The 76-year-old company known for its ice cream and hamburgers is the latest restaurant chain to file for bankruptcy, as consumers continue to eat out less, a habit they picked up during the recession, and food costs remain high.
Other companies that have sought bankruptcy protection this year include Perkins & Marie Callender's; Real Mex, which operates El Torito Restaurant and Chevys Fresh Mex, and SSI Group Holding Corp., which operates Souper Salad and Grandy's restaurant.
Friendly's said the economic downturn coupled with higher costs and high rents drove it to file for bankruptcy protection.
"The strategic decision to pursue a financial restructuring will allow us to proactively and quickly improve our financial position," said CEO Harsha V. Agadi.
Friendly Ice Cream Corp., based in Wilbraham, Mass., says it has secured $70 million in financing and that its 424 remaining restaurants will stay open and pay employee salaries and benefits as it reorganizes under bankruptcy protection. Gift cards will continue to be honored. Friendly's now employs about 9,000 workers.
Its current owners, Sun Capital Partners, will be the lead, or "stalking horse" bidders, in an auction process.
The company filed for bankruptcy protection at the United States Bankruptcy Court for the District of Delaware.