Incorporated: 1947
NAIC: 722110 Full-Service Restaurants; 722212 Cafeterias
SIC: 5812 Eating Places
Frisch's Restaurants, Inc., an Ohio corporation engaged in the foodservice business, is probably best known for its midwestern chain of Frisch's Big Boy restaurants. Frisch's operates a total of 87 family-style restaurants--in Ohio, Kentucky, and Indiana--under the Big Boy name, while another 28 are licensed to outside operators. The company also operates 34 Golden Corral grill buffet restaurants and plans to expand that chain. In 2007, CEO Craig Maier was at the helm of the company, while his sister Karen Maier served as vice-president of marketing. After launching a restructuring in the late 1990s, Frisch's sold many of its noncore holdings, such as a horse farm, a stake in the Cincinnati Reds, and a couple of hotels.
Early 20th-Century Beginnings
The history of Frisch's Restaurants may be traced to 1905, when Samuel Frisch opened a small restaurant on Freeman Avenue in Cincinnati, Ohio. The venture lasted only five years; when Frisch was earning just enough money to support his growing family, in 1910, he was also ready to find something more profitable. Frisch moved his wife and ten children to the Cincinnati suburb of Norwood to begin a new career in the grocery business. However, he soon returned to the service side of the food industry, opening a café in Norwood. Business was good, and by 1915 Frisch was ready to try a larger operation.
Frisch constructed a new restaurant in Norwood, known as Frisch's Stag Lunch, and this became one of the town's most popular gathering places. By the early 1920s, Frisch's Stag Lunch had moved into a larger building, and Frisch had been joined in the business by three sons, Dave, Irving, and Reuben. Sam Frisch died in 1923, and his son Dave, then only 20 years old, took over the restaurant. The Frisch brothers would continue to work together at Frisch's Stag Lunch for several years.
Dave Frisch Ventures Out
In 1932, Dave Frisch sold his interest in the Stag Lunch to his brothers and opened his own restaurant, Frisch's Café, also in Norwood. The new venture was quickly successful, garnering a loyal customer base, particularly among the local autoworkers who lunched there. Soon Frisch opened another location. However, in the aftermath of the Great Depression, he was forced into bankruptcy and closed both restaurants in 1938.
Fortunately, Frisch soon received some much-needed moral and financial support in the form of investor Fred Cornuelle, a local businessman. With Cornuelle's backing, Frisch again opened a restaurant in Norwood called the Mainliner, one of the first year-round drive-in restaurants in the Cincinnati area. The Mainliner was so successful that Frisch and Cornuelle were able to construct a second Frisch's restaurant in 1944. Located in Cincinnati, the new restaurant was designed to recall the historic Mt. Vernon home of George Washington.
At an industry convention in California in 1946, Frisch met Bob Wian, who introduced Frisch to the Big Boy, a double-decked hamburger made of two thin patties that cooked faster than one larger patty. Frisch secured Wian's permission to adopt the concept and began offering the Big Boy at his restaurant in Cincinnati. However, he personalized the sandwich by dressing it with a specially formulated tartar sauce rather than the Thousand Island sauce that Wian used. The recipe was unique to Frisch's and became a big hit with Frisch's customers.
Shortly after their initial meeting, Frisch and Wian entered a franchise agreement under which Frisch would become the exclusive franchiser of Frisch's Big Boy restaurants in Ohio, Kentucky, Indiana, and Florida. Frisch incorporated his business in 1947 and the following year opened his first Big Boy restaurant in Cincinnati. During the same time period, Frisch's new son-in-law, Jack Maier, began working at the Mainliner.
The double-decked Big Boy hamburgers, served at drive-in restaurants, were an instant hit. Over the following three decades Frisch's business grew steadily. The Big Boy concept was becoming immensely popular throughout the Midwest and South, with other restaurateurs establishing Big Boy chains of their own and generations growing up recognizing the front entrance statue of the chubby Big Boy character with jet-black hair and checkered overalls. New Frisch's Big Boy restaurants were constructed and franchised at a rapid pace.
Public in 1960
Frisch's went public in 1960, its common stock selling for $12.75 a share on the over-the-counter market. By 1961, the Frisch's chain had expanded to 140 locations, including franchises, which offered Big Boy hamburgers, Brawny Lad steak sandwiches, and Buddie Boy ham and cheese sandwiches. In 1966, Frisch opened a more formal restaurant in the Cincinnati area, called Annette's, after his wife.
In the late 1960s, the Big Boy concept was acquired by the Marriott Corporation, and most of its franchisers enjoyed remarkable growth. Another industry-wide trend among the Big Boy owners was to enter the hotel business as a complement to the restaurant holdings. In 1967, Frisch's entered the lodging business with the opening of Quality Hotel Central in Norwood, across the street from the original Stag Lunch. Five years later, a second hotel was built in Covington, Kentucky, featuring a revolving restaurant on its top floor.
Dave Frisch died in 1970 leaving behind a company with $30 million in annual sales. Jack Maier, who had by this time had been with the company for 23 years and had worked his way up to become executive vice-president, was named president and chairman.
Continued Growth
Under Maier, the company experienced another period of remarkable growth, expanding its Big Boy holdings to Texas, Oklahoma, and Kansas through the purchase of the Kip's Big Boy franchise. Frisch's also entered the fast-foods market during this time, adding another Marriot Corp. franchise to its holdings, Roy Rogers Roast Beef restaurants. With the economic slowdown of the early 1980s and subsequent high interest rates, Frisch slowed its expansion plans somewhat. However, by 1986, the company owned 105 Big Boy restaurants, 19 Roy Rogers restaurants, and three Prime 'n Wine restaurants. In 1987, it acquired the rights to develop Big Boys in parts of Georgia and Tennessee in addition to the rights already secured in Florida, Indiana, Kentucky, Ohio, Oklahoma, Texas, and parts of Kansas.
In 1989, Craig Maier was tapped as president and CEO of Frisch's. His father remained chairman until his death in 2005. The younger Maier had started with the business as a manager trainee at a restaurant; he had gone on to own and operate a franchise in New Richmond, Ohio, before being named a divisional vice-president for both Frisch's and Kip's Big Boys. During the period from 1989 to 1991, under Craig Maier's leadership, Frisch's sold or reorganized company-operated restaurants in Florida, Oklahoma, and Texas, preferring to focus on Ohio and neighboring states for restaurant expansion. Moreover, Frisch's began phasing out its fast-food holdings. In 1990, when Marriott Corp. sold Roy Rogers to Hardee's, all but one of Frisch's Cincinnati area Roy Rogers outlets was converted to a Hardee's restaurant. By midyear, Frisch's had reduced its Hardee's restaurants to seven. The company continued to operate 101 Big Boys, two Prime 'n Wine restaurants, and two Quality Hotels.
As it reduced some foodservice holdings, Frisch's also began to diversify, acquiring stakes in a wide variety of businesses, including a horse farm in Kentucky and a stake in the major league baseball team the Cincinnati Reds. In the meantime, critics alleged, the company took on a debt burden and neglected its restaurants.
Restructuring
Between 1993 and 1996, Frisch's opened 30 restaurants in Ohio and in neighboring states. During this time, however, the company experienced a huge decline in net income, which management attributed to increased labor costs and overly rapid growth.
In 1996, two nonmanagement investors, calling themselves Wolverine Partners, launched a proxy fight to gain themselves and two other nonmanagement investors seats on the board of directors of Frisch's Family Restaurants. Their goal, according to industry analysts, was to break the hold of the Maier family on the chain, which they claimed was dragging down the company's profitability. In the ensuing battle, stock prices dropped below their 1960 initial public offering price, and Jerry L. Ruyan and Barry S. Nussbaum, together owning an 8 percent stake in the chain, drafted a management plan that required Frisch's to pay off its debts through the sale of its nonrestaurant assets. The Wolverine Partners claimed that the immediate sale of those holdings could generate $20 million to $30 million, which could then be used to eliminate Frisch's long-term debt (approximately $20 million), invest in restaurant improvements, and buy back stock. Wolverine also proposed revamping the company's board of directors, giving the majority voice to nonmanagement directors and requiring the entire eight-member board to be reelected annually.
Frisch's management maintained that many of the changes proposed by Wolverine Partners had already been considered by the company. Restaurant improvements, a computer system in particular, had been slow in development; the Cincinnati Reds investment was once profitable and could become so again; the farm and hotels operated at a profit and would be sold upon receipt of a suitable offer. Management was also not receptive to the board restructuring recommendations. Moreover, the Maier family alleged, the goal of the Wolverine Partners was only to realize short-term gains on their investments.
Frisch's management firmly held that the loss of profitability over the previous few years was due to overzealous expansion in a competitive environment. The company had opened 30 restaurants, primarily in Indianapolis and in Columbus, Ohio, which overextended their management resources. Frisch's also pointed out that it had indeed been receptive to selling its peripheral assets, and had done so with the Hardee's and Prime 'n Wine chains.
Nussbaum and Ruyan were elected to Frisch's board in 1996 for two-year positions (although shareholders would vote to replace them at the company's 1998 annual meeting). During their tenure, the company sold its horse farm, 15 underperforming Big Boy restaurants in Indiana, and its 6.6 percent share of the Cincinnati Reds baseball team. Moreover, Frisch's reached a development agreement with Golden Corral Restaurants to operate more than 20 of the casual steak-buffet restaurants in Cincinnati, Dayton, and Louisville. Golden Corral gave Frisch's the opportunity to expand without extending outside its geographic parameters. During this time, Frisch's also began installing point-of-sale computer systems for its 88 Big Boy restaurants, thereby finally introducing computerized workstations at the drive-thru windows, carryout counters, and dining areas. At the end of 1999, the company's board of directors announced the approval of an additional repurchase of up to 200,000 shares of its common shares. This approval supplemented a previous authorization in 1998 to purchase up to 500,000 shares.
Frisch's performed strongly as it closed out the 1990s, with reports of record sales. On March 14, 2000, Frisch's announced that its board had voted to divest the company's Clarion Riverview Hotel and the Quality Central Hotel. This decision, Maier asserted, was consistent with earlier declarations made by the company to maintain focus on Frisch's core restaurant business.
Renewed Focus on Restaurants
The two money-losing hotels were sold within several years. Radisson acquired the riverfront hotel for $12 million in November 2000. One of Frisch's managers bought the Quality Hotel for about $4 million a few months later. Frisch's thus began the new century with a streamlined operation.
Management was also more or less free of the annoying burden of its two dissident shareholders according to some analysts. By January 2000 they had sold most of their shares back to the company. Within months, the company's share price began a steady climb from about $10 that would see it triple within a few years.
Frisch's was able to tidy up another business issue, acquiring ownership of the Big Boy trademark rights it had been leasing. These were first acquired by Liggett Restaurant Enterprises following the bankruptcy of Elias Bros. Restaurants Inc. Liggett sold the rights to Ohio, Kentucky, Indiana, and some of Tennessee Big Boy's outlets to Frisch's while buying Frisch's rights to the name in other states (Florida, Kansas, Texas and Oklahoma). The deal assured Frisch's future access to the Big Boy name in its core areas.
Frisch's had expected the most growth from its Golden Corral concept, but this proved elusive. In 2001 it committed to add 41 new restaurants over the next six years. (One of these had to be torn down and rebuilt before it could open, due to structural problems from building on spongy soil.) Nevertheless, same-store sales stalled at Golden Corral while increasing slightly at the Big Boy sites. The stagnant steak-house growth was attributed to intense competitions due to the dense spacing of the restaurants.
The company had its reasons for banking on Golden Corral, for which it was the largest franchisee. Golden Corral restaurants each did an average of $3 million a year, about one-third more than the Big Boy locations. In 2006 the company signed another franchising deal, bringing the total of planned Golden Corral locations to 61 by 2011. There were 26 Golden Corrals by mid-2004, and 89 company-owned Big Boy restaurants.
Frisch's made minor changes to the Big Boy chain. It experimented with smaller stores for secondary markets. Some underperforming restaurants were closed. The end of the last downtown Cincinnati location, a popular gathering place for nearly 20 years, made front page news. The downtown restaurants were less profitable, however, since they did not have space for the lunch and breakfast buffets that had proved so popular at other locations.
Freed from its unprofitable side ventures, Frisch's enjoyed several years of record financial performance. Sales exceeded $260 million in fiscal 2004 as profits hit the $10 million mark. However, only a life insurance payout related to the death of chairman Jack Maier kept net income from slipping the next year. Daniel Geeding, formerly dean of the business school at Xavier University, was named chairman following Maier's death in February 2005.
The company noted it had been profitable since going public in 1960 and boasted a string of more than 160 consecutive quarterly dividend payments. Long undervalued by Wall Street due to the company's relatively small size and small number of investors, Frisch's shares made an impressive climb over several years, rising to $38 in 2007. Revenues slipped a bit to about $290 million while profits were flat at about $9 million. There were some increases in food costs as well as a jump in the minimum wage in Ohio. By this time, it was clear the Golden Corral concept did not have the Midas touch management expected. Same-store sales there had been on the way down for three years, while the Big Boy sites managed to hold relatively steady.
Principal Subsidiaries
Frisch Kentucky LLC; Frisch Indiana, Inc.; Frisch Ohio, Inc.; Frisch Pennsylvania, Inc.; Frisch West Virginia, Inc.
Principal Operating Units
Big Boy; Golden Corral.
Principal Competitors
Bob Evans Farms, Inc.; CBRL Group, Inc.; Perkins & Marie Callender's Inc.; The Steak n Shake Company; Ryan's Restaurant Group Inc.; Buffets, Inc.
Further Reading
Bohman, Jim, "Golden Corral Expanding," Dayton Daily News, December 1, 2001, p. 1E.
"CEO/Company Interview: Donald H. Walker; Frisch's Restaurants, Inc.," Wall Street Transcript, January 1, 2001.
Cook, Tony, "Frisch's Exits Downtown," Cincinnati Post, November 13, 2004, p. A1.
Coolidge, Alexander, "Frisch's to Open 21 More Golden Corrals," Cincinnati Post, July 26, 2004, p. B7.
------, "Frisch's Upbeat Despite Problems," Cincinnati Post, October 5, 2004, p. C6.
------, "Warning Signs," Cincinnati Post, July 30, 2005, p. B8.
Driehaus, Bob, "Frisch's Buys Rights to Big Boys," Cincinnati Post, January 10, 2001, p. 8B.
------, "Frisch's Predicts Profits; Expansion Planned for Restaurant Chain," Cincinnati Post, April 6, 2000, p. 8B.
------, "Frisch's Sells Hotel in Norwood," Cincinnati Post, May 15, 2001, p. 6B.
------, "Frisch's Strategy Pays Off in Profits," Cincinnati Post, July 16, 2001, p. 7B.
------, "Frisch's Will Sell Hotels, End Drain," Cincinnati Post, March 16, 2000, p. 6B.
"Ex-XU Dean Takes Reins at Frisch's," Cincinnati Post, March 17, 2005, p. 8B.
Fasig, Lisa Biank, "Big Boy Still Golden at Frisch's Meeting," Business Courier of Cincinnati, October 1, 2007.
------, "Diners, Shareholders Hunger for Frisch's but Wall St. Isn't Biting," Business Courier of Cincinnati, October 6, 2003.
------, "Frisch's Chairman Dies at Age 79," Business Courier of Cincinnati, February 4, 2005.
------, "Frisch's Serves Up Something Hot: Stock Price," Business Courier of Cincinnati, May 4, 2007.
------, "Frisch's Still Has Taste for Buffet Chain," Business Courier of Cincinnati, August 26, 2005.
Fisher, Mark, "Frisch's Big Boy; Frisch's Restaurant Gives Glimpse into Dayton's Delicious History," Dayton Daily News, June 29, 2007, Go! Sec., p. 27.
Frazier, Mya, "Frisch's Buys Critics' Stock," Business Courier of Cincinnati, January 17, 2000.
"Frisch's Buys Liggett Trademarks," Dayton Business Journal, January 9, 2001.
"Frisch's Restaurants, Inc.," Cincinnati Business Courier, September 7, 1987, p. 25.
Hamstra, Mark, "Frisch's Eyes Expansion, Inks Golden Corral Pact," Nation's Restaurant News, January 19, 1998, p.1.
------, "Investors Launch Proxy Fight at Frisch's Family," Nation's Restaurant News, September 30, 1996, p. 3.
Hayes, Jack, "Frisch's New Deal for Golden Corral Franchise Growth Sparks Race with Metro Corral Group," Nation's Restaurant News, August 9, 2004, pp. 4, 50.
------, "Profits Plus Reds' Stake Sale Puts Frisch's on 'Golden' Trail," Nation's Restaurant News, February 1, 1999, p. 11.
Lawley, Lauren, "Frisch's Hopes Riding High with Golden Corral," Business Courier Serving Cincinnati-Northern Kentucky, December 18, 1998, p. 30.
Littman, Margaret, "What's Your Fantasy, Big Boy?" Chain Leader, November 2000, pp. 30-31.
May, Lucy, "More Employees Having to Earn Pay Hikes Through Performance, Not Base Increases," Business Courier Serving Cincinnati-Northern Kentucky, November 24, 2006, pp. 1f.
Milstead, David, "Big Boy Faces Big Challenges," Cincinnati Business Courier, April 17, 1995, p. 1.
Monk, Dan, "Frisch's Banking Smaller Is Better with Big Boys," Dayton Business Journal, November 27, 2000.
------, "Frisch's: Some Assets for Sale," Cincinnati Business Courier, August 19, 1996, p.1.
Rosencrans, Joyce, "Old Recipe Kept Fresh at Frisch's," Cincinnati Post, November 22, 2006, p. B3.
Schaber, Greg, "Roy Rogers Restaurant Chain Ready to Ride Off into Sunset," Cincinnati Business Courier, August 5, 1991, p. 4.
Schor, Adam, "Frisch's New Strategy: Add New Stores, Franchise," Cincinnati Business Courier, September 7, 1987, p. 1.
Zuber, Amy, "Frisch's Seeks to Nix 2," Nation's Restaurant News, September 7, 1998, p. 1.
— Ana Garcia Schulz; Updated by Frederick C. Ingram
