Friendly's Explores Bankruptcy, but High-Fives Keep Flying

Chain To Stay Course With New Campaign Despite Financial Woes

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Friendly's billboard is part of the 'High 5' campaign
Friendly's billboard is part of the 'High 5' campaign
Despite reports of looming bankruptcy, Friendly's will still high-five its customers.

After years of declining sales, the East Coast restaurant and ice cream chain is set to file for Chapter 11 bankruptcy as early as next week, The Wall Street Journal reports. The move comes less than a month after the chain launched its "high-five" campaign to gain relevance and boost sales. The campaign features, you guessed it, a lot of high-fives in its TV ads and even in the restaurants.

Friendly's spokeswoman Maura Tobias said that "like many restaurant chains, we are feeling the impact of the economic downturn and rising commodity prices and a challenging marketplace. We are working with our lenders, board and management team to explore alternatives to strengthen our financial base." She told Ad Age via email that the chain plans to continue the new campaign moving forward, but did not comment on whether the timing of the campaign coincided with those financial alternatives that are being explored.

Assuming the bankruptcy happens, keeping on course with the new campaign and having a business-as-usual mindset is exactly what the chain should do, said Dennis Lombardi, exec VP-foodservice strategies at WD Partners. "The absolutely right thing is to move the brand forward as much as it can with the campaign. They want to be able to convince creditors and the bankruptcy court that Friendly's is a viable brand." He added that the average consumer may not be aware about the marketer's woes.

"People love our brand, but we've kind of lost relevance," Chief Marketing Officer Andrea McKenna told Ad Age last month. "People's lifestyles have changed, and they've gotten busy." She added that the dominance of fast-food restaurants has cut into the 76-year-old chain's business.

Friendly's is the country's 60th-largest chain and No. 8 in the stagnant family-dining category--a segment dominated by IHOP and Denny's--and has suffered negative sales since 2005, according to Technomic. Last year, the company pulled in $596.8 million, down 2.7% from the prior year, and had about 492 units in 2010, down 3%, though that number could change with the bankruptcy proceedings. The chain also has an ice cream business through more than 7,000 retail locations in various parts of the U.S.

Friendly's unveiled a value menu alongside the new marketing campaign. The so-called High 5 Menu, includes five items for $5: a cheeseburger; chicken salad; grilled chicken wrap; turkey club; and loaded waffle fries. "They're creating a value promotion, and that 's not only on point, but probably a little overdue given the economy and the competition" like Denny's, said Mr. Lombardi.

Ms. McKenna said in August that the chain is increasing ad spending, though declined to provide specifics. "The company made a very large investment in for the fourth quarter," and will continue if the campaign is successful. Friendly's in 2010 increased its ad spending to $10.3 million, up 42% from about $7.3 million in 2009, according to Kantar.

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