Harsha V. Agadi is so confident the 75-year-old Friendly Ice Cream Corp. still holds substantial growth opportunities, the new chairman and chief executive acquired a stake in the family-dining company from its private-equity owner upon his recent appointment of leadership.
Agadi, who was named CEO of Friendly’s on Tuesday, stepped down last year as president and chief executive of Church’s Chicken, though he retains a stake in the Atlanta-based quick-service chain. Agadi said he expects to grow Friendly’s on all fronts — particularly through the brand’s new fast-casual concept, Friendly’s Express.
“I spent five years at Church’s and expanded it into a $1 billion company,” said Agadi, who succeeds president and chief executive Ned Lidvall at the Wilbraham, Mass.-based Friendly's. “I wouldn’t have invested in [Friendly’s] if there wasn’t a lot of opportunity for growth.”
Agadi declined to divulge the size of his share in the company, characterizing it only as “decent sized.”
Private-equity firm Sun Capital Partners Inc., which is based in Boca Raton, Fla., acquired Friendly’s in 2007 for about $337.2 million. The firm also owns Boston Market, Bruegger’s, Souplantation, Sweet Tomatoes, Fazoli’s, Garden Fresh, Restaurants Unlimited, Smokey Bones and Bar Louie.
Agadi said his experience at Church’s lends itself to his new post at Friendly’s. “I’m used to classic brands with a long heritage and loyal customer base,” he said.
New York-based consultant Malcolm M. Knapp called Agadi “an entrepreneur,” adding: “He’s a smart guy. He did a good job at Church’s and made money when he sold it [in 2009]. He’s got a great, disciplined business process.”
Knapp also noted that Lidvall “did a very good job” during his tenure at Friendly’s, which had been in slow decline before his arrival. “Ned got it going,” Knapp said. “He stabilized it and opened new avenues. He re-emphasized ice cream and introduced [Friendly’s Express].”
“This is not a broken system anymore,” Knapp said of the chain. “Can it be better? Yes. But Harsha will be building on Ned’s base. I think, though, he will be able to accelerate the process.”
The regional company, which includes a retail ice cream division, said it generated system-wide sales of about $700 million last year. Food and beverage sales at Friendly’s 500-plus restaurants generated $634.1 million in 2009, according to Nation’s Restaurant News’ Top 100 census of chains and companies.
Agadi said the chain will be stepping up growth through the addition of franchised locations and some company stores, notably by expanding the new Friendly’s Express vehicle. With four Express units open and another under construction, the concept “travels very well,” he said. “You can place them at highway rest stops, in universities, even expand them overseas. We’ll be exploring international franchising.”
Initially, new growth will take place along the Eastern Seaboard for the near term.
“Friendly’s is entrenched in the East, and we’ll fill in the gaps here before moving on,” he said. “Then we’ll open up expansion to other areas.”
He anticipates starting slowly with about 15 to 20 new locations in 2011. “But that will increase over time,” he said. “We’ll have faster and faster growth.”
Agadi predicts that total system sales will increase by 5 percent next year.
Growth will not be restricted to the Express units, though. Agadi said the company plans to reimage its classic sit-down restaurant.
“We’ll modernize it and update the menu,” he said. “We’ll focus on the customer experience and food quality.”
Agadi discussed the possibility of adding more healthy choices to menu. At the same time, the company will focus on offering more affordable meals.
“Affordability will help increase our customer frequency,” he said. “We’re going to be careful about pricing.”
He said the company also will explore the possibilities of purchasing organic milk and localized sourcing with dairy farmers to produce its ice cream. “We may even be adding new flavors,” he said.
Currently, Friendly’s ice cream is available in approximately 4,000 retail locations.
Contact Paul Frumkin at [email protected]