Hartford Business Journal

14 Hartford Business Journal • May 4, 2015 www.HartfordBusiness.com Q&A Friendly's brings new strategic focus to CT Q&A talks about the reinvention of Friendly's and its strategic plan for Connecticut with John Maguire, the restaurant chain's CEO. Q: Your restaurant chain is cel- ebrating its 80th anniversary this year. What are you doing to keep things fresh and people interested in coming? A: When I first joined Friendly's in 2012 we did research on the brand includ- ing usage and aware- ness. We looked at the menu mix and did focus groups with current and past cus- tomers and former employees. What came back is the problem with Friend- ly's is that people aren't that friendly, the food is medio- cre and things aren't fixed when they are broken. Since then we have been improving on the quality and training. We're also remodeling all of our restaurants so they can compete. There have been huge improvements in terms of the quality of our employees. We have people now who want to be in the service industry and we're helping them understand what matters. We've improved the quality of our food, and we went back to real ice cream in our Fribbles. We are using extra large eggs and fresh and never frozen burgers. We're in the process of remodeling all of our restau- rants, including 21 restaurants in Greater Hartford. We are also advertising again in Hartford and will be on television — with a focus on great value to get people in the door to try us again. Q: Understanding that Friendly's is now privately held, what can you say about performance in the last three years? How many locations do you have? How does that compare to when you took over? A: We are privately held by Sun Capital. Our performance the last three years has been mixed. For the last decade, Friendly's has had declining sales every year from 3 to 5 percent. What we did last summer is focus on the improvement of our people, food and res- taurants, in the Boston area with its 43 loca- tions. We saw double-digit growth in sales and 3 to 4 percent growth in transactions. We feel like we've found the blueprint to grow. We're now rolling it out to the entire sys- tem. We'll see a sales lift and transactions lift. We have 268 locations in 14 states from Maine to Florida and as far west as Pennsylvania and also sell our ice cream in roughly 8,000 grocery stores across the country. We have started to grow in the Midwest with some of our ice cream products distributed nationally through Wal- Mart. We're the No. 1 ice cream in New England, No. 2 in the Northeast and in the top 5 nation- ally. It shows you the strength of the Friendly's brand. We have continued to grow that business by about 15 to 20 percent over the last five years. Q: According to a Forbes article, quick service restaurants like Burger King have grown at a much faster pace than any other restaurant segment in the indus- try. Fast casual restaurants like Chipotle and even Panera, where you were COO before getting your current job in 2012, are a relatively fresh and rapidly growing concept, positioned somewhere between fast-food restaurants and casual dining restaurants. Is Friendly's still relevant against this competition? A: In some ways Friendly's has a unique niche. Having spent 20 years at Panera I could tell you Friendly's could never be Panera and Panera could never be Friendly's. What sets us apart is 30 percent of our sales is ice cream and 75 percent of our guests who order an entrée get ice cream as well. With casual dining, ice cream is usually 6 percent. Since we're a sit down restaurant we want to give a great experience and it has to be fast. Our food is indulgent so the quality of the food has to be worth it. We have to be at a price point that is competitive — compa- rable to fast food or fast casual but deliver an overall better experience. Q: What demographic is Friendly's chasing? What segment promises the most growth and how are you marketing towards them? A: Right now if you look at the makeup of Friendly's, half of our volume is families with kids and the rest is adults as well as a large number of seniors. Families with kids are a strong sweet spot for us and we need to con- tinue to do a great job for our seniors. One of the things we have to improve on is we have to become more relevant to Millennials because they will become parents in the next few years and we want them to eventually bring their children and dine with us. In the new TV campaign you'll see that we speak to all of our demographics. We speak to them through offer- ing a great price point with real value. Money is something that is awfully tight so to attract them we have to have a great value to offer. Q: Is future growth for Friendly's going to come from the restaurant side or the retail side? Is the ice cream going to keep the lights on? A: It comes from both. On the restaurant side we're investing in our existing locations. We're going to invest about $20 million to remodel all of them and bring them to a stan- dard where we can compete. We will be opening new locations, includ- ing three franchise locations in New Jersey and one at Logan Airport. We will look to grow 3 to 5 locations a year over the next few years. We've grown 15 to 20 percent over the last few years in our retail business and I see no reason that can't continue. We have about $500 million in total sales with half restaurants and half ice cream. My hope is that we can get the restau- rant side back to where it can grow 10 to 15 percent over the next few years. Q: Your chain does better than most at selling desserts to customers, according to one report that showed 70 percent of customers order it. How does that bal- ance against a perceived need to offer healthy alternatives? Does Friendly's have to embrace healthy or does it con- tinue to do what it does best, which would seem to be burgers, fries, shakes and ice cream sundaes? A: This speaks to health and nutrition. Com- ing from Panera we dealt with that first hand. First and foremost good nutrition starts with us, as parents, to instill good eating habits in our kids. For us at Friendly's it's about giving guests a choice. They have the ability to make choices. The truth is Friendly's is an indulgent brand and if people are going to partake in our food, then the quality of food has to be worth it. That's really the three-pronged approach we take to it. It's about healthy choices and giving our guests options. n JOHN MAGUIRE CEO, Friendly's Restaurants Friendly's is remodeling all 21 of its Greater Hartford restaurants to modernize its facilities so it can better compete with other food chains. 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