Friendly's Restaurants


Chief Restructuring Officer

Wilbraham, MA

The Company is an 80-year-old brand with a network of over 200 restaurant locations, primarily located in the northeastern United States. Friendly’s servers as both an owner and operator of about half of its locations, serving as franchisor to the remaining ~100 locations.

The Friendly’s brand had been experiencing multiple decades of declining sales that had resulted in negative free cash flow and negative EBITDA. Friendly’s needed an assessment of all its locations along with its overheard expense base in order to rationalize its locations to a core subset of profitable locations and a more appropriate overhead expense base.

Key Challenges
Highly Competitive Market
Industry Wide Declining Sales
Deferred CapEx Requirements
Unprofitable Locations
Outsized Overhead Expenses
Lease Obligations
Master Lease Agreements

Engagement Highlights

Phase I – Assess the Real Estate Obligations

  • A solution needed to be negotiated regarding ~50 of the estimated 100 company-owned locations that fell under Master Lease Agreement (“MLA”). 
  • CMA developed several strategic alternatives that helped Friendly’s adequately assess the costs and legal implications of its options and choose the options that maximized value to the business and all stakeholders (lenders and owners). 

Phase II – Restructure the Business

  • Worked closely with Friendly’s to rationalize the company-owned locations, assessing the performance of each restaurant which included detailed location-specific meetings with management and on-site visits to assess expected store performance and CapEx needs.
  • Assisted management in evaluating the overhead cost structure, identified areas where savings could be achieved, and right-sized the costs for the new pro-forma business based on a rationalized store footprint.
  • Developed a go-forward operating plan, including costs to execute (lease terminations, severance, etc.) for the restructured business with a smaller footprint of better performing locations and a reduced overhead burden.

Phase III – Strategic Alternative Analysis

  • Provided an analysis of the strategic alternatives for the restructured business (out-of-court sale, in-court sale, franchisor model, etc.), and the potential value and cost considerations attributed to each.

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