Nothing really worked, and by October 2011, the company was out of options. It filed for bankruptcy that month and ultimately closed some 100 restaurants, dozens of them in Massachusetts. The company’s pension obligations to about 5,100 retirees were picked up by a federal program, and nearly $350 million in debt was erased. Soon, it would say goodbye to its fourth CEO in six years.
The changes came at a high cost, but as the chain emerged from bankruptcy in January 2012, it had a balance sheet that gave it a shot at competing for the first time in years.
IN 1994, Boston’s Au Bon Pain chain handed then 26-year-old John Maguire his first chance to turn around an operation. The project was a 17,000-square-foot commissary in a building under the Tobin Bridge charged with providing salads, juice, and baked goods to the Au Bon Pain locations without their own kitchens. The commissary was a disaster. “The morale was terrible, the place was filthy, cars were being lit on fire in the parking lot; it was a nightmare,” Maguire says, breaking into a smile. “So I got this wonderful opportunity.”
On his first day, Maguire opened a meeting with a simple question: “How many of you guys have been to an Au Bon Pain?” With the exception of the delivery drivers, no one had. So that weekend Maguire showed up at the factory with his Ford Explorer and started loading the line workers in for a tour of the Au Bon Pains around Boston, at each stop pointing out what had become of their work. See how good your baked product looks on the shelf? he’d say. See how good your orange juice looks?
It was those tours more than anything else that transformed the commissary from losing a few million dollars a year to breaking even, Maguire says. Sure, he also had to get the place cleaned and deal with the people who were drinking at work, but connecting employees with the outcome of their jobs was an essential first step. “I have this fundamental belief that people are good, they want to be involved in something bigger than themselves, and they want to contribute,” he says. “That’s my life lesson in leadership, and I’m applying those same principles at Friendly’s.”
Maguire’s optimism might be tested by the long downward trend in the restaurant world for places like Friendly’s. The restaurant arm of Howard Johnson has almost vanished, as have the Brigham’s shops. Burgers and sundaes, says Jeff Farmer, a restaurant analyst with Wells Fargo Securities, are “the food we were eating twenty and thirty years ago.”
Friendly’s is stuck between two more successful restaurant models, says Ron Paul, president of the restaurant consulting firm Technomic and coauthor of Winning the Chain Restaurant Game. One on hand, there are the traditional fast-food restaurants like McDonald’s, on the other, places like Chipotle and Panera, which offer more upscale food but at a lower price than full-service restaurants. “The old casual dining players, Applebee’s, Ruby Tuesday’s — they’re struggling. They’re in the middle, which is not a good place to be,” Paul says. “None of these people have been able to turn their business around.”
But Maguire, a Weymouth native with fond memories of Friendly’s, believes the chain is different. Unlike its competitors, for instance, about 70 percent of customers order dessert, which is about 10 times the industry average. And its packaged ice creams are New England’s number one brand in grocery stores — number two in the Northeast — and expanding through deals with Walmart, Target, and others. Even more important: People want it to succeed.
“If there’s any advantage I have over the past few CEOs, it’s that I grew up with it, and so I remember what its core is and what it’s supposed to be and what it meant to people,” Maguire says. “Our biggest challenge now is to get those customers that have those memories, but we’ve disappointed, to try us again. Once they do that, they’ll come back.”
TO SEE HOW FRIENDLY’S is hoping to bring customers back, I visited a Springfield shop around lunchtime on a warm day in June. Located near the company’s headquarters and its ice cream plant, which will produce 25 million gallons in 2013, this location is one of 20 or so that have been recently remodeled, at a cost of about $115,000 each. Another 10 are slated for an overhaul before the end of 2013, with the rest chain-wide in 2014.
The dining room is about half full, and customers here are choosing from a menu with about 40 percent fewer items. Gone are the quesadillas and steak tips — Maguire and his team streamlined the offerings to just the items most in synch with the brand and with speedier service times. They also brought in higher-quality ingredients, including fresh beef for the burgers and melts, not frozen, as well as haddock in a Fishamajig sandwich that some time ago had switched to pollock — a fish Maguire notes he’s used as bait. The thicker bread has come back, along with the extra-large eggs (though they cost Friendly’s 2 cents more each) and the old sundae sizes. In a much heralded move, Maguire started putting hard ice cream in the Fribble rather than soft-serve. Continued...