A Keen Sense: Lloyd Sugarman Uncovers Success One Brand at a Time

When Cold Stone Creamery first showed up on his radar, Lloyd Sugarman knew it had great franchise potential years before the couple who started it were ready to grow. And he had a special feeling in his gut the first time he visited a tiny coffee shop in Chicago called Starbucks, but he listened to friends who insisted coffee shops had limited growth potential, and didn't make a move.

But all systems were go in the late 1980s when the self-made businessman who'd battled ADHD as a youth, got a tip from a 9-year-old girl on a flight to California. When he asked her father about new restaurants in the LA area, she piped up, "There's that new place in Melrose--Johnny Rockets. It's a little hamburger and malt shop."

Sugarman liked the name so much that he rented a car and drove to Melrose Avenue in Los Angeles, near West Hollywood. "There were long lines outside, including some familiar faces, like Kiefer Sutherland, whom I ended up sitting next to at the counter once we got our chance at the 20 stools. I ordered everything on the menu except the egg salad--I don't like egg salad. I loved all the food and the place with its red-and-chrome décor," he says. "I was off the charts with excitement."

He learned from the duty manager that Ronn Teitelbaum, an award-wining clothier, conceptualized and opened the Americana-type diner and asked for Teitelbaum's phone number. "She said, 'I'm sorry I can't give it to you. So many people have been trying to get in touch with him about this place, but I'll give him your name and number. Sometimes he comes by,'" Sugarman recalls.

Sugarman said he'd wait. "But I don't know for sure if and when he's coming," the manager protested. Sugarman said, "That's all right. I'll just wait, if you don't mind. I'm enjoying myself." Seeing that he had no intention of leaving, she promised Sugarman that she would make sure Teitelbaum called him first thing the next morning.

The next morning Teitelbaum did call, and Sugarman impressed him with his detailed comments and understanding of the Johnny Rockets concept. "I said, 'I'm not good enough to copy what you've done, but I want to be part of what you do.'"

Teitelbaum looked into Sugarman's financial situation and told him, "You don't have enough money to build your own Johnny Rockets, but you've got half the money. Go to the Bay Area and build Johnny Rockets on Chestnut Street with us as your partner." So Sugarman, without hesitation, moved to San Francisco to be Teitelbaum's partner in a new Johnny Rockets restaurant.

In 1987, Sugarman became Johnny Rockets' first franchisee, building five top-revenue locations in San Francisco. In 1989, he traded his stores for 10 percent of Johnny Rockets and worked as vice president of operations and franchise development with his new mentor, Teitelbaum.

By 1991, Sugarman wanted to be back in the stores, so he kept his ownership in the company and bought back his restaurants in San Francisco. He also built other Johnny Rockets, including one in Santa Monica with a partner. In 1995, Johnny Rockets was sold, and he traded in his stores and moved to corporate as senior vice president of development.

Selling his restaurants this time was probably a mistake, he says in retrospect. "I no longer had control of my destiny," he says. With the revolving-door CEOs not taking Johnny Rockets in the direction of a public offering, he decided again to start over as a franchisee. In 1998, he and his family moved to Providence, R.I., where he grew up, to open more Johnny Rockets and consider other concepts.

When Teitelbaum died in 2000 at the age of 61, Sugarman was bereft. "Ronn was an amazing influence in my life. He was a great guy, an influential partner and mentor. The most intelligent people you meet in life have the ability to simplify things--even in franchising. Ronn had that," he says.

Throughout his association with Johnny Rockets, Sugarman has continued to be an innovator, using his own money a couple of years ago to create a new, updated design prototype for the chain, the first change in 25 years. Early resistance from corporate and other franchisees abated when the company tested the prototype in a couple of company stores, along with Sugarman's stores. The experiment was a success, and many Johnny Rockets are adopting elements of the new design.

Today, Sugarman, with his son Jason, owns 17 Johnny Rockets in Rhode Island, Minnesota, California, New York, Connecticut, Pennsylvania, and Massachusetts, as well as 3 Original Soupman locations, and 2 Yeh! Yogourt Glace and Café units in Montreal. He also has a couple of new concepts brewing that he's not yet ready to talk about yet.

His favorite activity remains searching out the newest, most exciting trends and concepts, wherever that takes him. "There's a saying: You go, you get. You don't go, you don't get," he says. "I've always gone after things whether it was to the New York Trade Show to do rock'n'roll T-shirts, to Massachusetts where I got my real estate license at 18, or to California where I found Johnny Rockets."

Sugarman acknowledges that his way of doing things may appear a little quirky to those who don't know him well. One of his favorite sayings is, "Don't ever chase others--you'll always be looking at their butts."

Name: Lloyd Sugarman
Title: I never think of myself in terms of a title.
Company: I have different companies for different groups of stores. My headquarters is in Providence, R.I.
No. of units: Johnny Rockets, 17; Original Soupman, 3; Yeh! Yogourt Glace and Café, 2
Age: Over 50
Family: Wife Rhonda, son Jason (who works in the business), and daughter, Dana Sugarman Johnson
Years in franchising: More than 25
Years in current position: Hard to say. I am the only person ever exposed to Johnny Rockets as its first original franchise partner in 1986, then as its first franchisee in 1987, then as a member of the corporate team, then as a franchisee again and back with the company, and now back as a franchisee.