William B. Johnson -- WSJ

The one-time waffle king created the Ritz-Carlton hotel chain, won awards for service, hobnobbed with evangelists and bred Tennessee walking horses. Then debt destroyed his empire, leaving $10.17 in his checking account.

By James R. Hagerty 

Before he bought the rights to the Ritz-Carlton hotel brand in 1983, William B. Johnson was known mainly as an owner of Waffle House diners. Headline writers suggested he would serve grits at the Ritz.

"We proved that we weren't country bumpkins," said Catherine "Cam" McLoud, who was a sales executive at Mr. Johnson's Ritz-Carlton chain. Her boss spent lavishly on décor and service. Guests padded across Oriental rugs. Harpists played during afternoon tea. Employees, from bellboys to bathroom scrubbers, were told they were "ladies and gentlemen serving ladies and gentlemen."

After he sold the chain to Marriott International Inc. in the mid-1990s, Mr. Johnson's business empire foundered. The Waffle House holdings and other assets were lost to bankruptcies. He declared personal bankruptcy in January, listing debts of $45.4 million and assets of $380,110 -- including $375,000 of equity in a home in Atlanta's posh Buckhead district, $100 of clothing and $10.17 in a checking account.

Mr. Johnson died June 12 at age 79. Friends said he had been suffering from Alzheimer's disease for years. Eleven days after his death, a bankruptcy trustee completed the sale of his former home for about $1.2 million.

Mr. Johnson, who shunned publicity and high society, cultivated friendships with evangelists including the radio preacher Chuck Swindoll and Chuck Colson, a Nixon aide caught up in the Watergate scandal.

Mr. Johnson had a good eye for promising locations, whether for lowly diners or posh hotels, and was willing to pay for top executive talent, former colleagues said. He was less adept at cost controls and spent heavily on sailboats, private planes and a farm for breeding Tennessee walking horses.

William Bailey Johnson Jr. grew up in Decatur, a suburb of Atlanta, where his high-school yearbook listed him as a member of the football team's B squad. His parents didn't get along and he became a go-between for them at an early age, learning to negotiate, according to a eulogy delivered at his funeral. He attended a Baptist church on his own.

After studying at Georgia Tech, he worked as a management trainee at a bank and then joined the real-estate arm of an insurer. In his late 20s, he began acquiring franchises in Waffle House, a 24-hour diner chain.

Those restaurants provided cash to fund investments in Holiday Inn motels, mainly in Florida. In search of marketing expertise, the tall, lanky Mr. Johnson made an unannounced visit to Fred Alias, a 24-year-old sales whiz at Holiday Inns Inc. Mr. Alias said Mr. Johnson informed him, "I'm going to double your salary, whatever you're making."

The hours proved brutal. Mr. Johnson often held meetings at 6 a.m. and expected his top aides to work seven days a week. Managers got lots of freedom to decide how to fill restaurants or hotel rooms but would be fired summarily if they fell short.

Mr. Alias wrote a detailed memo making the case for a New York office to promote the Florida motels. The boss sent it back almost immediately with a single comment: "ROR." That meant: rent out rooms, whatever it takes.

Mr. Johnson prodded his employees to read and discuss "Think and Grow Rich," a 1937 self-help book by Napoleon Hill. Sample insight: "The men of greatest achievement are men with highly developed sex natures; men who have learned the art of sex transmutation."

One former Johnson aide recalls being pressured to donate $2,000 to the evangelist Billy Graham.

Making excuses wasn't an option. "I sure am a high achiever, and we strive for excellence," Mr. Johnson said in a rare interview with the Atlanta Journal-Constitution. Explaining his reputation for being a sometimes-difficult boss, he added: "What I expect of myself and everybody is results. You either do it or you don't do it."

Mr. Johnson branched into Marriott hotels to go with his Holiday Inns, then mortgaged those properties to finance a push into luxury hotels. At first, he planned to create his own luxury brand, Monarch, but then learned of the chance to buy the Ritz-Carlton hotel in Boston and rights to that fabled name in North America in 1983. He paid about $75 million.

Mr. Johnson was determined to make the Ritz-Carlton chain live up to its name. Colleagues said he sometimes ordered costly last-minute changes in décor. Employees were authorized to spend as much as $2,000 to appease any guest who had a gripe. When the New York Ritz-Carlton was overbooked in 1989, it sent 20 guests to another hotel in three limousines stocked with champagne.

"He thought big and achieved big," said Colgate Holmes, a hotel industry veteran recruited by Mr. Johnson to lead the drive into luxury lodgings. "He didn't want to be the waffle king who bought the Ritz and tarnished its image."

The service was good enough to win two Baldrige quality awards from the U.S. government in the 1990s. But some Ritz-Carlton franchisees were losing money, and Mr. Johnson's various hotel holdings were loaded with debt. Marriott bought 49% of his Ritz-Carlton business for about $200 million in 1995 and later acquired the rest.

Mr. Johnson went on to develop a golf and residential community in Georgia, a marina in the Bahamas and other projects.

He served as chairman of the board of trustees at Berry College, a liberal arts school in Rome, Ga., where he established a "second chance" scholarship for faltering students. At the Church of the Apostles in Atlanta, he headed the building committee and oversaw construction of a palatial neo-Gothic building whose sanctuary seats 2,800.

In the early 1990s, Mr. Johnson was a director of Trust Co. of Georgia, a predecessor of today's SunTrust Banks Inc. His 2016 bankruptcy filing said he owed $8.9 million to SunTrust. A SunTrust spokeswoman declined to comment.

Mr. Johnson is survived by his wife of 55 years, Sandra. They had no children.

Write to James R. Hagerty at [e-mail]

(END) Dow Jones Newswires

July 02, 2016 02:47 ET (06:47 GMT)

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