Snyder firm buys Johnny Rockets

'Skins owner plans to expand diner chain

February 10, 2007|By Jim Puzzanghera | Jim Puzzanghera,Los Angeles Times

WASHINGTON -- Johnny Rockets, the chain of '50s-themed diners, is ready to blast off, with its new owner vowing to add nearly four times as many locations by 2012.

Smaller versions of the burger-and-fries restaurants will start touching down in airports, shopping malls and other heavily trafficked spots as part of an aggressive expansion by Washington Redskins owner Daniel M. Snyder, whose private equity firm, RedZone Capital, acquired the chain yesterday.

"There's no reason we shouldn't see 1,000 Johnny Rockets locations within the next five years," Snyder said.

The privately held Johnny Rockets has 202 locations in the United States and abroad. Terms were not disclosed.

Johnny Rockets was started in Los Angeles by the late Ronn Teitelbaum, who after a successful career selling high-end men's clothing decided to re-create the malt shops of his youth. He opened his first retro-diner in 1986, with a menu that included hamburgers, milkshakes, cherry Cokes and apple pie.

When certain songs played on the jukeboxes, waiters and waitresses started dancing.

Known for its dancing staff and nickel jukeboxes, Johnny Rockets now has outlets in 28 states, including Maryland, plus Puerto Rico and seven foreign countries.

The chain has been growing about 20 percent annually and already is well-known because of some high-profile locations, including the Atlantis resort in the Bahamas and aboard seven Royal Caribbean cruise ships.

"Everyone tells me that the brand is bigger than the number of restaurants we have," said chief executive Michael R. Shumsky. "Our challenge has been to fill the shoes we've already built for our brand."

One of RedZone's first steps will be to open Johnny Rockets Express restaurants in airports, malls and sports stadiums.

Snyder, known for his inventive marketing, is also chairman of Six Flags Inc., and his connections in sports and entertainment will help the chain's expansion, Shumsky said.

But Snyder's five-year growth plan will be difficult to meet, said Dennis Lombardi, executive vice president of food service strategies for WD Partners, a restaurant development firm. "Johnny Rockets has a great entertainment theme and it's got a nice niche ... that appeals to certain occasions, certain times, and other times it doesn't work," he said.

RedZone was started in 2004 by Snyder and Virginia homebuilder Dwight C. Schar, who also is an investor in the Redskins football team. The firm said it specializes in "under-marketed companies."

RedZone's first major investment was a stake in Six Flags, and Snyder won a proxy battle in 2005 that led to the ouster of the company's management. Snyder installed former ESPN executive Mark Shapiro as chief executive and he has focused on making the parks more family friendly.

Snyder and Schar, chairman of NVR Inc., formed a limited partnership last fall, called RedZone Capital Fund II, that seeks to raise $750 million, according to a Securities and Exchange Commission filing. Johnny Rockets is the fund's first investment.

Snyder, Schar and Shapiro agreed last year to provide $2 million to $3 million a year to Tom Cruise's production company.

Jim Puzzanghera writes for the Los Angeles Times.

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