Johnny Rockets CEO on moving forward after acquisition

In June, Johnny Rockets became the latest chain to be purchased by private-equity group Sun Capital Partners Inc., which bought the 300-unit casual-dining chain from RedZone Capital Management Co.

The Americana-themed restaurant that features soda fountain–style décor, tabletop juke boxes and servers that dance to American classics has now joined a stable that includes Smokey Bones Bar & Fire Grill, Boston Market, Bar Louie, Fazoli’s Restaurants Unlimited, Garden Fresh, Captain D’s and Friendly’s Ice Cream.

Sun Capital left Johnny Rockets’ management team intact, and the chain’s chief executive, John Fuller, recently discussed working with the new parent company with Nation’s Restaurant News.

How do you like being part of Sun Capital?

The great thing for us is the synergies and the buying power and the best practices, and the collaboration I get to have with all these other CEOs and other business partners that they make available to us is second to none. So from the ability to maximize our potential, we couldn’t be picked by a better ownership group.

I loved our previous owners, because they were good to us, but they didn’t own any other restaurant concepts.

[Sun Capital has] a buying co-op, so that allows us to be an even better return on investment [for franchisees].

Is that because you’re lowering operating costs?

Absolutely. There are at least a couple hundred basis points that we’re going to get out of this ownership.

Were you involved in the negotiations for the acquisition by Sun Capital?

Not necessarily the ‘too high, too low’ part, but I was intimately involved in every presentation, all the due diligence, and it was a pretty extensive process. It took about 10 months from start to finish.

Were there many other offers to buy Johnny Rockets?

It was actually a unique environment. We had 10 different groups that we had to do presentations for, and the group that was advising us [North Point Advisors] said that was the most they’d ever had. Of those [groups] all but one wanted to take it to the next round of due diligence, which was pretty time consuming on our part, but it just showed the absolute interest in our brand and the story we had and what we were able to provide a future investor.

It’s intensive as can be, but you get to know those guys really well. You’ve had so many one-on-ones and different talks with them, and you get their feedback. They were really pleased with what we were able to do with our company during the recessionary period, when we were able to double earnings, and we really got a lot better at some of the other processes that help leverage growth, especially internationally, and to continue to identify where we do great in the United States. So it was perfect timing on their part.

What are some of the processes that you improved during the recession?

There was consistency in who we wanted to be in terms of the Johnny Rockets brand. A lot of different concepts were trying to do these express concepts or other things. And we dabbled in a couple of things, but we were able to solidify that we know what we are.

And then just site selection: Making certain where you work best and then tightening up the site selection process.

A presence abroad

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What is Johnny Rockets’ international presence like?

We currently have about 300 locations, and 270 are franchised, of which 86 are international. We’re just opening in Honduras, which is our 21st country. Brazil and Costa Rica are under construction, and our second in Nigeria is about to open.

There’s a Johnny Rockets in Nigeria?

Yeah, and there are lines out the door. There’s like an hour wait. It’s amazing.

But that’s the thing that’s happening. Western brands [are becoming popular there] — not just the food, but the music, the films, the clothes. There’s a rising middle class and that’s a perfect match for what we’re trying to bring. And we’re lucky, because we have the look and feel of an American concept. If you go to some other American brands you don’t necessarily walk in and feel like ‘Yeah, this is an American concept.’ But when you walk into ours, there’s no doubt.

We all know that Western brands have never been accepted more [than they are now], and what [consumers] really like is the American dream, or the American escape, and there’s no doubt when you’re over there that there’s nothing more Americana than a Johnny Rockets restaurant — the way we look, the juke boxes, the counters, the uniforms, the music, all that stuff.

We do phenomenally well in the Middle East. We’re in Kuwait, Dubai, Abu Dhabi, Saudi Arabia, Qatar, Bahrain, Oman — we’re getting started there. We’re in negotiations for Israel and Egypt. We just signed Tunisia.

There are differences with our politics there, but there’s still that American dream that we’re selling, and they buy it.

Do the servers dance at international restaurants like they do at the U.S. locations?

Yeah. Actually some of the greatest thrills I’ve had in this job is being in these foreign countries and seeing the workers doing the dances.

One quick example if I can: In the Philippines they have a 72-song dance menu, and you can pick whatever song you want them to dance to, and they have a choreographer as part of their administrative overhead piece to help them do these things. When I went there and I saw it, and the kids there and everyone taking pictures and getting involved, I really had goose bumps. From a cultural standpoint they’re very theatrical, and they’re a perfect match for what we like to see in our servers.

In the U.S., what markets are you looking at?

We’re in 32 states now, so one of the best ways continue to grow the brand is in existing markets. We’re under-penetrated in every market we have, so there are opportunities basically anywhere in the U.S.

And also new markets: Minnesota is a great state for restaurants. We have one in the Mall of America, but there are other opportunities around there.

In existing states where we’re already doing great, California and Florida and New Jersey, there are a lot of opportunities there. Washington, D.C. — we’re going to be opening up there.

Under Sun Capital we’re going to open up two new company stores this year. They’re fully supportive of doing that. Previous owners weren’t as keen on spending money to open up company stores. But we love [the business], we know how to run it, and it’s a great return on investment, so why not do it? In terms of believing in what we’re trying to do and supporting management’s objectives, they’ve been great that way.

What have you learned from meeting the restaurant executives of other Sun Capital concepts?

What I’ve gotten mostly, because it’s only been a couple of months, is the confirmation that my first initial read and interaction with the Sun Capital people is legitimate; that they’re very good, they’re very supportive. They’ll spend a ton of money on research to help us understand what our guests’ perception is.

Contact Bret Thorn: [email protected].
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