ONE AFTERNOON IN SUMMER 2012, the new CEO of Friendly’s Ice Cream, John Maguire, got a call from the company’s longtime public relations chief, Maura Tobias. The Today show was going to do a story, Tobias said, and it wasn’t going to be good news.
On the show, Consumer Reports would be releasing the results of a survey of nearly 48,000 customers of popular restaurant chains. Friendly’s would get low marks for both cleanliness and service, and an editor from the magazine was going to slam Friendly’s live, in front of 4.5 million viewers — many of whom were parents of young kids, the exact demographic the fresh-out-of-bankruptcy company needed most.
At Friendly’s headquarters in Wilbraham, the then 46-year-old Maguire sat in his office and puzzled over what to do. He’d arrived a few months earlier from a job as chief operating officer at Panera, a chain he’d spent almost two decades helping build into one of America’s most successful, but this was his first shot as CEO. “Has this happened before?” he asked Tobias. She told him it had, a few years ago.
“Do you think the restaurants are dirty?” Maguire asked. Tobias was silent. They wrote a statement and sent it off to the Today show.
The next morning, they gathered nervously around a television to see what would happen. Hard Rock Cafe, which was criticized in the segment for value and service, provided a terse statement denying Consumer Reports’ findings, arguing that its own independent data actually showed contrary results. But Maguire and Tobias tried a different approach: They acknowledged there was a problem and said they were working on it.
In the five months since emerging from bankruptcy, “the company has had a singular focus on improving the customer experience in every one of our 389 restaurants across 16 states,” host Matt Lauer read from the statement. “We understand the root cause of this issue and have seen recent improvements in our customer experiences.”
Maguire took heart from Lauer’s optimistic response: “So maybe they’ll be on the upswing next time around.” It was a small thing, and Friendly’s still had plenty of problems, but it was valuable anyway. A sign the old chain could actually have a new beginning.
IT WAS A JULY DAY in 1935, and temperatures reached 92 degrees in Springfield, Massachusetts. Twenty-year-old S. Prestley Blake and his brother, 18-year-old Curtis, had perfect weather for opening their new Friendly Ice Cream shop. “We had customers immediately, and it wasn’t any mystery to understand why,” Prestley later recalled. “The bigger ice cream stores charged a dime for two scoops. We charged a nickel. And our quality was better.” The brothers rang up sales of $27.61 that day.
The Blakes were launching their business during a golden age for Boston-area ice cream parlors. The company that would become Brigham’s was founded in Post Office Square in 1914 and would eventually grow to about 100 outlets. Howard Johnson’s, which had been operating in Quincy since 1925, would open 35 ice cream and sandwich stands in Massachusetts by 1935 and grow to more than 1,000 nationwide by the end of the 1970s. Friendly’s, the youngest of the big three, would expand to 800 restaurants.
Prestley elaborated on their winning strategy in his 2011 memoir A Friendly Life : “The formula Curt and I had hit upon by trial and error with our first store — a simple, wholesome menu offered at a fair price and served by a sincerely friendly staff — continued to win customers and keep them coming back.” Today, Curtis says their early success came from the decision to run the company debt-free and from their work fostering strong relationships with their employees. Two of their first five management trainees went on to become Friendly’s presidents.
In 1979, the Blakes sold their flourishing chain to Hershey’s for $164 million, and Hershey’s sold it almost a decade later for about double that amount. But the succession of deals, coupled with aggressive expansion, left Friendly’s burdened with hundreds of millions in debt and struggling to stay true to the basic formula that had been the foundation of its success. A 2003 lawsuit from Prestley, who had bought back into the then public company, culminated in a $337 million sale to an affiliate of the private equity firm Sun Capital in 2007.
And still the slide continued, with each new management team trying to win back customers. Steak tips, quesadillas, and fajitas turned up on the menu, and as the work in the kitchen got more complicated, service times slowed to a crawl. The restaurants started looking dingy. Frustrated once-loyal customers swore off the chain, which only led to new efforts at cost cutting. Friendly’s switched to smaller eggs, thinner toast, and lower-quality french fries. And though its desserts were the only thing setting it apart from competitors, it shrank the portions of its Happy Ending, Jim Dandy, and other sundaes.Continued...