Formula Profits

Since the first Howard Johnson restaurant was built in Quincy, Mass. 18 years ago, 225 more white-walled, orange-tiled units of the chain have sprung up along main highways from Maine to Florida. Last week, tall, hefty Howard Johnson announced plans to widen out. Already under construction (near Dayton, Columbus and Cincinnati) were the first of 200 new branches that will carry his name, his ice cream (28 flavors) and his own brand of New England decor across the Middle West and into California.

Johnson will own few of the new places himself. Like the old restaurants, of which he owns only 52, most of the new ones will be backed by independent investors. They will be built and operated according to a restaurant-operating formula which Johnson credits for most of the chain's success.

The Newcomers. Aside from their contacts with Johnson, many of the present owners--including an ex-Army officer and an editorial writer--had no particular qualifications to operate a restaurant except some loose cash. The cost of land and construction (ranging from $50,000 to $90,000), plus a minimum of $1,000 which they paid for a Johnson franchise, was their big contribution.

Johnson's corps of 27 architects designed the buildings. Johnson "site engineers" determined their locations, after checking the income level and food habits of surrounding communities, counting the traffic on nearby highways. Johnson supervisors carefully hired and trained cooks, waitresses, counter clerks.

Once the restaurants are operating, they will get the benefit of another Johnson technique, the follow-up program. A Johnson agent, who looks like just another customer, makes periodic visits to each restaurant to make sure that the food is cooked and served in the prescribed manner. He reports to Johnson, who uses his information to give sound advice to the owner.

The Visitors. If the report is unfavorable, another Johnson worker is planted in the staff to make daily reports to Johnson. Such tactics help operators and managers to keep service at a uniform, better-than-average level; in the past they have helped most backers to get their investment back within five years. The wartime ban on pleasure driving cut heavily into their business. But this year, the chain expects to gross nearly $32 million, about 200% more than prewar.

Johnson's ample share of this take is assured through the franchise terms which require all owners to pay him a set percentage of their take, buy all their supplies from the Howard D. Johnson Co. The company owns six ice-cream factories, four candy and jam plants, a clam bed at Ipswich, Mass. It provides the restaurants with 700 items, ranging from hot dogs to toilet tissue. The company, being privately owned (chiefly by Johnson), has never revealed its profits. With the 200 new branches, however, other restaurateurs guess that Johnson will not be far from his avowed goal of making $1,000,000 a year.

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