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 Reportswould 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.
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.
Maguire is betting that the key to success is a return to Friendly’s as it once was. The chain recently put the company’s more than 6,000 cooks, servers, and managers through additional training. “Not just retraining them on what they do or how they do it, but why,” Maguire says. “We’ve put them all in new uniforms and tried to make them proud of what they do.” They renamed the sundae makers Scoopologists and the servers Memory Makers, “because, technically, that’s what they do,” a manager in Middleborough tells me.
However, Christopher Muller, a professor at Boston University’s School of Hospitality Administration, thinks investing too much hope in the nostalgic past can be dangerous, especially in a country where a quarter of American households consist of one person and more than half of marriages end in divorce. “You can’t build off family anymore — it doesn’t work. There is no family,” Muller says. Adds Paul, the Technomic president: “You’ve got new players like Panera that meet breakfast and lunch [demand] and are family-oriented enough — where does it fit in? The best way to sum it up is to say the consumer has decided they’re not that relevant.”
“Relevance” is a word Friendly’s executives use a lot these days. “This is a brand started in the thirties, so we said, let’s hearken back to those roots,” says Maguire. “Let’s create a look that’s timeless but that’s relevant to the 21st century.” At headquarters, Maguire, Maura Tobias, and Dave Panella, senior director of design and construction, gather in what they’ve dubbed the “Timeless Room.” It’s there that Panella and some of his staff have been digging through boxes of old photographs Curtis Blake gave them for inspiration.
Walking through the restaurant, Panella points to the improvements, all of which are made over just four days. Lighting is brighter, upholstery has been redone, and the old wallpaper was torn down. Everything has been deep-cleaned and freshened up with paint. There’s Wi-Fi now, and lots of throwback musicians like the Zac Brown Band coming through the speakers. Staff make red velvet waffle cones near the entrance so customers will smell them right away.
Each store gets one of 10 or so old-timey murals and the tag line “Creating Memories Since 1935” (“That’s very timeless,” Panella says) and lots of new photographs on the wall from Friendly’s past. At this shop, near new high-top tables and stools — “I probably won’t sit there but my grandkids will love them!” one woman told them during a focus group — there’s a photo of Prestley Blake, with his bow tie retouched in bright red for a whimsical pop of color to complement the Friendly’s color scheme.
For the first time in a long time, both Curtis Blake, now 96, and his brother, 98, are confident the future of the chain they started is being served by a return to past strengths. “As time went on, the history of the company and the heritage faded and got lost,” Curtis says. “John Maguire has decided that the heritage is important. Friendly’s is 78 years old this summer, and he wants to make the most of it.”
The brothers haven’t had any official role with the company in decades, but both speak with Maguire regularly. “We’re delighted, and I think he’s going to make it,” Curtis says. He has eaten off the new menu in two of the remodeled locations and was very pleased — he thinks other people will be, too. “There’s a big following. Friendly’s has a big reservoir of good will.”
And at least among nostalgia-minded customers, there’s no serious competition. “Brigham’s is gone. Howard Johnson’s is gone. They’re all gone,” Curtis says. “There’s nobody as old as ours.”