Friendly's restaurants file for bankruptcy
The 76-year-old chain, with more than two dozen area locations, will continue to operate 424 restaurants as it tries to reorganize.
NEW YORK - Friendly Ice Cream Corp., the 76-year-old restaurant chain known for its ice cream and burgers, filed for Chapter 11 bankruptcy protection Wednesday, another victim of the nation's economic woes.
The company, commonly known as Friendly's, has more than two dozen restaurants in the eight-county Philadelphia area.
Friendly's is the latest restaurant chain to file for bankruptcy, as consumers continue to eat out less - a habit they picked up during and after the 2007-09 recession - and food costs remain high.
Others that have sought bankruptcy protection this year include Perkins & Marie Callender's; Real Mex, which operates El Torito Restaurant and Chevys Fresh Mex; and SSI Group Holding Corp., which operates Souper Salad and Grandy's restaurant.
Friendly's said the economic downturn coupled with higher costs and high rents for its locations drove it to file for bankruptcy protection.
"The strategic decision to pursue a financial restructuring will allow us to proactively and quickly improve our financial position," chief executive officer Harsha V. Agadi said.
The company said it already closed 63 of its stores - including ones on Easton Road in Doylestown and at the Coventry Mall in Pottstown. Each of the 63 stores had about 20 workers, so some 1,260 jobs were lost.
The chain, based in Wilbraham, Mass., will continue to have 424 restaurants from New England to Florida.
Friendly said that it had secured $70 million in financing and that the remaining restaurants would continue to pay employee salaries and benefits as it reorganizes under bankruptcy protection. Gift cards will continue to be honored. Friendly's now employs about 9,000 workers.
Its current owner, Sun Capital Partners Inc., will be the lead, or "stalking horse" bidder, in an auction process. The company requested court permission to hold a Dec. 1 auction, followed by a Dec. 5 hearing to approve the sale.
Under the proposed timeline, all bids must be submitted by Nov. 24. Potential buyers would have to offer at least $122.6 million in cash to qualify for the auction.
The company filed for bankruptcy protection at the U.S. Bankruptcy Court for the District of Delaware.
Friendly's opened at the height of the Great Depression with one shop in Springfield, Mass. Its founders sold the company in 1979 to Hershey Foods Corp., which introduced the candymaker's products into Friendly sundaes as toppings. In 1988, the company was bought by Donald N. Smith, who launched the Cyclone soft-serve dessert and renamed the chain "Friendly's" in 1989.
The company went public in 1997 at $18 a share and was bought by Sun Capital in 2007 for about $395 million, or $15.50 a share.
Sun Capital, of Boca Raton, Fla., owns other restaurant chains including Boston Market, Captain D's Seafood Kitchen, Fazoli's Restaurants, Smokey Bones Bar & Fire Grill, and Real Mex Restaurants.
In addition to its restaurants, Friendly's makes ice cream products for U.S. supermarkets and retailers.