Johnny Rockets takes its malt shop brand abroad
The Americana appeal of Johnny Rockets, with its malt-shop feel and menu largely made up of burgers and shakes, is finding a growing audience outside the United States, where more than half of its 352 restaurants now operate. The West Coast-born chain aims to continue capitalizing on that appeal as it intensifies growth efforts abroad, opting for smaller-scale operators and markets where economic growth is on the upswing.
From his post in Istanbul, Turkey, where he originally landed in the mid-‘90s as a franchisee of TGI Fridays, Johnny Rockets’ SVP of International Business Stephen O’Connor said the burger segment is “solid, especially the better burger market,” and consumer demand for American brands remains high, even in the face of geopolitical tensions.
“People like Americans, they like American culture, American things—even if they may not like our politics,” said O’Connor, who in addition to TGI Fridays worked on the overseas expansion of Ruby Tuesday and Sbarro, and was VP of casual dining for Kuwait-based mega-franchisee M.H. Alshaya Co. “They can separate those two things. Ninety percent of the time people like American things.”
Johnny Rockets franchisee Giangiacomo Groppetti, above, opened his fifth location in Italy last fall. The restaurant in Rome, top photo, is inside the Euroma2 shopping center.
Johnny Rockets opened more than 20 international units in 2019, including restaurants in Brazil, South Korea, Italy, Nigeria and Mexico. But the company isn’t simply looking to accelerate entry into multiple markets “and just plant flags,” said O’Connor. “We look at markets with a strong economy, strong currency. Places where we can command good average unit volumes” and where “they’re not so restrictive on outside international investment.”
When he was with TGI Fridays, one of the first casual dining brands to expand internationally decades ago, O’Connor said he learned it’s a matter of “really knowing what not to do,” particularly when selecting franchise partners. “Make sure you go into places that have competent management,” he noted, and find those who share the same value system because “people’s behaviors don’t change.”
Franchisees in overseas markets must also have solid financials, real estate connections and “the correct political affiliations,” said O’Connor.
“What I mean by this is, that at times in some regions where being in favor with the ruling party or administration can be a benefit by opening doors and opportunities, so can being out of favor,” O’Connor explained. “For example, if there is a change in administration and the franchisee ends up on the wrong side of the power change, it can negatively affect the business stability. This may affect access to licensing, real estate and even permitting.”
Johnny Rockets has also opted to identify local franchisees who can develop handfuls of restaurants instead of giant players such as the aforementioned Alshaya group, which has more than 30 American brands in its portfolio.
“Master franchising sounds good, but it’s a low control environment,” said O’Connor. “Plus you give up some of the royalties as well.”
More Italians dining out
In Italy, which O’Connor called “a wasteland of U.S. concepts that have tried to go in there,” franchisee Giangiacomo Groppetti opened his fifth Johnny Rockets last fall and the brand’s first in Rome. His real estate background, including selling and renting restaurant locations, has proven essential to development, especially as his group seeks space in malls and shopping centers.
“These venues have growing importance in Italy and are undergoing development projects,” he said. “The large number of daily visits” translates “into many potential customers.”
The Rome restaurant, inside the Euroma2 shopping center, joins Groppetti’s other stores in the Brescia and Verona provinces outside Milan. Johnny Rockets, he said, was an opportunity to diversify his group’s investments, and he loved the “timeless experience” along with the “quality of the menu and the fun and familiar atmosphere.”
Italians, he noted, have always been attracted to “what’s American,” and consumers there are increasingly spending more of their food budget on dining out.
“In the last 15 years, more then 3.5 million people have changed their eating habits, choosing to have lunch in a restaurant,” he pointed out. “If we combine this data with the appeal of American brands on Italian consumers, we can see how Johnny Rockets can be—and has been—a successful investment.”
Other burger brands such as Five Guys have stepped up their development in Italy, and Groppetti noted local Italian food chains such as American Graffiti and Old Wild West are creating Italian versions of the classic American casual diner.
Johnny Rockets’ food quality, though, sets it apart, he said, and while “at the beginning we offered a 100 percent corporate menu, which has been appreciated and is keeping up with expectations,” over the past four years since signing the first franchise agreement the group has introduced LTO menus “that could meet the Italian taste.” Recent items include a Honey BBQ Crunch Burger and Loaded Bacon Crunch Chips.
Groppetti’s sixth Johnny Rockets is set to open soon in Bergamo, northeast of Milan.
Brazilian franchisee Antonio Augusto Ribeiro de Souza, second from left.
Since opening the first Johnny Rockets in the Sao Paulo suburb of Guarulhos in 2014, Antonio Augusto Ribeiro de Souza has added 22 more in Brazilian cities such as Goiania and Rio de Janeiro. It’s “full speed ahead,” said the former McDonald’s franchisee, with seven more stores set to open in the next six months.
“We have been in Brazil for six years now, and Brazilians identify with international brands and the product, hamburger, itself,” said Souza. “Also, Johnny Rockets is a fun brand, something that the Brazilian population also relates to.”
Souza, who owned an import/export brokerage firm in the 1980s, became a McDonald’s franchisee in the early ‘90s, has operated other local franchises and created several brands. He was drawn to Johnny Rockets for its brand identity, product quality and “the difference in customer experience, which is essential in our market,” he said.
“ … We have a differential when it comes to hospitality and service,” Souza continued, and are “always seeking to renew and offer what customers are looking for.”
Case in point: the Johnny Rockets restaurant design. “The ‘50s style is no longer differentiating in Brazil, so we are updating the design concept of the restaurants to be more contemporary while still maintaining our brand identity,” said Souza. “We are adapting the new global Fusion design of the brand, which combines heritage elements with contemporary touches, and it is getting a great response.”
Souza’s restaurants maintain Johnny Rockets’ core menu, but to meet “cultural nuances,” he’s made some adaptations.
“For instance, Brazilians have different lunch habits and like to eat platters versus burgers, which are seen more like a snack,” he explained. “To meet this need, we are the first country to offer a ‘special menu’ of full meal plates such as ribs, steaks, pasta, etc., and it has been very successful for us.”
That willingness to adapt is what helps set Johnny Rockets apart from local burger competitors such as Madero, The Fifties and Bullguer, noted Souza. “We are always looking to innovate and keep track of new trends.”