The Decline of Friendly’s… What Happened?

Friendly’s is a chain of family restaurants primarily located in the northeastern part of the United States. At times, they have extended their reach as far west as Ohio and as far south as Florida. Overall, this is considered to be an iconic New England brand. Almost anybody from the area has grown up with Friendly’s and can tell you all about them.

They can tell you about the red and white color scheme, the historically welcoming environment, and the menus specializing in breakfast, burgers, sandwiches, seafood, and most notably, ice cream.

More than 20 flavors of ice cream are served up in all the ways you might expect, including a milkshake called the fribble. It was uniquely named through a contest in the 1960s, and today they claim that it is the creamiest, tastiest milkshake ever.

I apologize if I made you want to test that claim by seeking out a Friendly’s and ordering a fribble of your own because that is becoming more difficult now than ever before. I can’t even say with confidence how long they’re going to be around because Friendly’s has not been doing well.

In 2011, they filed for bankruptcy, and then in 2020, they filed for bankruptcy again. Two bankruptcies within a decade are not a good sign, and their problems go back way further than that. I would argue that they’ve been declining fairly consistently for 30 to 40 years now. I won’t get into the details, but they hit their peak in 1988 with 850 restaurants and have since closed all but 130 of them.

Rise and Fall of Friendly’s

The obvious question here is how can a restaurant that serves the creamiest, tastiest milkshake ever be having so much trouble, and that is what I intend to answer. The restaurant goes back almost 90 years, and over that time, they have had five separate owners. In this article, I want to talk about the rise and fall of Friendly’s by highlighting some of the ways that they have been impacted by each one of these owners, starting in 1935 with the co-founders Curtis and Prestley Blake.

1935 – Curtis and Prestley Blake’s Journey

They were brothers from Massachusetts, 18 years old and 20 years old, looking to find jobs and start their careers but having trouble considering it was during the Great Depression. Instead, they were able to borrow $547 from their parents and they used it to start a small ice cream shop in Springfield called Friendly Ice Cream.

I know that sounds pretty standard today, but you have to consider that ice cream shops weren’t all that popular yet. This was before Dairy Queen and Baskin Robbins. Their biggest competition was actually drug stores that would sell ice cream at their soda fountains, typically for five cents a cone. The Blake brothers cleverly decided that they would sell their cones for the same price but they would add a second scoop. It gave them lower margins but higher volume because a deal that effectively offered two scoops for the price of one proved to be extremely attractive during the Great Depression.

They sold over 500 cones on their first day because customers were lining up out the door to get them. Within five years, they saved up enough money to open a second Friendly Ice Cream in the area. When that one opened, they started serving hamburgers as a way to keep customers coming back over the winter. I do want to mention that both restaurants closed for a couple of years during World War II because Curtis joined the army and Presley helped domestically with the war effort, but they reopened when it ended and continued expanding over the next few decades, adding more items to the menu along the way.

By the end of the 1970s, they opened over 600 restaurants in 16 States of United States. I know that opening 600 restaurants might sound aggressive, but remember that this was over the course of 44 years, and Friendly’s was doing really well as a popular, mostly well-liked family restaurant. The Blake brothers had always placed a huge emphasis on the customer’s experience, going out of their way to create a friendly environment for everyone.

For example, if a customer dropped their cone on the ground, and that’s always a sad experience, they would replace it for free. To go along with that, they never franchised anything so they could keep tight control over the restaurants to be sure they were meeting their standards. They were good at cutting costs; they didn’t even have any employees in the beginning. One of them would make the ice cream while the other one would take orders from the customers. They almost entirely avoided debt by reinvesting those profits back into the business and never extracting more than fifty thousand dollars a year for their own salaries.

Overall, I would call Friendly Ice Cream during this time a product of patience and hard work. The Blake brothers had slowly but steadily built a stable company that was now worth millions of dollars, and that is what brings me to the second owner on my list.

1979 – The Hershey Era

Hershey, the chocolate company known for the Hershey bar. Well, in the 1970s, the prices of sugar and cocoa beans kept going way up and down, so they figured that they could bring some stability to the business by diversifying into other areas.

They had already bought some pasta companies among others, but maybe their biggest single attempt at diversification during this time was in 1979 when they bought Friendly Ice Cream for 164 million dollars. That seems to be a good enough fit, right? Hershey had just introduced Reese’s Pieces the previous year, so it was good cross-promotion when they started offering it as an ice cream topping at the restaurants along with other Hershey candies.

Hershey was also able to utilize their relationships and distribution system to start selling Friendly Ice Cream treats in supermarkets around New England. They were a large company that had the resources to open a bunch of new restaurants quicker than Friendly’s had ever done it before. They even acquired some smaller regional chains and converted them into Friendly’s, helping their sales more than double in under a decade.

This chain was bigger than ever but arguably less stable than ever. In 1987, even though their revenue continued to go up, their profits fell for the first time. They cited a labor shortage and increased competition as main reasons behind it. But think about what was happening here. Even though they were operating more restaurants, they were attracting fewer customers, and that is a major issue. The following year, Hershey wanted to narrow their focus back down to consumer foods, which meant selling their restaurant business to an investment group that was led by Donald N. Smith.

1988 – Donald N. Smith’s Management

You might not know that name, but Donald Smith is kind of like a legend in the industry. In the 1970s, he was the chief operating officer at McDonald’s, where he played a big part in introducing their breakfast menu. From there, he became the CEO of their main competitor, Burger King, where their profits practically doubled during the three years he was there. He then worked at PepsiCo’s restaurant division, where he was partially responsible for the release of their famous personal pan pizza.

In 1985, he helped create the Tennessee Restaurant Company that would invest in various restaurant chains. In his words,

The first one they bought was a 330-restaurant chain called Perkins Family Restaurants, a direct competitor, and the next one was the 850-restaurant chain called Friendly Ice Cream. It was essentially a leveraged buyout where they had to borrow a good portion of the $375 million purchase price.

You could already see the issues that were forming here. Hershey had already put Friendly’s into a vulnerable position, and now they had a lot of extra debt to deal with. Donald Smith, I think, did make some promising attempts to revive the brand. Almost immediately after taking control, he renamed it. It used to be Friendly Ice Cream, and he changed it to the much simpler “Friendly’s” because that’s what most people were calling it anyway.

He started selling ice cream to thousands of supermarkets. Hershey had introduced the initiative but never really took it outside of the testing phase. He also tried to improve Friendly’s reputation by making it appear a little classier.

He renovated most of the restaurants, closed some of the older, underperforming ones, and introduced steak and other higher-priced items to the menu. All of these efforts failed to turn things around. By 1997, competing chains like Olive Garden and Outback Steakhouse were complicating things by expanding across the country, and they still had almost $400 million in debt that desperately needed to be reduced.

The combination of lower sales and the interest expense meant that they were reporting losses every year. So as part of their plan to reduce it, they had a public stock offering where they sold a portion of the company on the stock market for $90 million and used it to pay off some of that debt. They restructured a lot of it as well through issuing bonds, but things continued to get worse. In the span of three years, Friendly’s stock price fell from $26 to almost $2.

This is where things start to get crazy because remarkably, co-founder Prestley Blake, who at this point was approaching 90 years old, re-entered the picture in a big way. His brother Curtis did not approve of him getting re-involved. It ended up causing some issues between them, but Presley was adamant about it. I guess that he had never emotionally let go of the company that he had built, understandably, right? He had dedicated his entire life to it, and here he was disappointed of the new direction that Donald Smith had taken it.

He didn’t like the company being funded through debts, he didn’t like how they were closing restaurants and selling restaurants to franchisees to try to pay off that debt, he didn’t like how they alienated some of their blue-collar customers with the classier approach, and he felt that management was favoring the other chain of Perkins over Friendly’s. So when that stock price fell, he took advantage of the low price by buying almost 9,900,000 shares for $2 million, which represented about twelve percent of the company, becoming their largest individual shareholder. He also filed a lawsuit against them claiming misuse of $3.5 million involving a corporate jet that Smith would use to travel.

Presley went so far as to offer to loan them $50 million of his own money if Smith resigned and repaid the $3.5 million. That never happened, but what did happen, seemingly due to pressure by Presley and other investors but not officially, Friendly’s was sold in 2007.

2007 – Sun Capital Partners: Continuing Decline

It was bought by Sun Capital Partners for $337 million, and they just continued closing locations through the recession, which of course did not help the situation. By 2011, they couldn’t keep up with their debt any longer, so they filed for bankruptcy, but they did come out of it with big ambitions. They hired this guy John McGuire, who was the chief operating officer over at Panera Bread, and he implemented this turnaround plan where the central theme of it was pretty much to try to return back to basics: a simplified menu with lower prices, better service, cleaner restaurants, targeting a smaller group of customers but serving them better.

It is very questionable how effective any of this has been considering Friendly’s just continues to get smaller and smaller, closing the majority of their remaining restaurants in the decade following that first bankruptcy. In 2016, they even sold their retail ice cream business to Dean Foods to better focus on those restaurants, but then Dean Foods themselves filed for bankruptcy three years later, so a lot of trouble happening all over the place. Here in 2018, McGuire left the company, and in 2020, they went through their second bankruptcy.

When that happened, they claimed that they were doing really well with their efforts to reinvigorate the brand, but then the pandemic came and suddenly set everything back. Through the bankruptcy, they were bought a final time by Amici Partners Group for only two million dollars.

2021 – Amici Partners Group: The Final Chapter

Can you imagine that an iconic franchise like Friendly’s being sold for two million dollars? They have maintained less than one percent of their value compared to their previous sale 14 years earlier.

I don’t have very much to say about this phase of Friendly’s. The new owners have introduced the Sweet Rewards program along with some other efforts, but at this point, after falling so far, you really have to question if there is much remaining potential for the once-iconic Friendly’s brand.

Let me know in the comments, what do you see for the future of Friendly’s? Can they make a comeback and restore their presence in New England as a regional favorite or maybe even across the rest of the country one day? Or has that moment passed?

So going back to the beginning, if you are in fact craving that fribble, it might be hard, but you may want to go out of your way and try to find one of those remaining Friendly’s because it is unclear how long they’re going to be there. Could you even imagine a world without fribbles? All right, I just like saying the word fribble.

Also, I want to mention that the Blake brothers did make up with each other following those disagreements, and actually both lived to be over 100 years old. Prestley Blake passed away in 2021 at the age of 106, so that right there is impressive.

Finally, I’m going to ask anybody who’s been to Friendly’s over the years, what has been your experience and how has it changed? Is it better or worse, or would you even be sad to see them go? And any other thoughts you have about Friendly’s, leave them in the comments. I’d like to hear what you have to say. Thank you.