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WAKEFIELD â€“ The happy ending sundaes are no longer that happy as Friendly's Ice Cream filed for bankruptcy Wednesday and joined a growing list of retail corporations closing due to the sluggish economy. Sixty-three low performing restaurants will close, including the Wakefield branch on Kingstown Road.
On Wednesday, Oct. 5, the Friendly Ice Cream Corporation and its subsidiaries announced that the company has filed for Chapter 11 bankruptcy. As part of the filing, Friendly's intends to sell the business to an affiliate of its current owner, Sun Capital Partners Inc. The news comes after 76 years of service to customers in what it branded itself as a friendly, family restaurant.
The company blamed its Chapter 11 filing on the economic downturn and increased costs in commodities such as cream and rent, adding itself to the list of national retailers fallen victim to the recession, including Circuit City, Borders, Linens and Things, Blockbuster and Bugaboo Creek.
â€śOur company continued to face significant financial challenges. This was exacerbated by the weak economy and rapidly rising commodity costs that have impacted the entire restaurant industry,â€ť Harsha V. Agadi, Chairman and CEO of Friendly's said.
Although 424 Friendly's locations nationwide will remain open during the company's restructuring, Friendly's Corporation spokesman Rich Tauberman said 63 locations will close, including the Wakefield and Warwick branches. The Rhode Island closings follow the closing of the Attleboro restaurant earlier in the year.
â€śAfter a thorough analysis of the profitability and contribution of all Friendly's locations, including the least costs involved, the company made the difficult but necessary decision to close underperforming restaurants. These closures will help the company realize important cost savings and operational efficiencies that will improve its financial foundation so it can better serve all constituents,â€ť Tauberman said.
Employees at the Wakefield branch did not comment on the closing and referred all inquiries to the corporate headquarters in Wilbraham, Mass.
Tauberman said the Wakefield employees were told Tuesday night of the restaurant's closing.
â€śWe're trying to accommodate as many employees as possible at nearby locations,â€ť Tauberman said.
Of 162 workers at its five locations across Rhode Island, 37 worked in Wakefield and 30 in Warwick.
With the closings, the company hopes to restructure and emerge stronger and more competitive. The company claims the filing will provide it with the tools and time to strengthen its balance sheet, close underperforming restaurants, revisit certain agreements, and reposition the company for long-term success.
â€śWe have embarked on an aggressive campaign to enhance restaurant operations, improve the guest experience, strengthen our team and expand the company's successful retail ice cream business,â€ť Agadi said.
Friendly's has secured about $70 million in debtor-in-possession financing, which, along with the company's cash flow will provide working capitol to meet its ongoing obligations during the restructuring. The company expects to be able to continue paying employee salaries and benefits, meet the needs of its customers and honor all gift cards.