Restaurant franchises are the norm today, but did you know that the very first restaurant franchise ever was located on Cape Cod? In Orleans where Route 28 and Route 6A meet once stood the very first franchised restaurant, a name that became a part of American history throughout much of the 20th century. There he would begin his journey toward nationwide recognition by adding butterfat to his homemade ice cream, coupling that with higher quality ingredients. The ice cream became a huge hit.
This was followed by grilled hot dogs and fried clams at the store bringing in droves of customers. Johnson then opened an ice cream stand in on Wollaston Beach next to a home he was leasing for the summer. Legend has it Johnson sold as many as 14, cones in a single day at his stand. However the Stock Market Crash in October curbed any growth of the restaurant and nearly put Johnson out of business.
Johnson survived and in the coming years would take a chance on a new idea, that being franchising. In Johnson had the desire to open a new restaurant in Orleans on a tract of land owned by Eugene Sprague. Located where Route 28 met Route 6A it was a perfect spot to catch the eye of thousands of motorists daily. Time and money were the sticking points as Johnson did not have the time to run a second location nor the money upfront to lease the land.
Criticized for choosing to stand pat and hoard company cash, Howard Johnson told a Forbes reporter in , "My expansion plans got stalled in the oil embargo.
I overreacted. I stopped all expansion, and once you stop, you know how hard it is to get the monster going again. One of its former executives said, "HoJo always seemed to have ideas to upgrade the restaurants and hotels. But they never wanted to spend the money. For its money, Imperial received 1, restaurants 75 percent company-owned and motor lodges 75 percent franchised. He was succeeded by G. Michael Hostage, a manager who had worked his way through business school washing dishes and digging sewers before spending 15 years with the Marriott Corp.
Hostage inherited a declining balance sheet. Sales grew only 22 percent during this period. Hostage vowed to integrate adjacent HoJo restaurants and motels, which were often under different ownership, by unifying their staffs and offering food-and-lodging package deals and to cut costs by allowing restaurant managers to buy food from a variety of sources rather than exclusively from the company.
Some new entrees and a low-cholesterol breakfast were added. The successful Ground Round chain was expanded, growing to units in In order to lure business travelers to its motels, which trailed the industry average in occupancy rate and had fallen to sixth place among lodging chains, Howard Johnson initiated corporate discounts and a new reservations system and raised the advertising budget.
It gave licensees the choice of accepting low-interest loans to refurbish their properties by mid or losing their franchises. These units would include amenities business people expected but were not receiving from the traditionally family-oriented HoJos: restaurants and lounges, banquet and meeting rooms, and executive floors. Marriott kept the company-owned restaurants but immediately sold the franchise system and the company-owned lodging units to Prime Motor Inns Inc.
For its money, Prime received the Howard Johnson trade name and trademark, hotels and motor lodges operated by Howard Johnson, franchised lodges, and franchised restaurants. Imperial kept the Ground Round chain because Marriott was not interested in buying it. Neither did Marriott have an interest in prolonging the life of a restaurant chain whose name was also held by a lodging operation in competition with its own.
The corporation intended to convert these units to Big Boy and Saga restaurants, which would in turn be sold. By the end of , only 90 Marriott-owned Howard Johnson restaurants remained and by mid only Similarly, Prime wanted to wash its hands of the independently owned units once the franchise agreements expired. Claiming that their interests were being set aside, about Howard Johnson restaurant franchisees retained former U.
After eight months of negotiations, the parties reached an agreement in May by which Prime granted to Franchise Associates, Inc. From Marriott, the operators won the free use of HoJo recipes.
Franchise Associates bought 17 of Marriott's HoJos in It even built a prototype restaurant with a toned-down version of the orange roof and required all new franchisees to use the design. Oat bran muffins, salads, and garden pizzas were among the health-conscious fare added to the familiar standbys in a new menu introduced in A stockholders' company of 65 franchisees, Franchise Associates owned and operated about 85 of the franchised HoJo restaurants in Prime was described by a securities analyst as the fastest-growing company in the lodging industry with the highest profit margins.
Figures showed that 22 percent of U. A downturn in the lodging and real-estate industries and problems in the high-yield, high-risk junk-bond market had dried up financing sources for hotels and caused Prime's stock to lose 75 percent of its value in seven months.
The company went public in , but Blackstone retained 65 percent of the shares. In February , HFS announced that it would require its Howard Johnson franchisees to upgrade their properties, including establishing a rating system designating properties as either full-service hotels or limited-service units and posting a new sign with a bright blue background.
It was also considering discontinuing the distinctive orange roofs that still topped about 30 percent of the lodges. While conceding that the orange roof is "an American icon—as American as apple pie and Chevrolet," HoJo President Eric Pfeffer declared, "As we change with the times, we've got to show the newness. At the end of , there were properties with 57, rooms in the Howard Johnson lodging system throughout North America and also in Europe, the Middle East, and Central and South America.
They were mid-priced, averaged rooms each, and most had a swimming pool, gift shop, and restaurant. HFS received monthly marketing and reservation fees from its Howard Johnson franchisees based on a specified percentage of gross room sales.
Howard Johnson experienced changes in its ownership structure once again during the late s. He saw CUC, a direct-marketing outfit that sold memberships in discount buying clubs such as Shoppers Advantage and Travelers Advantage, as the perfect partner. The idea was to feed the names of all the customers HFS channeled through its hotels and real estate brokerages into the CUC direct-marketing machine.
While his system evolved and store design was modified, he never stopped paying attention to details and never stopped using big signs and orange roofs with steeples. New restaurants were opened across the Midwest and the South.
The s and s were glorious days for the company. In , Howard made his twenty-six-year-old son, Howard B. Food quality remained high. Again using a combination of company-operated and franchised locations, the roadside inn chain contributed significantly to company profits.
With the opening of a restaurant in Mesa, California in , the chain achieved a coast-to-coast presence. We previously posted the revenue data for the largest foodservice and lodging chains. Howard Deering Johnson retired in , turning over leadership to Bud, and died at the age of seventy-five in Bud continued to grow both the restaurant and lodging chains.
Revenues and profits continued to rise in the s. By , there were company-owned restaurants, franchised restaurants, company-operated motor lodges, and franchised motor lodges.
In Food quality began to drop. And just as ambitious. Prices were lower. The same era saw the rise of many new competitors in lodging, as well. Efforts to update the restaurants and motels had little success. And perhaps it is not a shock that that location has low ratings on sites like Yelp and TripAdvisor. The lodging part of the company has fared a bit better.
After several changes of ownership, the inns are now owned by the giant lodging franchise organization Wyndham, branded as Howard Johnson by Wyndham. As of yearend , there are locations, including in the United States, 69 in China, and 46 in Latin America. If one picks up a travel guide from the s and looks at the highest rated places, few of the restaurants are still tops or even in existence today, whereas most of the hotels are still hotels, under one owner or another.
Fads and fashions in foodservice come and go with regularity. As sad and nostalgic as this story might be, it makes us at the American Business History Center even more impressed by those restaurant chains which have survived decade after decade, like White Castle. Sign up for our free weekly newsletter with more stories like this. Click to support us. Sign up for business history stories and news from the American Business History Center. The First Location,
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