 30 states and 16 other countries at the end of 2012; it’s in 36 states and 32 countries now.
Same but Different
The chain’s bet is that it can attract the current generation and stay true to what oldsters see as the real Johnny Rockets: burgers, fries, shakes and music.
It includes the now-common targeting of millennials, but with those elements an ever-larger part of the overall culture, it’s also about a 30-year-old brand aiming to draw new clientele.
Menu moves are “a mix of new items, new procedures, and upgraded ingredients.”
All of that is supplemented by marketing sizzle, with some items getting freshly promoted, even if they’re not entirely new.
Burgers get butter brioche buns, Roma tomatoes and pickles cured on-site; bacon is “thick-cut, Applewood smoked;” and salt and pepper are kosher.
Menus tell of “hand-breaded” onion rings and chicken tenders, as well as fries; the spin on shakes: “hand-spun.”
Hot dogs were there before but are now Nathan’s Famous—an integration of retro and new.
Other changes include the logo—a red bottle cap with the words “American Original” under the “Johnny Rockets” name—and new booths, walls and lighting.
The location in Orange—the only one of the nine here that has the redesign—includes a “high-efficiency” open kitchen and tabletop kiosk ordering. Music flows from the music app, called Rockbot. Murals over brick-veneer walls include “brand messaging” related to the food.
Tactics
Johnny Rockets has tried smaller tactical changes over the last three years.
From mid-2014 to late-2016, it said it would sell express, drive-thru and pop-up locations, and a food truck option, as well as restaurants at a partner’s proposed chain of drive-in movie theaters in the Midwest.
That last one is gone, and pop-ups “are not currently our focus,” Walker says, “Though I wouldn’t say no to them.”
The other ideas are still sold: Three franchised drive-thrus are open or planned, and six food trucks are on the road.
Walker says a corporate restaurant in Buffalo, N.Y., that rebranded as “Burger Factory” in September 2015—with craft beer and “Sriracha Pub” burgers on its menu and an industrial-inspired logo that looked like a machine gear—tested ideas for the new concept and is now back in the fold as a Johnny Rockets.
“It was an incubator where we could work things out with neutral branding,” he said.
A plan to license the Johnny Rockets name for grocery store food, announced in 2014, is “in final negotiations, and we hope to see product later this year,” Walker said.
The Third Man
Johnny Rockets senior executives have decades apiece in food service—and have all been brought aboard in the last three years:
• Todd Schwendenmann, chief financial officer, began his Johnny Rockets role in July
• Naresh Worlikar, vice president of international operations, joined in September 2015
• Jim Kensinger, vice president of operations services and training, a new position, joined in May 2015
• Jim Hicks, senior vice president of domestic operations, joined in January 2015
• Joel Bulger joined in July 2014 as the company’s first chief marketing officer
Walker himself is the third man in three years to helm Johnny Rockets.
He joined in December 2013 under President and Chief Executive John Fuller, who in March 2015 was replaced by Charles Bruce, who left last July in favor of John Maguire.
Walker runs Johnny Rockets “on the ground” and reports to Maguire.
Coast-to-Coast
Maguire is chief executive of FIC Restaurants Inc. in Wilbraham, Mass., a holding company for 260 Friendly’s Ice Cream restaurants, about half of which are franchised. Johnny Rockets CFO Schwendenmann is CFO of Friendly’s.
The two chains share an owner: private equity firm Sun Capital Partners Inc. in Boca Raton, Fla., which in 2007 bought the then-named Friendly’s Ice Cream LLC for a reported $337 million, then added Johnny Rockets in 2013.
A price for the latter wasn’t given. Private equity seller Red Zone Capital Management Co. LLC in McLean, Va.—run by Washington Redskins owner Daniel Snyder—wanted $150 million for the chain, or about nine to 13 times earnings before interest, taxes, depreciation and amortization, news reports said.
Sun Capital sold Friendly’s retail ice cream making and distribution business last May to Dallas-based milk processor Dean Foods for $155 million to focus on restaurants and two months later gave Johnny Rockets’ operations and finance oversight to Maguire and Schwendenmann.
The two chains offer some similar menu items—burgers, fries, ice cream—and can share “best practices” but have no plans to merge operations, executives of both firms have said.
