Magic Johnson Team Moves Ahead With Fatburger Expansion Project

Despite the economic slowdown, Earvin “Magic” Johnson, thinks its a good time to be aggressive in business.

Johnson, basketball star turned businessman, is leading a team of investors that acquired the 47-store Fatburger chain.

Plans are to add 20 stores next year and move into 10 more states with 100 stores over the next five years. And those plans are moving forward despite talk of the slackening economy.

“Now is the time to take advantage of other people not being aggressive,” Johnson said Tuesday, as he discussed the deal at the Fatburger in Santa Monica. “We see this as a great opportunity. People don’t stop eating and they don’t stop drinking coffee.”

In fact, Johnson and Kenneth Lombard, president of Johnson Development Corp., said the lackluster economy could give the team more bargaining power as they work out leases with shopping mall landlords.

Johnson Development, which owns five movie theaters in California and four other states, also plans to add 25 Starbucks coffee shops to the 28 it already owns throughout the country. The Starbucks are expected to open before 2003.

Terms of the Fatburger deal were not disclosed. And Johnson would not reveal how much he plans to spend on the expansion projects.

But adding 20 burger shops might cost as much as $9 million, according to analyst Randall Hiatt, president of Costa Mesa-based Fessel International, a restaurant consulting firm.

Given the logistics of expansion--finding properties, going through the permitting process--Hiatt said he doubts 20 new stores will actually open next year. If they do, that’s a much more aggressive approach than he’s seen, even in the fast-food segment.

“You’re talking about a 50% increase in units,” Hiatt said. “Nobody is expanding in this business at a 50% rate.”

But Hal Sieling, managing partner of the eponymous Carlsbad, Calif.-based restaurant consulting firm, noted that most of the new stores would not open until mid- to late 2002, which gives the economy some time to regroup.

“I can just see his big smiling mug pictured in every establishment,” Sieling said. “That’s going to be very attractive to many people. He’s a very, very popular guy.”