Johnny’s places hotel sidekick front and center


Franchise-Times-logoBy Nicholas Upton
Publication: Franchise Times

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Hotel restaurants can be grim. Nearly every traveler has spent a reluctant meal in a dim hotel sports bar, munching on fried frozen food, tainted by the chlorine smell from down the hall. But some of the most successful hoteliers have begun to see that big open space next to the registration desk as a way to entice guests beyond prices and pools.

Mike Whalen, hotel franchisee and the franchisor behind Johnny’s Italian Steakhouse, sees the hotel as the business superhero. And every hero needs a good sidekick.

“It’s like Batman and Robin,” said Whalen. “I think it’s the biggest point of differentiation in hotels today—everybody has good rooms and a nice bed. The real point of differentiation is the restaurant and the bar.”

Whalen, who owns more than 40 hotels and restaurants under the umbrella Heart of America, said despite the general attitude toward hotel restaurants, the first Johnny’s franchise became the top restaurant in town.

“It’s the number one restaurant in Eau Claire, Wisconsin, doing about $3 million a year in the new Holiday Inn, and it’s a hot place to eat,” said Whalen.

The eight-location concept borrows from Italian and typical steakhouse fare, featuring pasta, several fish dishes and various cuts of steak, of course. Whalen says a highly finished atmosphere attracts people from across demographics, for a price that falls below a Ruth’s Chris but comes in a little more than Outback Steakhouse.

“Johnny’s is kind of a timeless thing,” said Whalen. “There’s nothing faddy about it, but it’s age neutral. Prom kids like Johnny’s and old people like Johnny’s.” The clean design also brings in more women than other steakhouses that Whalen said have “a little too much testosterone.”

The idea was inspired by a bygone Des Moines, Iowa, speakeasy called Johnny’s Vet’s Club that shut down in the 1990s.

“When I had to come up with a restaurant concept for one of our new hotels, I said, ‘I’ve always wanted to do a Johnny’s steakhouse,’” said Whalen. “We called the family and she said that Johnny would be proud, so with her blessing, we started Johnny’s.”

Whalen, who also started the non-franchised chain The Machine Shed, said startup costs are nominally more than a generic hotel sports bar at about $1 million, and stand-alone locations (of which there are three so far) come in at $3 million plus real estate costs. Each location ranges from 5,000 to 7,800 square feet.

Heart of America began franchising in 2002 with the Eau Claire location, and Whalen plans for another five or six restaurants in 2016, at a 50-50 corporate and franchised split. He said franchising Johnny’s was a big decision for the seasoned franchisee, and it wouldn’t have happened had hoteliers and other entrepreneurs not asked for it regularly.

“To franchise well is a hell of a commitment, if you’re really going to do it right and you’re really going to have the support structure to provide a platform and a foundation of success to a franchisee,” said Whalen. “We decided that we wanted to make that commitment.”

He said the same group that supports all the company’s concepts was well suited to support new franchised locations. Aside from a robust web-based training portal, Heart of America’s strong suit is supply chain management that aims to keep the various concepts’ food quality high compared to competitors, and maintains healthy margin.

Whalen’s strategy for growth came from some advice he got from a boating instructor: go slow like a pro. He said the adage has helped him hold out for only the most passionate restaurateurs.

Having a successful hotel empire doesn’t hurt, and it means he can be careful about selling franchises and still have plenty of cash flow to help support the nascent franchising infrastructure.

Ultimately, Whalen wants to provide high value for franchisees, something he takes seriously after years as a franchisee himself. He said there are two lessons he takes to heart.

“One, standards should be imposed on a franchise for a good reason, not just a power and authority reason,” said Whalen. “And second, you need to pick franchisees that are in the business mentally, not as an investment.”

That, he said, keeps the brand standards department from becoming simply the B.S. department.