Lean, Mean and Friendly's

If you grew up in the northeastern United States, you undoubtedly remember Friendly's. Whether you remember it as the Main Street coffee shop or the place you went for ice cream after little league games, that nostalgia still holds sway over the modern Friendly Ice Cream Corporation for better and for worse. Those memories continue to draw in guests, generation after generation, but that same history also makes it difficult for companies like Friendly's to be the modern, efficient restaurant company that it needs to be to survive.

In the late 1990s, Friendly's has been in the process of remaking itself. Bringing in President John Cutter, the publicly-traded company shed many of its poorest performing urban locations, dropping from a high of more than 800 restaurants in the 1980s to nearly 550 now. In addition, Friendly's cut more than 100 corporate-level employees. Running leaner has meant a wholesale re-evaluation of its information technology infrastructure. A lean company cannot build custom applications for everything it needs, but rather must rely more heavily on the technology vendors. "As the company has evolved, we have had to change our strategies," admits Corey Wendland, chief financial officer. "It requires a lot of discipline. Friendly's is shifting from a place where our people could call IT and have us build every little application. We can't do that anymore."

Shifting priorities According to Wendland, Friendly's is already beginning to realize that being leaner has a number of advantages as the company looks to refurbish its image and push same-store sales. Friendly's recently developed a new restaurant prototype, like the one pictured on the cover and on page 13, that leverage Friendly's key point of differentiation: ice cream. "We like to look at it as Friendly's equals family, equals ice cream, equals good times," notes Wendland. "We are starting a new remodeling program where we are bringing back the ice cream shop feel. It is a fresher look and it gets us a little bit back to our roots." Along with the remodeling, Friendly's is pushing out a new POS that will be implemented at both company- owned and franchised locations. By the end of 2005, all Friendly's restaurants will run the same Micros point of sale. The single POS will significantly reduce help desk burden--some locations are still running 20-year-old Fisher POS systems--and provide far greater reporting and better corporate control.

Reporting by proxy "When I started five years ago, we did not have a daily reporting system," notes Wendland. "In fact, they look at how much cash was at the bank and use that as a proxy for sales. There was no location-by-location reporting. We started supporting Director of IT Peter Palumbo and we quickly developed daily sales reporting with sales trends to give us basic information."

Under Wendland and Palumbo's direction, Friendly's implemented a data warehouse and just by cutting the size of its analyst group, saw a return within a year. "The success of that project opened eyes to how technology can change a company in almost one swoop," confides Wendland. "Not only did we save hard dollars on head count, but the quality of data increased so dramatically that real data began to play a part in how we established marketing strategies and how we judged the success or failure of the marketing campaign, managing labor in restaurants, etc. It really opened our eyes."

Complying with Sarbanes-Oxley has also opened eyes at Friendly's to the importance of accurate and timely data. Friendly's recently moved from a homegrown accounts receivable application to an "off-the-shelf" module from Lawson, in parts to make Sarbox compliance easier. "If you don't have the proper documentation you are in a lot of trouble," warns Palumbo "Fortunately we had the bulk of our systems with Lawson and in the store was Micros so we didn't get nailed." The experience has re-enforced Friendly's move away from proprietary solutions. "A lot of companies like to chase the best of breed applications and be on the cutting edge," insists Wendland. "The time between something going from a cutting edge to state-of-the-art is shrinking continuously so you have to ask: Is it worth the investment and risk? We also found that we are getting better applications. We are partnering with Micros and I am very pleased. We helped them develop a cash management application that is now part of their packageÃ.‚¬"we required that to do our deployment."

A more friendly Friendly's
Running after best-of-breeds also complicates integration, notes Palumbo. "We look at technology, not so much in terms of the best applications, but the best integrated environment. This allows us to have all our systems totally integrated-- reducing the pain of having to go back and forth and support three or four different applications. We look at what's more functional, what works, what is more integrated: what is not necessarily a Cadillac, but far from the Chevy. We put a lot of emphasis and time in nurturing those relationships."

As more of the back-end solutions are put into place, Friendly's is turning its attention to improving guest satisfaction. True, Friendly's implementation of a Spacenet satellite network has improved its polling to close to 100 percent, but the real ROI is in the ability to speed up credit and giftcard transactions, notes Palumbo. Friendly's is also using the satellite network to run its Empathica customer-comment system.

"Our shift is towards making the customer happy," adds Wendland. "Sometimes it doesn't matter if they get their food in ten minutes. You can get it to them in five and they won't be happy or you can get it to them in fifteen and that is fine. We are trying to get a lot more data on what our customers want from us."

"For Friendly's it seems to be simple," Wendland continues. "The customers have said the restaurant is dirty, my food wasn't cooked the way I wanted it and the service was unfriendly. The service can mend a lot of ills. If the service is good, it can make everything else not so bad."

Ensuring that guests come away from Friendly's happy and perhaps a bit nostalgic is essential for the restaurant. And while the company may be a bit leaner and meaner, it is still Friendly's--the Friendly's that its guests remember.

Moving a 70-year old restaurant company is never easy, but by streamlining IT, moving away from proprietary software solutions, and analyzing data to better understand its customers, Friendly's is on the right track.