Sodexho, Magic Johnson make play with branded cafeterias

Nation's Restaurant News, June 26, 2006 by Elissa Elan

Gaithersburg, MD. -- Sodexho USA has partnered with former pro-basketball star and multi-brand franchisee Earvin "Magic" Johnson in a joint venture called SodexhoMagic that would bring cafeterias branded with Johnson's name to new and existing foodservice accounts in urban locations.

Terms of Sodexho's 10-year deal with Johnson, whose companies are franchisees of Starbucks Coffee, Burger King and T.G.I. Friday's in several urban locales, were not disclosed.

"This is a significant initiative for Sodexho, and we believe it will make a real difference for our brand and our company," said Richard Macedonia, chief executive of the contract foodservice and facilities management company based here. "Magic Johnson is admired not only for his athletic accomplishments but for his leadership ability and will to win. We've also all grown to appreciate him as a businessman."

Macedonia said the deal consists of two components: a marketing initiative in which Sodexho will market Johnson's name and brand image and the development and operation of joint-venture accounts that will be agreed upon by Magic Johnson Enterprises.

Johnson, who is chief executive of Beverly Hills, Calif.-based Johnson Development Corp. and Magic Johnson Enterprises, will own 51 percent of SodexhoMagic, to be based in Gaithersburg, Md. He also owns and operates six Magic Johnson cineplexes, in Atlanta, Cleveland, Houston and Los Angeles, as well as in Harlem, N.Y., and Largo, Md. The SodexhoMagic venture is his first in the contract foodservice arena.

"I am very happy to be able to partner with Sodexho not only to create new revenue streams, but to make a difference in the lives of the people we serve," Johnson said. "There is a lot we want to accomplish, and I am looking forward to the creation of new branded concepts.

"This is an outstanding marriage," he added. "We're going to build something that people in the marketplace will be proud of. We're going to make a difference ... and we're going to win."

In addition to developing new business opportunities, SodexhoMagic will operate at an undetermined number of corporate-dining facilities, college campuses, sports arenas and health care accounts across the United States. The new joint-venture company will focus on the same lines of business currently managed by Sodexho, including foodservice, high-end catering, grounds keeping, plant operations and maintenance, asset management, and environmental and laundry services.

Sodexho USA has 437 accounts in its school services division, 380 seniors' units, 895 health care locations, 1,217 corporate-dining accounts and 844 campus-dining venues. The company reported revenues of $6.3 billion in 2005.

According to Macedonia, the decision to roll out SodexhoMagic across all business lines is a tribute to Johnson's star power and name recognition.

"Because of Earvin's appeal, this will not be a market-specific venture," he said. "This has the capability of growing across our entire business."

Although no accounts have been signed yet, both Johnson and Macedonia indicated that a number of deals already are in the pipeline.

"As soon as we knew we had a deal, I was already on the phone with corporations, colleges and hospitals, making sure we had an opportunity to get their business," Johnson told Nation's Restaurant News. "These are people I want to do business with, to be in the trenches with--not just for profit, but for the nonprofit side of things."

Johnson's Magic Johnson Foundation provides financial assistance to those in need who reside in urban communities throughout the country. It also has distributed more than 800 college scholarships to minority students. Currently, 225 students are in the program. In addition, the organization has established four HIV/AIDS clinics in Los Angeles, San Francisco, Jacksonville, Fla., and Oakland, Calif. Johnson, who was a star player for the Los Angeles Lakers in the 1980s and 1990s, quit playing professional basketball in 1991 after he was diagnosed as HIV positive.

Johnson emphasized that he would be directly involved in the operation of the business, which was under development for some seven to nine months before the deal was signed.

"I roll my sleeves up every day and go to work," he said, "and that's what I'll continue to do. The 'Magic' man is here."

He added that his personal involvement was key to his signing the deal with Sodexho.

"It doesn't work if you're not involved," he said. "If I thought this was just a deal to use my name I wouldn't be here. We both bring expertise to the table and we have a plan, so it's wonderful. We also get along and have fun."

Johnson said he is enthusiastic about the future of SodexhoMagic because he believes it will add something new to what currently is offered at contract foodservice facilities.

"I'm really excited about it," he said. "It's going to change the marketplace. People don't just want to go to a regular cafeteria; they want to have a dining experience, whether it's in K-12 or a college or corporate setting."