Year: 2012

New CEO John Maguire Is Shaping a Turnaround Strategy

John Maguire acknowledges that ‘going back to basics’ is hardly a new refrain at Friendly’s, but he believes the chain now has the requisite pieces, and attitude, to get it done.

When it comes to turning around troubled companies, John Maguire has been there and done that.
Well, sort of.
In many ways, he compares his current undertaking — which he said others have described succinctly with the two-word phrase “fixing Friendly’s” — to one of his first assignments with the Boston-based fast-casual bakery and café chain known as Au Bon Pain (later to be renamed Panera Bread Co.), close to 15 years ago.
“In 1993, I had the opportunity to run a commissary in Chelsea,” he recalled. “It was a 17,000-square-foot facility located under the Tobin Bridge, and this was a wonderful opportunity for me because I was going to get to run what was a broken business.”
Elaborating, he said this division of the company produced baked goods, sandwiches, salads, and fresh juice for all the Au Bon Pain restaurants in the Greater Boston area; products were shipped twice each day. By the time Maguire arrived, the business was failing, he said, noting that there were many ways to quantify and qualify the decline.
“Customer satisfaction, with regard to the quality of the product and service coming out of the building, was terrible,” he noted. “The employee satisfaction and how they felt about their jobs was terrible. And, oh, by the way, it was losing several million dollars a year.
“My approach to all this was that I wasn’t thrilled as much as I was scared to death,” he went on, adding that he soon found out that few if any of the 100 employees in the facility (except those that delivered products) had ever been to an Au Bon Pain and seen the fruits of their labor. So he took them.
“They had no connection to what we were trying to do and to what success would look like for us,” Maguire told BusinessWest. “One Saturday, I came in at 5 a.m. I had a Ford Explorer, and I picked a few people off the production floor and said ‘come with me.’ We drove to downtown Boston before the traffic hit and went into some of the restaurants. I was able to say to the people, ‘see how good your baked products look on the shelves? See why we want you to spin the lettuce for 30 seconds to remove all the moisture from the container?’ By doing that, we got people connected.
“That shaped my entire philosophy on leadership in business,” he continued. “You have to come up with a plan, and then you get people involved in what that plan is going to be. You focus them in the right direction, and then it’s your people who will make the determination if a business is successful.”
Maguire said he took this same philosophy to a number of career steps at Panera, from president of retail operations to executive vice president, and he intends to continue in that vein at Friendly’s, where he is now CEO — only without the Explorer, at least in a literal sense.
Indeed, he still intends to get people connected and make them part of the brand-resurgency process. And in a lengthy interview with BusinessWest, he explained how he will do that, while also delineating the scope of the challenge and the broad strokes of the strategic initiative to return the chain to prominence.
“In a nutshell, I would say that Friendly’s has lost its focus on what really makes it special,” Maguire explained. “It’s lost its perspective on who its customer is and what is the best way to deliver for that customer, and, most importantly, what gives us credibility with our customers.”
Successfully reversing those trends will not happen quickly or easily, he continued, adding, however, that it can be done, because he’s seen it happen at other chains, such as Boston Market, Steak & Shake, and even McDonald’s, and because he believes the right ingredients are, or soon will be, in place for it to happen here.
“The leadership teams that came in here tried really hard — it wasn’t that they didn’t have good ideas or do things,” he explained, noting the high rate of turnover in the corner office. “There’s some fundamental things that need to take place that didn’t happen. There’s no quick fix to any of this business. It took a long time for Friendly’s to lose its way; it’s going to take some time for us to find our way back.”

Any Given Sundae
Before discussing what he wants to do at Friendly’s — the chain that filed for Chapter 11 bankruptcy last fall, closing dozens of restaurants as it did so, before emerging from bankruptcy this past spring — Maguire, who took over on May 29, first explained why he tackled this assignment.
After nearly two decades at Panera Bread, he said he understood that he would only leave for another opportunity if it represented a chance to lead an organization (he was second in command at Panera) and was also something, or some company, that he was passionate about.
And Friendly’s certainly fit that description.
Maguire grew up in South Weymouth, only a few blocks from one of the chain’s locations, and said he spent considerable time there, creating memories at virtually every stage of his life.
“Some of my most memorable experiences have taken place in a Friendly’s restaurant,” he said, “from when I was a kid, when I would go to Friendly’s on weekends with my grandfather, to when I was a teenager — that was the spot where you hung out with your friends — to more recently with my daughter; Friendly’s was a place where we’d spend ‘Katie-dad time.’”
But there was far more to this than nostalgia.
“This was a brand that I not only grew up with, but also have rooted for,” Maguire told BusinessWest, adding that, in recent years, it was a chain that he watched decline, and from a very intriguing perspective.
“As someone who’s been in the industry, I was keenly aware of some of the challenges they’ve had over the past 10 or 15 years,” he noted. “There were times when I would speculate and say, ‘if I had the opportunity to run Friendly’s, what would I do? How would I approach it?’”
And now that he has that opportunity, he sums up the strategy moving forward quickly and succinctly with the phrase ‘getting back to basics,’ while acknowledging that the three or four men who occupied his office before he arrived said essentially, if not exactly, the same thing.
But there is a difference between saying something and doing it, he continued, adding that previous CEOs have understood Friendly’s main problem as well as he now does — getting away from what brought it success decades ago and instead trying to be all thing to all people. The problem has come in the execution of strategies to change that equation.
And with that, he referenced the several different Friendly’s menus on the conference-room table, while noting that there are still many items on it that are far removed from the company’s core and its success quotient.
“Things like steak tips,” he explained, adding that ‘under-555-calorie’ meals would also fall into this category — things the chain does, but doesn’t do especially well, and constitute items that do not bring many people to a restaurant known for decades as a source of what Maguire called “an indulgent experience.”
But they’re still on the menu, he went on, adding that it’s often hard for restaurant executives to pull them off.
“Everyone gets this — everyone understands there are too many items on the menu, but when push comes to shove, to actually do it, it’s difficult,” he said. “People are going to be nervous — we’re going to hear from a vocal minority of our customers who say, ‘I want this.’ It’s going to take some discipline and sticktoitiveness; we’re going to need the fortitude not to react and to give it a chance to succeed.”

Shaking Things Up
Summing up what has happened to the franchise he grew up with, Maguire said it’s a scenario he’s seen many times in the industry.
“What happened to Friendly’s, and what got Friendly’s off track, is basically the same story that happens to most concepts in the restaurant business,” he explained. “Most concepts in this industry diminish over time; three out of four restaurants are making less money today than they did five years ago.
“What happened to this chain is typical,” he continued. “You’re chugging along, and then, whether it’s the economy or overgrowth or lack of focus on the business, sales start to fall. And when that happens, people panic. They say, ‘uh-oh, sales are falling, we have to do something.’
“So they try things,” he went on. “They try new menu items, they try a different direction, and then sales either come up or they don’t, and usually, they don’t. So then they try some other things because now they’re a little more panicked because sales are really down. And then they try other things, and they don’t work.”
What follows are inevitable leadership changes, Maguire told BusinessWest, adding that this cycle continues to repeat itself as new people assume the CEO’s chair.
“And with all those leadership changes, over time, Friendly’s has become less and less of what Friendly’s was,” he noted. “The focus on operations has diminished, the menu proliferation has continued to the point where we don’t know if we’re family dining or casual dining … and we’ve lost focus on what was iconic to us, and we’re trying to please all people. And when you do that, you wind up not pleasing anyone.”
Thus, beyond sales and market share, what Friendly’s has ultimately lost over the past several years is something ultimately more important — credibility, said Maguire, adding that it’s his unofficial job responsibility to get it back.
To do this, he continued, the chain must remove what he called “complexity” from the equation, meaning everything from that aforementioned menu proliferation to ambiguity about just what Friendly’s is.
“What we do now is take great people who work in our restaurants and make their jobs very difficult based on the complexity of our menu and the complexity of our service system,” he explained, adding that the process of simplifying things is already underway.
To help with all this, the company has hired the research firm RTS (Results Through Strategy) to get a sense from customers about what the chain should be doing moving forward.
“We’re going to be heavily research-based,” he said, adding that this is a departure from the past and a big reason why the menu has proliferated. “Opinion has driven much of what we’ve put on the menu; the franchise community thinks we should have this product, the company thinks we should have that product. And the way I’ve described it to the team is that my opinion doesn’t get to determine what’s on the menu, and your opinion doesn’t get to determine. Our customers are going to be the ones to tell us what should and shouldn’t be on the menu, and they do that through what they believe we have credibility in and what they purchase from us.”
Such research will likely inform the company on how to maintain its current strong following among young families and seniors — two constituencies that have always supported the chain — and also provide insight into how to reach a client group that it has lost to a large degree — teenagers.
The company has developed prototypes for some new developments, such as an old-fashioned ice-cream parlor concept called the Scoop Shop (there’s one located inside a Burger King in New Jersey), as well as something called Friendly’s Express, said Maguire, but before it can think seriously about growing, it must focus on the fundamentals in its existing 400 locations.
And by this, he means speed and quality of service, cleanliness, mood, or atmosphere, and a menu that is tailored to the identified Friendly’s customer.
“We need to focus on how to create the best customer experience day in and day out,” he said, “because, until we do that, we won’t have the credibility, the cash, or the ability to grow.”

Topping It Off
As he talked about the large challenge ahead of him, Maguire said that as important as what he wants to do is how he intends to do it.
And for this, he returned to that Au Bon Pain facility in Chelsea, and that process of connecting people with the company’s products, goals, and aspirations.
Completing that story, he gave tours in his Explorer nearly every Saturday for more than two years; there was even a waiting list of sorts created to determine who would get to go next. But there was more to the turnaround process than getting employees into the field.
Indeed, Maguire said the plant had to be cleaned up and renovated, some workforce decisions had to be made — specifically, weeding out people who were not doing their jobs properly — and training had to be implemented for all those who remained.
“But in six to nine months, our customer perception had improved, our employee satisfaction had improved, the facility had improved, and after about a year, we started making a little money,” he noted. “And it started with getting people involved and getting them focused.”
He’ll be doing this on a much larger scale at Friendly’s, and while he won’t be using a Ford Explorer to get people connected and on the same page, he will be using other methods, all designed to improve the level and quality of communication within the company, which means several constituencies, including employees, franchisees, and vendors.
“One of the things we spend a lot of time on is town meetings,” he explained. “Next week, I’m meeting with all our franchise owners and speaking with them about where we’re heading with the business, what matters, and hearing from them on what we can do to better serve them as franchise partners.
“We’re opening up with every constituency in the business — generating that two-way conversation,” Maguire went on. “We’re even doing it with our vendors; we’re bringing all our vendor partners through so they can understand what we’re trying to accomplish, so they can help us in that mission.”
Overall, Maguire is optimistic about the prospects for a turnaround, despite the inherent high degree of difficulty, because other chains have successfully gone back to what made them successful.
“I’ve seen concepts be in worse position than Friendly’s is and reinvent themselves and come back,” he said, mentioning Steak & Shake, Boston Market, Captain D’s (a seafood restaurant), and McDonald’s, which he considers perhaps the best example.
“If you look back 10 years ago, McDonald’s was really in some trouble; their sales were falling, customer satisfaction was down, and they were losing market share to people like Panera Bread and Starbucks. What McDonald’s did was understand that their biggest point of difference is their 10,000 locations with drive-thru.
“They went after Starbucks and said, ‘we can’t compete with you on a $5 cup of coffee, but with 10,000 drive-thrus, we can improve our coffee to Newman’s Own, do it at a better price point, and you’ll pass six of our locations on your way to work. And they took a big chunk out of Starbucks by doing that.”
The place for all those at Friendly’s to start is with brand strategy, Maguire explained.
“One of the questions I asked myself before I came here, as I was going through the interview process, was ‘why should Friendly’s exist?’” he recalled. “And I think it should exist because of the differentiating things we have. We’re different than other concepts; there’s no brand in the U.S. that has the focus on ice cream, breakfast, burgers, melts, fries, and other pieces. But ice cream is the key differentiator.
“The best way to describe what our strategy is and what we’ve already begun to work on is bringing us back to our roots with relevance,” he explained. “We’re going to create a brand strategy: who is Friendly’s? What do we aspire to be? Who is our customer? What are the products that give us credibility in serving them? And what’s the best way to reach them?”

Chain of Events
Moving ahead, the company will attempt to reposition the brand, focusing more on the ‘story’ than on specific products, he concluded, adding that there will be many components to this turnaround effort.
“Businesses are not mathematical equations — they’re living, breathing organisms with many different parts and pieces and things that make them work,” he said. “For us, it will come down to … do we make a few fundamental bets, and do those bets work?”
Maguire noted that, since arriving nearly three months ago, he’s spent considerable time acquainting himself with the many nuances of Friendly’s history, and has met both Curtis and Prestley Blake, the brothers who started it all in 1935, as well as other top administrators from the company’s past.
But for the most part, this was a story he already knew and understood. The place where he logged significant Katie-dad time and listened to stories from his grandfather was now referenced with the past tense.
To fully fix Friendly’s, he has to make that place the center of the company’s future. It won’t happen overnight, he stressed repeatedly, but the process is already well underway.

George O’Brien can be reached at [email protected]