I'm not surprised at all.
Would you like a Globe cup of coffee first?
"Friendly’s may file for bankruptcy" by Erin Ailworth, Globe Staff
Friendly’s, the restaurant chain known for its ice cream, is considering a potential bankruptcy reorganization and sale, according to a published report.
The Wall Street Journal reported today on its web site that Friendly Ice Cream Corp. of Wilbraham could seek Chapter 11 protection from creditors as early as next week, and could then try to sell itself through a bankruptcy auction. The Journal cited unnamed sources in its report.
In a statement, Friendly’s said, it would not comment on “on rumors in the media or marketplace.”
But the chain conceded it had been hurt by the weak economy. “Like many restaurant chains, we are feeling the impact of the economic downturn and rising commodity prices and a challenging marketplace,” the statement said. “ We are working with our lenders, board and management team to explore alternatives to strengthen our financial base.”
The chain, which has more than 500 locations nationwide, is owned by Sun Capital Partners Inc., a buyout firm in Boca Raton, Fla. that bought Friendly’s for $337.2 million in 2007. The firm also invests in other restaurants, including Boston Market Corp.
The potential bankruptcy is the latest bout of trouble for the popular restaurant chain.
Friendly’s was co-founded by brother’s Prestley and Curtis Blake, who started a neighborhood ice cream shop in Springfield during the Great Depression in 1935. Over the next several decades, the brothers opened hundreds of restaurants, carving a niche in the market as a family-friendly hangout serving ice cream treats.
But by the 1970s, the brothers were feuding over the direction their business would take, and sold it to Hershey’s Co. in 1979.
Under the candy giant, Friendly’s grew but struggled with high labor costs and intense competition. The chain changed hands again, went public for a time, but continued to struggle with poor management, and a reputation for bad service.
Well, it wasn't the greatest but I never complained and always left a tip.
Since it was bought by Sun Capital, Friendly’s has had a revolving door for chief executives. The current CEO, Harsha Agadi, formerly of Church’s Chicken, joined Friendly’s last year.
I'll bet they have all been compensated nicely on the severance.
In the company statement, Friendly’s officials said, “It is business as usual at our restaurants, our manufacturing and distribution facilities. What we do know is that we have a great Company, a great workforce and our owners are committed to the long term future of Friendly’s. “
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I guess I'm no help; I got my crappy coffee and paper and came home.
Ah, the Globe plate has arrived:
"What’s up at Friendly’s?; Changing times and tastes have the iconic New England chain struggling" by Steven Syre and Beth Healy, Globe Staff / October 1, 2011
The Friendly’s restaurant chain, a New England icon from years past, is facing serious financial trouble as it struggles to regain some of its old popularity in a world where tastes have changed.
Friendly Ice Cream Corp., a Wilbraham company that operates about 500 locations, is no stranger to financial distress. A series of owners and a heavy accumulation of debt have kept the budget restaurant chain in a bind for years. Sales have been on a slow but steady descent for more than half a decade.
But a bad economy and other complications have helped turn up the heat on Friendly’s finances.
Don't burn the damn breakfast! (It's happened before)
Related: Slow Saturday Special: Blogger Being Mean To Me
All of a sudden my stomach is upset.
The company is getting squeezed by a continued decline in restaurant revenues and higher food commodity prices, making it even harder for the company to make ends meet.
Friendly has acknowledged talks with lenders and others as the company develops a plan to improve its “financial base.’’ That plan includes the possibility of filing for Chapter 11 bankruptcy protection and a sale of the business, according to a person close to the company.
Friendly is owned by Sun Capital Partners Inc., a Florida private equity firm that purchased the business in 2007. Executives there did not return calls yesterday.
Industry analysts noted that Friendly operates in a casual family restaurant category that has been under pressure for years. It’s challenged on the lower end by more aggressive fast-food restaurants and on the higher end by casual dining competitors, most recently by so-called fast casual restaurants like Panera Bread and Chipotle Mexican Grill.
But Friendly’s restaurants may have an even bigger problem. Their time may have simply come and gone, analysts say.
“Restaurants have a life cycle, and Friendly’s has hit it,’’ said industry analyst Ron Paul, president of Technomic Inc. in Chicago. “I don’t think there is any marketing fix when you are a model of a restaurant that went out of style.’’
Even among its direct competitors, Friendly’s ranked 10th among 12 chains across the country in a consumer-preference survey published last month by Nation’s Restaurant News. Friendly’s scored poorly on questions on value, food quality, and reputation. Only one chain among the dozen ranked lower when consumers were asked if they were likely to return....
Some Friendly’s locations seem popular and busy....
But....
Friendly’s can conjure that sense of nostalgia because it’s been a fixture in New England since the business was founded by brothers Prestley and Curtis Blake in the middle of the Depression in 1935. The brothers operated Friendly for decades but eventually sold the business to Hershey Food Corp. It changed hands again in the 1980s, went public in 1997, and finally was sold to Sun in 2007, adding hundreds of millions of debt to its balance sheet over the years.
James Vinick, a Springfield stock broker who, with his clients, controlled about 12 percent of Friendly’s stock before the sale to Sun Capital, criticized the new owners for their handling of the restaurant chain.
“I think they’ve done a horrible job,’’ Vinick said. He blamed too much turnover in the corner office at Friendly’s, as well as a real estate deal to sell off the chain’s property holdings and lease the stores back. And the menu, he said, has become too large and unfocused, straying from its burger roots. “It’s an abomination what’s transpired.’’
It's not the menu; your lunch was once again eaten by Wall Street!
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Related:
"In the 1990s, the T and other transit agencies were encouraged by federal officials to sell their train equipment to banks and then lease it back. The arrangement brought the T $53 million in upfront payments. In return, the private banks realized a tax benefit.... During the go-go investing years, school districts, transit agencies, and other government entities were quick to jump into the global economy, hoping for fast gains to cover growing pension costs and budgets without raising taxes. Deals were arranged by armies of persuasive financiers who received big paydays. But now, hundreds of cities and government agencies are facing economic turmoil"
Looks like Friendly's f***ed up.
Also see: Massachusetts Democrats Keep Making the Same Mistakes
At least they made some Wall Street guys fat. Chew on that for a while this morning.
