Friendlly's files for bankruptcyA 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.


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60 Comments

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tom

Too bad. I was unaware of their situation. The local operation has always been well run, sparkling clean, great food, and first class service. Not at all like a chain. I thought they all must be so.

October 06 2011 at 2:24 PM Report abuse rate up rate down Reply
mjoninreading

I was shocked to hear this and my teenagers were even more alarmed as it is one of their favorite places to eat. In our area there are 2 Friendlys relatively close to one another and it is rare to get a table without waiting in line. I guess it comes down to management.

October 06 2011 at 2:12 PM Report abuse rate up rate down Reply
gizmo4257

they need gordon ramsey to show them how to run the place

October 06 2011 at 1:40 PM Report abuse rate up rate down Reply
evenfaster

Catherine, your name does not jibe with being 10 years old in Richmond VA. many years ago You must have married someone
"not from around here" as they say.

October 06 2011 at 1:34 PM Report abuse rate up rate down Reply
evenfaster

Friendly's had too much discrepancy between locations. I have been to some nice ones, but they are few and far
between. The last two times the place looked like a hogsty. I ordered meatloaf and it took forever and tasted like
someone had opened a can of dog food and sliced it up and heated it in the microwave. I could not eat it.
Part of the problem is the workforce pool for the restaurant business (unless very upscale) is made up of people
who could care less about the company they draw a check from, generally speaking. You just can't find quality
people who work hard anymore.

October 06 2011 at 1:28 PM Report abuse rate up rate down Reply
croone22

It should be no surprise to anyone. Poorly run,offered nothing unique,and its products were not outstanding. A very weak business model and an even weaker implementation.

October 06 2011 at 12:41 PM Report abuse rate up rate down Reply
Barbara

To many businesses here are failing. Some are failing due to their own fault, some are failing due to Government red tape, some are failing because folks just don't have the money to spend like they use to,some are failing by being pushed out by Big Businesses. Us Americans have got to support our locally own businesses. We can't count on BIG businesses/Government to support us, we have got to support each other or we will all fall.

October 06 2011 at 12:11 PM Report abuse +2 rate up rate down Reply
surfherenomail

Pretty much agree with the writer. Had one in my home town growing up and went there often, consistently good.
Last decade only twice, quality took a dive and retaurant dirty. They did it to themselves, became too lazy and sloppy to keep up with the competition.

October 06 2011 at 12:01 PM Report abuse rate up rate down Reply
Gary

SAD! I remember going to Sunday "brunch" at Friendly's as a virtual ritual in W. Hartford. Have also been to one in the last year or two. They apparently forgot what they were. An icecream and dairy products provider who tried to compete with fast food joints. Another example of poor management.

October 06 2011 at 11:54 AM Report abuse +1 rate up rate down Reply
dsaamins

Their prices were too high to be diner food. In a hard economy they need more meals in our price range. And Friendly's needs to retain the food customers like, they keep changing the menu up but put on things I don't care for. They eliminated a really tasty melt that had pineapple and dill that I really miss.

October 06 2011 at 11:38 AM Report abuse rate up rate down Reply