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Santa Clarita Investors Try to Revive Farrell’s Brand

Santa Clarita Investors Try to Revive Farrell’s Brand By JACQUELINE FOX Staff Reporter Three investors hope to bring a once-popular but long-shuttered ice cream parlor and restaurant business back from the dead, and they’ve chosen the site of their Santa Clarita family fun center as a testing ground. Brothers Michael and David Fleming, along with their partner Paul Kramer, have secured development rights to the Farrell’s Ice Cr & #269;me Parlor and Restaurant chain of franchises and are set to open the first store this month at their Mountasia Family Fun Center. Trying to revive a brand that wound up in bankruptcy court at the end of its heyday in the 1980s sounds like a risky proposition. But some trends show that aging baby boomers are aching for ways to reconnect with their youth and restaurants are benefiting in the process. A & W; Restaurants, a 1950s icon, for example, has seen a significant turnaround over the last five years after a steady decline and the loss of more than half of the company franchises in the 1970s. Farrell’s is remembered by many today as the place to go for family-style celebrations 20 or 30 years ago, a place where Dixieland jazz blared overhead, gigantic ice cream creations like The Zoo and The Pig’s Trough were served on stretchers, and waiters embarrassed anyone admitting to a birthday by making them wear straw hats and getting the entire restaurant to join the singing piano player and drummer in a serenade. That concept of loud, family entertainment venues, where food and fun are on order, has been particularly lucrative for the Chuck-E-Cheese chain, and the Fleming brothers say they have used it as a model. The Flemings and Kramer also expect nostalgia to play a key role in what they believe will be their success, pointing to the recent revival of interest in the Volkswagen beetle as evidence. Bob Farrell launched his first restaurant in 1963 in Portland, Ore. He turned it into a 60-store chain with spots across the country, including Hawaii, before selling it to Host Marriott Corp. in 1974, which added another 80 stores. According to Farrell, the franchises remained highly profitable until Host Marriott sold it all to a private investor in San Francisco a few years later. That investor, Farrell said, essentially stripped the chain of all the bells and whistles before filing for Chapter 11 protection in the early 1980s. Marriott bought the chain back and eventually let all the leases on the franchises expire. The last store closed in 1982. Almost 20 years would elapse before the Fleming brothers and their company, Parlour Enterprises Inc., secured development rights to the Farrell’s name last year from Marriott. Parlour has invested roughly $400,000 to remodel a small restaurant at Mountasia, a miniature golf and family entertainment center that gets roughly 300,000 visitors a year. Parlour executives refused to say how much they paid Marriott for rights to the Farrell’s name. Michael Fleming, Parlour’s CEO, said the time has never been better to reintroduce a tradition that baby boomers and former Farrell’s customers can pass on to their children. “Our goal is to have this company back better than it ever was in its prime,” he said. “With the exception of a Chuck-E-Cheese, which is really for smaller children, not entire families, there really isn’t a place to go and celebrate with all the excitement of a Farrell’s.” According to Paul Westra, an analyst with Robertson Stephens in San Francisco, Parlour’s timing is probably near perfect. To begin with, he said, Chuck-E-Cheese, owned by Irving, Tex.-based CEC Entertainment Inc., absolutely rules the roost for restaurants specializing in one-stop shops for children’s group events, where parents simply order pizza and drinks and let kids go wild. But the concept is limited to children under 13, so there is probably room for some competition. “CEC has successfully defended their market segment and they are the clear leader in the family entertainment business, primarily because they have an incredibly strong management team,” said Westra. “So certainly the timing for a similar concept for young adults or teenagers to enjoy is good.” Revenues for CEC increased by 9 percent to $141.8 million in the third quarter of 2001 from $130.3 million in the third quarter of 2000, driven primarily by the addition of 31 new company-operated locations last year. And, said Westra, aging baby boomers are fueling a wave of nostalgia within the food and entertainment industry. Parlour’s executives say they know that is going to help, and they aren’t shy about admitting they have used both Chuck-E-Cheese and the recent revival of the Volkswagen beetle as models, or at least inspiration, for their business plan. “It’s good old-fashioned Americana, and it’s certainly being used as a successful model,” said Westra, citing the example of Lexington, Ky.-based A & W; Restaurants. A & W; has witnessed a growth spurt since its purchase in 1994 by Sidney Feltenstein, former vice president of marketing for Burger King Worldwide. The number of A & W; locations dropped from a one-time high of about 2,500 to about 500 in the late 1980s. The number of locations is now approaching the 1,000 mark, Westra said. “The country is taking a second look again at icons like A & W; because of the aging boomer effect and the nostalgia that they are seeking out,” said Westra. The one area where Parlour will have to tread cautiously, said Westra, is in its expansion plans. Parlour has just received backing for a second location in Orange County under a limited partnership, and is close to securing financing for a third store in Woodland Hills both with openings planned for the end of 2002. But Westra cautioned that the risk of reviving an old concept is big enough on its own and could be hampered if the company attempts to roll out franchises faster than the idea can catch fire.

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