Harsha Agadi, chairman and chief executive of Friendly Ice Cream Corp., has had a busy Wednesday morning.
Beginning at 6 a.m., Agadi separately contacted the company’s factory workers, support and field employees, franchisees and suppliers and vendors. Each received news that the Wilbraham, Mass.-based Friendly Ice Cream, parent of the Friendly’s once 500-unit family-dining chain, has filed for Chapter 11 bankruptcy protection and closed 63 restaurants.
Employees also found Wednesday that the company has secured about $70 million in debtor-in-possession financing to begin restructuring and has 424 restaurants still operating. Agadi said Friendly will undertake a sale process and its current owner, private-equity firm Sun Capital Partners, is the lead bidder.
“We needed to address this aggressively and effectively,” Agadi said in an exclusive interview with Nation’s Restaurant News. “A Chapter 11 filing is one of the smoothest and most predictable methods.”
Friendly said there will be no impact on manufacturing and distribution operations, it will continue paying employee salaries and benefits, serving guests and retail customers, and honoring all gift cards.
Agadi said the company fell victim to the current economic downturn, increased commodity costs and rents that he felt exceeded market rates. Sources also have noted that Friendly took on significant debt when it was purchased by Sun Capital in 2007, after a contentious battle with investors and Friendly’s co-founder, S. Priestly Blake.
“Being in the [restaurant] industry for the last 25 years, I’m quick to read a situation,” Agadi said. “When I came here recently, I knew with our shareholders, with Sun Capital — and I’m an investor — what had to happen … I’m here to stay. I’m here to make this thing turn.”
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It is no surprise why a lot
It is no surprise why a lot of companies are closing down due to bankruptcy it is now time for the government to look for better solutions to stop this problem since a lot of employees are affected. Tony Robbin is concern that this will eventually create a domino effect on business industry.
Closing down of
Closing down of establishments in our area is very common earlier this year. Because of the increase in the commodity prices and space rents, many businessmen opted to close down some branches. But nevertheless still paying the existing employees on the remaining branch. Millionaire mind seminar actually gave tips and advices on how to handle business money properly so that we will end up closing down or declaring bankruptcy.
They have shown a great way
They have shown a great way of working out through the rough patches..The CEO has taken a good decision as the employees had worked hard as well to bring up the company..And I am very much sure that they will come out clear from this rough patch..cell phone directory
I really hate to see that
I really hate to see that Friendly's went bankrupt. This was definitely a great restaurant that i ate at all the time. I do not understand how this happen. I really thought business was so good. maternity dresses
It's amazing that Friendly is
It's amazing that Friendly is still paying the employees the same way as they use to before. The company will definitely come over this economic failure and again become financially strong.
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Nice To Hear
Nice to hear from the chairman and chief executive of Friendly Ice Cream Corp Mr. Harsha Agadi.I have read about your company's achievement and goals.I like your sentence most that you have said “We needed to address this aggressively and effectively”.drug and alcohol rehab facility
Deep Discounts
While the deep discounting like a $5 menu might be congratulated for bringing on flat sales, it cuts into profits. Customers might see a busy restaurant but quickly adapt a feeling that your food is only worth $5. When you finally decide to bring the prices to a reasonable profit level, they stop coming in and feel ripped off by the change. I don't see this platform as a life jacket. This can work for fast food, but casual needs another solution to declining sales. While it's not as easy and cost more to really make a dent, atmosphere and menu are better approaches to achieving long term results. Value is defined by much more than price.
David Jones, CEO
Blazing Onion Burger Company
www.blazingonion.com
Twitter @BlazingOnionCEO
Consider the financial structure owners give execs
I don't think it's appropriate to "Monday morning quarterback" since we have only a fraction of the fact set that a sophisticated manager like Mr. Agadi is working with.
In addition to the (legitimate) operational problems listed by others, we have to consider financial structure - and this is where an MBA can be of use. One of the main problems typical of situations like this is a private equity owner who ran up the company's debt in the mid-2000's, took the cash out, and left unsustainable debt loads on the portfolio company(s). Now those dividend grabs are coming home to roost for some of their brands - no big surprise.
This is an otherwise fine brand that we will see continue its leadership in family dining once it's deleveraged through the Ch 11 process. Sorry to all the suppliers. You could hedge by investing in the PE firms if it's any consolation!
AJ Mesalic
Family Hospitality Group
www.FamilyHospitality.com
Management is totally responsible
Come on. A "...sophisticated manager like..." who somehow, even being placed in the position by the equity firm running the show, was not responsible for the Chapter filing?
How sophisticated is it to look only at internal attempts to turn around a troubled brand?
These equity companies and their hand picked insular "turn around" experts need to look outside for fresh perspective.
No excuse for not looking at every avenue to save a company.
Tom Kelley
Concept Branding Group
San Diego
Look Back To Move Forward
As a former corporate employee I have seen the company go through many changes, some good and some bad. It was always a roller coaster ride there. Exec Row was always looking for that one great thing that would pull the company up by the boot straps. All the while confusing the hell out of the folks that had to execute it and not to mention, the Customer.
It all starts with the kitchen. If you burden a kitchen with products that are to complicated to make you ultimately slow down service. Once you slow down service you piss the customer off. Once that happens, you can pretty much kiss that customer good bye. Smaller customer base means less revenue. Where do most companies look to cut when revenue begins to slow, controllables. That means labor and to some extent cost of food. Combine all this with a beleaguered economy and it's a sure bet that you'll struggle. It becomes an endless cycle and this is what happened to Friendly's.
There are so many good things about the company and it's food that seem to have wasted along the way. Read the consumer blogs and you'll see what they want. This company needs to look at the past and remember where it came from and stop trying to everything to everyone. I have high hopes for the company but very little faith in it's management team pulling this one off.
So sad
Growing up outside of Hartford, Friendly's was "the" place to go. They had the best burgers, ice cream, and service. (And in most shopping centers, the place for teens to hang out on weekends). I actually worked there in college for a while.
Living down south for 20 years I have not experienced the decline of the brand, but if it is as Mr. Johnson has stated that the MBAs got involved and forgot how the Blake brothers ran Friendly's for so many years, well, they only have themselves to blame.
As a loyal (ex-) New Englander, I hope that Mr. Agadi and his team can pull this off. It is truly a great place and deserving of another chance with some good capital in back of it.
Forget the Fribble...bring back the Awful-Awful!
friendlys bankruptcy
This event was a long time coming!!! The district managers are unmotivated.. Staff was poorly selected and poor quality.. You need owner operators to run these establishments... Extremely filthy restaurants with no everyday operations manual in place.. I couldnt take anyone to a friendlies to eat even if the food was FREE!!! Total turnoff for the restaurant industry.. Take tips from IHOP..
I couldn't agree more
My family and I used to frequent a Friendly's almost every weekend. The food and staff were great. Then we went to a different Friendly's and the place was disgusting. The table we were seated at was filthy, so we requested a different table. After placing our order the drinks came in dirty glasses and the silverware were dirty. We promptly left without eating and have not been back to any Friendly's since. That was two years ago. One very bad experience ruined it for us. Now we frequent IHOP too!
Copy-Cat menu’s and MBA’s foil a once leading brand.
Outside influence from fist full of dollar MBA’s utilizing food management theories from the 70’s,80’s and mid 90’s prove once again the consumers drive sales not numbers crunchers. There are many exceptions look at Bain capital’s Domino’s bold consumer focused menu and market positioning, driving both top line sales and bottom line profits.
If your c-level team is placing the blame on the economy, your contemporize relevance is being eroded. If that is the case you might look for some outside eyes. After reading this it is clear that it’s much more than the economy.
The consumer is not static but this brand wants to be? Why? I see outside eyes are signing up to help? I hope they consider some of them.
We look forward to demonstrated leadership!
We'll see how much Mr. Agadi agrees. Here's my phone # [Moderator note: Phone number removed]...please don't hesitate to reach out for some additional fresh perspective and strategy for retelling the brand story that originally made Friendly's great!
We look forward to your call! :-)
Tom Kelley
Concept Branding Group
San Diego