It's Sad to See Friendly's Fail, but It Was Inevitable
A Friendly's "Jim Dandy" sundae is meant to be shared, and no wonder: It contains five scoops of ice cream, a split banana, pineapple topping, hot fudge, marshmallow sauce, walnuts, and sprinkles.
But on my 10th birthday, I was allowed to order a whole Jim Dandy for myself, and my three guests got their own, too. I was barely able to reach high enough to scoop out bites. But I felt awfully grown up, sharing a booth with just my friends while my parents gave us our privacy by sitting in the next booth over.
Times Have Changed
It was a low-key birthday party by today's standards, yet the pleasure and excitement I experienced at Friendly's were some of the purest I've ever had.
I'm sure I'm not alone in harboring affection for the Friendly's of yore. (It started as a Depression-era ice cream shop, and then was purchased by Hershey Foods (HSY) for $164 million in 1979. After another sale and an IPO, Friendly's was purchased for $559 million in cash and assumed debt in 2007 by private equity firm Sun Capital Partners, which owns it today.)
Today's Friendly's is different. The restaurant smells like a bus station. Food takes a long time to arrive at the table, no matter how painfully empty the dining room is. The salad looks like it was assembled a few weeks before I ordered it. Only the nostalgia keeps me coming back.
When visiting home, I'll still go to breakfast at that same location (the one on Pump Road and Patterson Avenue in Richmond, Va., to be exact), to meet old friends or my younger brothers. It's the place we gathered after my niece was born, and the last place I ate with my brother Luke before he was deployed to Afghanistan.
Soon, though, there may not be a restaurant to return to.
Bound for Bankruptcy
Wednesday, Friendly's parent company filed for Chapter 11 bankruptcy protection.
The chain, headquartered in Massachusetts, owes its creditors some $250 million, and although it has secured $70 million in bridge loans to keep operating, it has already shuttered 63 stores and shed more than 1,000 employees.
The challenging marketplace for a tuna melt and milkshake joint like Friendly's comes as no surprise. Competitors like T.G.I. Friday's, Chili's, Applebee's, IHOP, and Denny's have been eating its lunch for years, so to speak.
Friendly's has been losing market share and gaining debt since the 1990s, and the number of its stores has declined to less than 500 from a peak of almost 700. More recently, with the recession, consumers have moved toward lower-priced "fast casual" restaurants like Chipotle (CMG) and Panera (PNRA), a trend that Friendly's has tried to ride, opening Friendly's Express stores.
Of course, plenty of consumers -- especially those who've lost their jobs -- have stopped eating out altogether.
We've Seen This Coming, But It Still Hurts
A turnaround for Friendly's will probably require an extreme makeover. Much as I'd hate to see my old favorite restaurant shed its diner vibe, it may prove necessary to offer customers guacamole and rocket, or tapas and spring rolls, to ditch some of the typical diner offerings and focus on freshness (or at least attempt to market its offerings as fresh, as Ruby Tuesday (RT) has done).
But this revamped Friendly's wouldn't be Friendly's anymore, would it? I want to think there'd be enough of a market in delighting kids with gigantic sundaes. Sadly, maybe there isn't. At least the memories are sweet.
Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned. The Motley Fool owns shares of Panera and Chipotle. Motley Fool newsletter services have recommended buying shares of Chipotle and Panera.