For more than seven decades American roads were dotted with the familiar orange roof and blue cupola of the ubiquitous Howard Johnson’s restaurants and Motor Lodges. The company’s founder and namesake was a grade school dropout who became a franchising pioneer and introduced the restaurant industry to centralized purchasing. Johnson repeated his formula with motor lodges, creating one of the world’s largest hotel chains.
In 1965 Howard Johnson’s sales exceeded the combined sales of McDonald’s, Burger King, and Kentucky Fried Chicken. By 1979 the “Host of the Highways” had become the largest hospitality company in America, with more than 1,000 restaurants and 500 motor lodges. But the company saw a decline of its rule over the roadways in the 1970s after a series of events destroyed the company’s earnings.
Over the last decade and under new ownership “HoJo” hotels have thrived, but the final dozen restaurants were left to rot. Today all have closed, except one.
cover photo courtesy Ben Schumin
Howard D. Johnson
Howard Deering Johnson was born in Boston, Massachusetts in 1897. He dropped out of grade school and went to work for his father’s cigar company before he was a teenager. Howard spent fifteen years working for the company, eventually becoming its top salesperson.
When his father died, the 27 year-old was left to run the cigar company. He also inherited its enormous debt, which collapsed the business shortly thereafter in 1924.
Johnson’s next opportunity would come by chance the following year. In 1925 Howard was working at a small shop in Quincy, Massachusetts, when the owner died and the surviving heirs allowed him to purchase the store. With a $2,000 loan Howard opened the “Howard D. Johnson Co. Patent Medicines and Toilet Articles” shop. He noticed the marble soda fountain was the busiest part of his drugstore, which sprouted an idea and led to a re-brand.
Howard Johnson first became locally famous for his ice cream. He claimed the secret recipe came from his mother, while other accounts suggests it came from William G. Hallbauer, a retiring German immigrant who had been selling ice cream from his horse and cart in the area at the turn of the century. The ‘secret’ was to double the amount of normal butterfat, and to use only natural ingredients. This created a premium ice cream that was an immediate sensation and earned Howard $60,000 in revenue from his first beachfront stand.
Additional flavors were added – 28 in all – as well as “frankforts,” a premium hot dog sandwich developed by Howard that was grilled in butter. Johnson clipped the frankfurters at both ends and notched them lengthwise. He used only the highest quality meats grilled in a creamy butter, and for buns he used lightly buttered and toasted fresh rolls.
By 1928 Howard Johnson was grossing $240,000 from his store and small network of beachfront ice cream and frankfort vendors.
[ Howard Johnson’s original 28 ice cream flavors: Banana, Black Raspberry, Burgundy Cherry, Butter Pecan, Buttercrunch, Butterscotch, Caramel Fudge, Chocolate, Chocolate Chip, Coconut, Coffee, Frozen Pudding, Fruit Salad, Fudge Ripple, Lemon Stick, Macaroon, Maple Walnut, Mocha Chip, Orange-Pineapple, Peach, Peanut Brittle, Pecan Brittle, Peppermint Stick, Pineapple, Pistachio, Strawberry, Strawberry Ripple, Vanilla. ]
Howard Johnson’s Restaurants
The early success of his beachfront stands earned Howard Johnson a $50,000 loan in 1929 from local bankers to open his first full restaurant, which he named Howard Johnson’s. Early menu items included baked beans, chicken pot pies, frankforts, ice cream, soft drinks, and his most famous offering, fried clam strips. Johnson acquired the clam strips via an exclusive distribution agreement with the Soffron Brothers Clam Company in Ipswitch, Massachusetts.
Early losses at Howard’s first restaurant reached $100,000 before he figured out how to curtail waste and properly buy for the kitchen. He caught a break in 1929 when the mayor of Boston prohibited the planned theater production of Eugene O’Neill’s Strange Interlude in the city.
The theater guild relocated the production to nearby Quincy, just blocks from Howard Johnson’s restaurant. During the show’s dinner break, crowds of influential Bostonians made their way to the restaurant. The food was as much a success as the production; word spread quickly of a great new restaurant ten miles south of Boston.
Johnson wanted to open additional restaurants but the stock market crash in October of 1929 and ensuing Great Depression prevented him from borrowing money. It was this financial crisis which led Howard to the concept of franchising his idea via exclusive distribution agreements.
Howard’s system of having the licensees bear startup cost rather than the chain – and requiring licensees to purchase food and supplies directly from Johnson’s distribution network – was a relatively new idea and one that would prove to be a tremendous financial success for nearly half a century.
Howard Johnson & Franchising, Turnpikes
In 1932 Howard sold his first franchise to an acquaintance in Orleans, Massachusetts. The Orleans location was also a hit, which led to additional franchising as the newly popular “Howard Johnson” name gained traction across New England.
By 1935 there were 25 roadside restaurants. There were 41 by the end of 1936, and that number swelled to 107 restaurants by 1939 when the company’s gross revenues eclipsed $10.5 million.
[ Howard Johnson’s was not the first food company to franchise – that achievement goes to Harvey House, a fixture in railroad terminals in the late 1800s. There were also the Horn & Hardart Automats as early as the 1880s, and A&W Root Beer who sold their first franchise to J. Willard Marriott in 1925 when he founded Hot Shoppes. However no one before Howard Johnson’s had combined the standardization, strict recipe guidance and exclusive food distribution network. ]
For the 1940 World’s Fair the company built America’s largest roadside restaurant in Queens, New York. The thousand-seat restaurant featured luxurious touches such as crystal chandeliers, elaborate murals, and a grand staircase.
The Howard Johnson’s in Queens was once the largest roadside restaurant in the United States
One of Johnson’s smart early moves was securing exclusive hospitality contracts along state turnpikes. He realized the turnpike offered a relatively captive audience of long-commute drivers who would need a rest but were reluctant to leave the highway. When some of the early toll roads were paved in 1940, it was Howard Johnson who bid for and won exclusive rights – via gargantuan 40-year contracts – to run restaurant services at rest stops on the Pennsylvania, Ohio, Maine, and New Jersey Turnpikes (the Pennsylvania contract alone provided for 24 restaurants).
This was followed by a similar negotiation & agreement for the exclusive food rights on turnpikes in New York, Connecticut, Massachusetts, and Indiana. Others, such as Kansas and Illinois would follow in the late 1940s. Fortunate timing played a role as few companies of the era had the capacity to fill and staff the early large-scale hospitality requirements of the burgeoning turnpike system.
The turnpike deals from 1940 helped grow the Howard Johnson’s chain by nearly 50% in one year. Within three years, additional deals saw the number grow to more than 200 restaurants by 1942.
Howard Johnson’s: World War II and Postwar Recovery
The only thing that could derail Howard Johnson’s rise to the top was international war. After the United States entered World War II in 1941, food and gas rationing restrictions crippled the hospitality services industry. Fewer Americans traveled and raw materials were more scarce. Howard Johnson restaurants contracted quicker than they expanded; by 1944 all but twelve closed.
Johnson adapted his business as a food supplier for the U.S. military. His large pre-war stock of sugar and cream were valuable to the armed forces, where these supplies were strictly rationed. Johnson’s established network of commissaries offered a synergistic large-scale distribution system that could satisfy the requirements of the U.S. Government with minimal alteration. From 1942 until 1945 the Howard Johnson’s chain performed in this role, expansion plans on hold as the company served food to domestic war volunteers and Army recruits.
After the war the United States experienced a terrific economic boom sparked by the rising middle class. Returning GIs, cheap gasoline, the popularity of the car, and a new interstate highway system each played a role. Participating in this rebirth was Howard Johnson’s, which returned to adding franchises in 1945.
For the next two years the chain added fifteen restaurants per year. By 1947 Howard Johnson’s reported doing $150 million in gross business and embarked on a massive expansion of 200 new restaurants across the Southeast and Midwest.
By the end of the decade the company was the largest commercial food supplier in the United States, feeding more Americans than everyone but the U.S. Army.
In 1948 Howard sold his five-billionth ice cream cone and revealed his personal goal to reach an income of one million dollars that year. In the late 1940s the chain was westward-bound, and began expanding more aggressively into western states. The first west-coast restaurant was opened near Los Angeles in 1948.
Rufus Nims re-invents the Brand
In an effort to stay modern and cutting edge, the Howard Johnson’s company hired Florida architect Rufus Nims to develop a modern interpretation that stayed true to the restaurant’s identity. From 1948 until 1958 Nims worked to turn Howard Johnson’s into the easily recognizable “landmark for hungry Americans” or “host of the highways” for which it would become known.
A large part of this identity was the orange roof, a longtime staple of Howard Johnson’s and trademark feature that was selected after it was scientifically determined as the “best shade for attracting a motorist’s attention.”
“I think the orange roof saves us a lot of advertising bills. The orange roof is symbolic. People know exactly what they can count on when they see it.”
– Howard B. Johnson
Previous restaurants had a distinct New England estate design, white buildings replete with traditional clapboard windows and classic dormers in the roof. Many of the structures were massive in stature, essentially oversized roadside cathedrals capable of seating hundreds. The enormous cost to operate was one of the reasons many of Johnson’s restaurants closed leading up to the war. It was Rufus Nims’ job to not only solve this problem of economy, but to also create an even stronger identity with more robust brand recognition.
Nims’ most well-known contribution was the ‘Series 77’ (aka “Nims-type”) building. The Series 77 restaurants were smaller, single-story modern rectangular structures surrounded by acres of large-pane glass. This was capped by a sloping orange roof topped with the trademark cupola and weathervane.
Inside, rustic traditional seating was replaced with minimalist benches. Partitions were formed from repeating circles, and Formica tabletops replaced old wood tables. New refrigerated glass cases displayed various treats.
Despite his success with Howard Johnson’s, Rufus Nims’ involvement with the company ended abruptly in 1958. In a 1984 letter Nims revealed a rigid relationship with Howard Johnson’s. “We were not allowed to make any improvements to speak of as we went along — so [we] quit doing the Co.’s work altogether in 1958.”
The Howard Johnson Way
Howard Deering Johnson’s success was due in part to his relentless drive in business, which during his working years he claimed was his only real hobby in life. “I think that [building the business] was my only form of recreation.”
“I never played golf. I never played tennis. I never did anything after I left school. I ate, slept, and thought of nothing but the business.”
– Howard D. Johnson
Howard established a good brand on his values of quality and consistency. His early guiding philosophy was “quality sells,” and he was often caught repeating this mantra with “there’s no substitute for quality .” To that end Johnson used only top quality meats and all-natural ingredients, spending an industry-high 48% of his gross revenue on food supplies. (For comparison, present-day chain Chipotle, who allocates more than the industry average to purchasing its fresh food, spends 35%).
Johnson held lofty standards, something his employees understood well as he routinely urged them to put forth greater effort. He would travel to various franchise locations unannounced and perform surprise inspections; from hand prints on the door to the toilet paper stock, nothing was missed. Infractions incurred the wrath of man who had no time for failure, and he was not afraid to loudly call out violations. The elder Johnson was a Steve Jobs-type of leader – perhaps not the most diplomatic of stewards, but one possessing the kind of drive necessary to lead an industry.
Johnson smartly delegated important tasks to professionals. The restaurants and motels were drafted by a staff of 27 architects. Meals were designed by top chefs Johnson plucked from New York City’s finest French restaurants. Christian Dior was hired to design the uniforms.
Site selection was a crucial component of success. One of Johnson’s epigrams was “location, location, location.” Specialized site engineers researched and found ideal build locations. Operations were tighter than a drum; restaurant managers were required to attend specialized six-month training and waitresses were required to attend a four-day course before they were allowed to serve customers.
In uniform, managers were indistinguishable from restaurant workers. Constant pressure to cut labor costs resulted in working managers who could often be found dishing up ice cream or cashing out guests at the register. It was effective, but by all accounts it was grueling and under-appreciated work, and not exactly a favorite internship program of students at business colleges and hotel schools.
The “Howard Johnson Bible” was a robust guide of quality standards authored by Johnson himself. The book included full direction on how to operate the business, how to handle customers courteously, and how the staff should dress (“Howard Johnson Waitresses – Your Appearance from Head to Toe“).
Consistency and Commissaries
Johnson lured the family business by being one of the first to introduce a children’s menu and free desserts for Kid’s Club members on their birthdays.
He realized the value customers placed on the consistency and quality of meals, and dictated exactly how each dish was to be prepared and presented to the customer. His success was driven by the fact his exacting standards never changed. The proof was in the result; a customer could order fried clam strips and a Frankfort in Florida or Maine and it would look and taste the same.
To achieve such consistency led to another revolutionary move: Establishing commissaries and a centralized distribution system. Essentially the Howard Johnson Company acquired and stored all of the ingredients and materials in large warehouses around the country, then sold its inventory to the hundreds of franchises. More than 700 items – everything from the toothpicks to the flour – was sourced through corporate and delivered from one of the company’s nationwide network of commissaries. This ensured rock-solid food consistency and importantly, guaranteed additional sales for Howard Johnson’s beyond the franchise fees.
By 1953 the company had perfected large-scale commissary freezing, which freed restaurants to focus on the food preparation. This meant greater consistency and no complex ingredient lists or need for a formal chef, which in turn saved restaurant operators significant money.
Howard Johnson Motor Lodges
During the 1950s the number of Howard Johnson’s restaurants tripled. Independent local motel owners had recognized the advantage of operating next to a Howard Johnson restaurant, and many established new hotels next door. This fact was not lost on Johnson, who steered the company to also become the “Landmark for Sleepy Americans.”
Prior to major hotel chains establishing a nationwide network, vehicular travel across America offered drivers hit-or-miss lodging propositions. Johnson’s idea was to do for motels what he did for restaurants: Offer a consistent quality product that would look and feel the same in one state and another. He knew the value in traveler’s confidence; people who knew what to expect along the way might be encouraged to travel, which could lead to more lodge and restaurant visits.
Site specialists were hired to identify top real estate locations to build new motor lodges. These specialists determined, through tests of optical and mental reflexes, it would take passing motorists less than 20 seconds to identify the Nims-style Howard Johnson motor lodge and restaurant. As the company itself described, “the proposed site must enhance the facility, lend itself to attractive landscaping, provide sufficient parking and meet particular local needs.”
In 1954 Howard Johnson’s opened its first ‘Motor Lodge’ in Savannah, Georgia. The design was penned by Karl Koch and Rufus Nims, and like the restaurant it was designed with instant brand recognition in mind. Its dramatic A-frame gatehouse and orange roof fulfilled this role wonderfully as iconic roadside billboards across the nation. Americans associated the ubiquitous orange roof with good times with family and vacations.
Howard Johnson Motor Lodges featured fresh linens daily and boasted modern facilities with large guest rooms that offered air conditioning, televisions, and full bathrooms with tub and shower, at the time considered luxuries outside of the city.
Howard Johnson’s significant contribution to the industry was the improvement and standardization of the lodging product. Ironically his chain of motor lodges was an important part of the early success of the Interstate System, which had federal legislation written specifically to prohibit service plazas on the new highways. Johnson’s workaround was to purchase land near the exit ramps, just outside the exclusion zone.
Successful but Turbulent 1950s, early 60s
In 1955 Howard Johnson added frozen packaged foods to the company’s retail portfolio, selling some of the most popular Howard Johnson’s dishes in grocery outlets across the country. The following year, Howard Johnson’s opened its 526th restaurant.
Segregation in a Dover, Delaware Howard Johnson’s restaurant sparked an international crisis in 1957 when it refused service to the finance minister of Ghana. The event made national news and prompted a public apology from President Dwight D. Eisenhower.
Fallout from the segregation faux-pas included protests and sit-ins at various Howard Johnson’s across the country. Behind several demonstrations of the movement was the Congress of Racial Equality, or CORE.
[ Related: While a student at the University of Chicago in 1962, Bernie Sanders was an organizer of CORE events. ]
The motor lodges suffered less negative publicity and enjoyed substantial growth. Within five years of opening its first Motor Lodge the company had expanded to 71 lodges. The chain called itself “Landmark for Hungry Americans” – its fans called Howard Johnson’s the “Host of the Highways.”
Howard B. Johnson Era
Big news for the company would come in 1957 when Howard D. Johnson hired his son, Howard B. Johnson. When he arrived at the company, the 24 year-old Howard Brennan “Bud” Johnson was fresh out of Harvard Business School.
Bud was young but his resume was fairly accomplished for a person his age; in addition to his time at Harvard Business he graduated from Yale and spent two years in the Navy. He had known since the age of five he wanted to run the company, and he attended his first board of directors meeting when he was twelve years old.
Bud spent two years working in lower executive roles within the company, effectively learning the ropes. The transition was slow and measured; in 1959 Howard B. Johnson was named as president and chief operating officer. The elder Howard remained chief executive until 1964 and chairman until 1968, after which Howard Brennan assumed the respective roles. Howard D. Johnson retired in 1968 and died four years later, in June of 1972 at the age of 75.
Howard Brennan Johnson inherited a turnkey 34 year-old conglomerate worth $80 million. The company had a solid plan in place and a multi-year pipeline of new potential properties as the Interstate System construction continued into the 1960s. At its peak the company was adding a new restaurant every nine days.
Through several moves the younger Johnson modernized the company. In 1960 he established executive offices in New York City’s Rockefeller Center. In 1961 he guided the company through a successful initial public stock offering (IPO); at the time the company controlled 605 restaurants (265 company owned, 340 franchised) and 88 motor lodges across 32 states.
The company also owned 17 cold storage, manufacturing, and processing plants in 11 states, as well as ten Red Coach Grill Restaurants, an upscale specialized chain that Howard D. founded in 1938. The successful stock offering ushered in a two-decade era of growth that eventually saw the company increase its gross revenue by more than 500%.
In a 1962 interview Bud revealed the difficult schedule of his typical day. “In 20 minutes,” he said, “I’m presented with decisions about the architecture of new motels, the composition of a menu, the real estate values in Long Island and the ingredients of a can of soup.”
In 1963 and fresh on the heels of the capital infusion from the IPO, the number of company-owned Howard Johnson’s restaurants exceeded the number of franchised units for the first time. Bud explained the positioning toward more company-owned restaurants:
“It’s simple. Last year our own 279 stores and restaurants had sales of nearly $79 million, on which we got both the wholesale and the retail profit. Naturally, we’d like more of these double-barreled profits.”
Howard B. Johnson appreciated customer feedback. On average, twenty letters per week would arrive on his desk – half favorable, half unfavorable. Bud would respond to them all. “I am amazed,” he would say, “at the willingness of the American customer, who is not on the payroll, to take a personal interest in American corporations. It’s good. It keeps us questioning. It is a free favor from the American public.”
On occasion Bud sounded like his father, such as when he’s asked about the importance of a new restaurant’s location. He switches on. “Location? It is the whole ball game. In this business there are three rules to remember: Location, location, and location. Location will make you if you do a good selling job, but a good location will almost carry you if you do a poor job.”
HoJo Chefs & Flash-Frozen Meals
The senior Johnson continued to observe his son’s running of the company until 1964, but spent most of his remaining time being chauffeured around in his black Cadillac performing surprise restaurant inspections. One of Johnson Sr.’s final contributions was the hiring of New York chefs Pierre Franey and Jacques Pépin in 1960 to oversee food development at the company’s main commissary.
Franey and Pépin were plucked from New York City’s ritzy Le Pavillion to help build the Howard Johnson’s menu. As Pépin described in a later memoir, “I had been in America only eight months when I started working at Howard Johnson’s. I moved there from Le Pavillon, a temple of French haute cuisine, where I had been working since my arrival in the United States in 1959.”
Franey and Pépin were instrumental in developing the Howard Johnson’s flash frozen signature dishes that could be delivered across the country and re-heated, which helped guarantee a consistent product. Despite being tasked with constructing frozen dishes, the chefs treated the role seriously and genuinely improved the quality of meals.
Newspaper ads for Howard Johnson’s frozen entrees, circa 1968-70
The men were given carte blanche to experiment, and as Pépin later described, “[we would] improve its taste by cutting down on margarine and replacing it with butter, using fresh onion instead of dehydrated onion, real potatoes instead of frozen ones. We made fresh stock in a quantity requiring 3,000 pounds of veal bones for each batch, and we daily boned 1,000 turkeys and made 10 tons of frankfurters.” Pépin worked for the company in its Queens Village commissary until 1970.
A 1960 news article boasted Howard Johnson’s achievements in food: “Howard Johnson’s food now appears on tables everywhere. It is sold in frozen counters in supermarkets all over the country, every package constituting yet another bit of evidence that the American public likes to know exactly what it is buying.”
1960s ad for Howard Johnson’s frozen foods
[ “Howard Johnson” or “Howard Johnson’s”? The restaurants and early motor lodges wore the apostrophe while the later hotels (post-split by Marriott/PMI, HFS, HJI) used a revamped logo without the apostrophe ‘s’. FAI brought back the apostrophe for its restaurants in the 1980s. ]
Rapid Reservation Service
The Howard Johnson’s Rapid Reservation Service (RRS) was a fast, direct method of making instant long distance room reservations from one location to another at no cost to the customer. It was developed in the 1960s and was a completely new idea at the time, a combination of automatic dialing and Direct Distance Dialing.
How it worked: A special “Rapid Reservations” telephone was located in the gatehouse of every motor lodge. The desk clerk turned a dial and pressed a bar to connect to any of the hundreds of other Howard Johnson Motor Lodges in the country. Calls were automatically flashed over long distance lines to the “Rapid Reservations” telephone in the gatehouse of the receiving motor lodge. Once connected guests could immediately discuss accommodations, prices, arrival times, and handle special arrangements in advance of arrival.
Shortly after its implementation, the RRS became the first in the nation to take advantage of Bell System’s then-new “inward watt” service, developed in 1967. This capability required a sizeable infrastructure build out of six staffed “nerve centers” across the country (Albuquerque, NYC, Wash. D.C., Atlanta, Miami, and Chicago) to handle capacity.
On the surface Rapid Reservations was a technological innovation, but it was also a business innovation. By offering customers an easy way to “call ahead” to the next motor lodge, Howard Johnson’s encouraged additional stays at other Howard Johnson Motor Lodges. This innovation brought repeat business through convenience, one less worry for the weary traveler.
HoJo’s Decade of Dominance
With help from its growing motor lodge business, Howard Johnson’s quadrupled its growth in the 1960s. Both annual sales and earnings per share increased every year between 1959 and 1966. Reaping the rewards of their success, the Johnson family cashed out between 1961 and 1967, selling nearly two million shares of stock for close to one billion dollars.
In 1964 the company added 42 new motor lodges. The following year the company added another 55, for a total of 265 lodges to add to its still-growing portfolio of 770 restaurants. In 1965 the company advertised the opening of “the first motel ever constructed on Texas’ only turnpike,” and boasted annual sales that eclipsed that of McDonald’s, Burger King, and Kentucky Fried Chicken combined. In 1965 Howard Johnson’s fed Americans 350 million meals and played host to 8 million travelers.
When someone pointed out to Howard that the company was serving 30 million soft drinks per year and paying someone else to produce them, Johnson decided to make his own cola. In 1966 the company released “HoJo Cola” in its restaurants and select supermarkets across the country. The beverage was not successful and quietly disappeared from shelves.
An April 1966 news article offered an innocent glimpse into the relationship between Howard Brennan Johnson and his son, Howard the third:
“Howard Brennan will be a very disappointed man if [his 7 year-old son] Howard Bates doesn’t become president of the Howard Johnson Company by the year 2000. By that time Bud wants a $1 billion company to hand over to his son. Since sales are expected to reach $200 million in 1966, Johnson says “we’re a fifth of the way home.”
In April 1967 an agreement was signed with Texaco that permitted the oil company’s credit card holders to charge their meals and lodging when eating and staying at Howard Johnson’s motor lodges. The result improved gross revenues, which for 1967 were reported as $200 million.
HoJo Junction & Ground Round
Feeling the heat from burgeoning fast food competitors such as McDonald’s and Burger King, Howard Johnson’s introduced a new HoJo Junction fast food concept in June of 1967.
These smaller Howard Johnson’s still had the orange roof, but they eschewed a full menu and waitress service for a select menu of re-heated items sold in disposable containers that customers served themselves. The HoJo Junction was designed to be a less formal atmosphere, and it would have also appealed to the price-conscience as no item on the menu sold for greater than 99 cents.
Given the threat of competition the idea was sound. HoJo hoped to build 50 of the “Junctions,” but the experiment was ultimately a failure. Only three were built, and within five years the HoJo Junctions were converted into regular Howard Johnson’s restaurants.
More successful was Howard Johnson’s 1969 Ground Round concept, a family casual dining restaurant known for its festive atmosphere. The initial incarnation featured a clown mascot, showed movies on a big screen and allowed customers to throw peanut shells on the floor.
The chain was later severed from Howard Johnson’s Company after a 1985 takeover. Ground Round eventually went public in 1991 and then was purchased by private equity in 1997. The parent company filed for bankruptcy in 2004, after which the franchised store owners came together to form an LLC and purchase the rights.
Today Ground Round still exists, although it is no longer associated with Howard Johnson’s and now hosts customers in a more upscale format (no more clowns or peanuts). Somewhat interesting is Ground Round’s current “About Us” page, which as of 2017 makes no mention of its previous theme or its Howard Johnson’s roots.
HoJo Headwinds in the 1970s
The Johnsons had built an impressive empire, by the mid-1970s the company had 1,000 restaurants and 500 motor lodges. Annual company revenues eclipsed $400 million and the company appeared to be on track to hit Bud’s goal for the year 2000. But cracks had been forming in the foundation of the Howard Johnson way, and by the 1970s the perfect storm broke as the company faced what seemed like every conceivable obstacle. This led to a series of cost-cutting measures which only further eroded the brand.
The 1970s kicked off with a series of national negative publicity events for the Howard Johnson Company. In 1971 two irate guests at a downtown New Orleans HoJo set the hotel on fire, killing six guests. Two years later the “Howard Johnson sniper” went on a New Orleans killing spree, killing seven people before ending up on the roof of the same Howard Johnson Hotel and being shelled by thousands of rounds from a Marine helicopter. Then in 1974 a singer-actress was raped at knifepoint in a N.Y. Howard Johnson Lodge; she sued the chain and won a $2.5 million settlement – at the time one of the largest settlements of its kind, and one that reformed hotel security.
One chink in the Howard Johnson armor was its dependence upon cars and the highway for 85% of its revenue. This was dangerously exposed after the oil crisis of 1973. Inflation spiked to 11% while gas prices quadrupled in 1974, which resulted in fewer Americans traveling and dining out.
Meanwhile fast food chains like McDonald’s were devouring HoJo’s market share with inexpensive menus and innovations such as the Kid’s Meal, a smash hit with Americans and something for which Howard Johnson’s had no immediate answer. Chairman Johnson remarked “We’ve all got to figure out where the children are going to be moving and what they want in terms of food and lodging. The younger generation is eating more snack items and eating out of the house more.”
The majority of the company’s forty-year monopolies over the toll roads were set to expire in 1979 and 1980, removing a guaranteed and robust revenue stream the company had reliably enjoyed for four decades.
In 1978 one Turnpike Commission Chairman acknowledged there had been numerous complaints lodged against Howard Johnson’s and that the company “could have improved its services to motorists.” He also blamed the firm’s “lack of competition for its attitude toward improvements.”
Howard Johnson’s contract with the Kansas Turnpike Authority was not set to expire until 1988, however in early 1981 the commission attempted to have it prematurely terminated due to HoJo’s “failure to live up to contract agreements.”
Interior of a Howard Johnson’s Hotel, 1970s
Another threat to the company was an impending 1979 lawsuit brought forth by the Federal Trade Commission on behalf of Howard Johnson franchisees. The suit was due to the company’s compulsion that franchisees buy 170 different basic food products from the company, alleging the company required franchises to purchase non-specialized items (such as eggs, milk, sugar, salt, ketchup, mustard, etc.) at inflated prices. This ‘double-barrel’ method of selling products to the franchisees was another Howard Johnson innovation, but prior to 1979 it was without regulation. The lawsuit added oversight, controls, and changed the landscape of franchising.
Perhaps most damaging was the graceless aging of its restaurants. Franchise owners were often not willing to spend the money to update their hotels and restaurants. This resulted in an inconsistent product from one Howard Johnson to the next, a huge derailment for the chain once known for its impeccable uniformity in product. Newer hotels by Marriott, Holiday Inn, and Ramada were doing to Howard Johnson what Howard Johnson once did to roadside motels.
By the end of the 1970s the brand had become synonymous with bland. People joked that Howard Johnson’s “ice cream came in 28 flavors and its food in one,” and that eating at HoJo felt like “fast food served slow.”
Howard Johnson was getting hammered in the restaurants, which throughout the 1970s was catering to a decaying market. In 1977 the restaurants accounted for 78% of the company’s sales but only 57% of the pre-tax profit.
Performing better were the Motor Lodges, which represented just 16% of HoJo’s sales but accounted for around 43% of the profit. Mr. Johnson commented, “We all want the dinner business, but you have those horrible margins involved in putting out the plate. So we have to sell a lot of liquor, but in a coffee shop you can’t sell more than seven or eight percent liquor.”
One solution to the liquor ceiling was to reorganize the restaurants into two divisions: The Orange Roofs (which included traditional Howard Johnson’s restaurants as well as Turnpike and Truck Stop stores), and the more upscale Specialty Restaurant Division (which included Ground Round, Red Coach Grills, and Lucky Lil’s). The reclassification allowed the specialty restaurants to serve more liquor.
“We’re trying all sorts of new things,” Howard B. Johnson announced as he attempted to modernize the brand. He removed the antiquated soda fountains and replaced them with period-popular cocktail lounges, color schemes changed from the decades-old turquoise and white to a new “environmental” theme with popular 1970s earth tones such as brown and taupe. He launched concepts such as HoJos Campgrounds, 3 Penny Inns, Deli Baker Ice Cream Maker, and Chatt’s Restaurants, however these failed and only furthered the company’s demise.
Howard Brennan retired the Simple Simon & Pieman logo and the “bottomless cup of coffee” – a one-time Howard Johnson’s staple and victim of skyrocketing coffee prices. The restaurants began serving cheaper food but charged more for it. HoJos were being run with fewer employees which resulted in worse service.
One way Howard tried to fill the earnings gap was by instituting around-the-clock service in more than 80% of the company restaurants, which captured additional revenue from the after-hours crowd. “By keeping Howard Johnson restaurants open 24 hours a day, the company will probably add $35 million to annual revenues without much of a capital investment,” Johnson said. “I think it’s a great way to make money. There is an awful lot of volume between 11 p.m. and 7 a.m…. We’ve neglected it for many years. Now we’ve decided to go out and capture some of that volume like our competitors have been doing.”
In 1978 Johnson had failed to grow or make a serious acquisition, and instead was hoarding company cash. He explained his actions: “My expansion plans got stalled in the 1974 oil embargo. I overreacted. I stopped all expansion, and once you stop, you know how hard it is to get the monster going again.”
Despite facing countless obstacles and trying nearly a dozen failed spin-offs and sub-brands, Howard Brennan Johnson led the company from $200 million to $650 million in revenues, grew the number of restaurants by 25%, and grew the number of motels by more than 40%.
HoJo under Imperial Group PLC (1980-1985)
In September of 1979 Howard Johnson’s accepted terms in a surprise bid from Imperial Group P.L.C. of London (later re-named “Imperial Brands” in 2016). The English company had interests in hotels, pubs, restaurants, canned and prepared foods, tobacco, wine, beer, paper, and packaging products, and was looking to gain American market share by purchasing a large, turnkey operation.
Imperial offered a bid of $28 per share (or $630 million) for Howard Johnson’s restaurant and hotel chain, which according to Imperial’s chairman was selected “as an avenue for overseas expansion after careful study and consideration.” The deal included 1,070 restaurants (75% company-owned/25% franchised) and 520 motor lodges (75% franchised/25% company-owned).
Howard B. Johnson was effusive in his praise of the deal, calling it “an opportunity which was in the best interests of the Howard Johnson shareholders” and adding “I enthusiastically support this proposal.” Analysts believed the deal was “probably connected” to the impending gasoline shortage of 1979-80, the second such event in ten years and potentially catastrophic to HoJo earnings over the next two years. As it turned out, they were right.
Initially the company was allowed to continue operating autonomously, and Bud remained involved alongside Imperial executives in running the hospitality chain. Howard Brennan Johnson’s exit came in November of 1981, when the 49 year-old cashed out his remaining $35.2 million in shares and resigned as Howard Johnson’s chairman after serving the company for 24 years.
Johnson was succeeded by G. Michael Hostage, a fifteen-year veteran of Marriott recruited by Imperial to take over the post in 1981. Initially, he was optimistic. “I’ve known Howard for a number of years, since I obviously watched the company as a competitor. This is a pretty good business.”
The company’s overall revenues had grown modestly over the past few years, but Howard Johnson’s restaurants had a declining balance sheet. After the lawsuits, expiring toll road contracts and observing of an oil crisis-reduced travel season, HoJo’s net earnings in 1980 had been halved to $14.7 million.
When Hostage dug deeper he recognized the business imbalance. “I looked at the profile of earnings and considered the company’s assets, and I saw that we were actually in the hotel business, notwithstanding the perception of the public.” Once he came to this realization, the restaurants effectively took a back seat to the hotels.
Ironically, to combat losing HoJo’s toll road contracts Imperial entered into franchise agreements with Burger King, converting a group of old Howard Johnson’s into the newer fast food restaurants. On the hotel side Mr. Hostage initiated corporate discounts, a new reservations system, and he raised the advertising budget to attract business travelers. He established firm ultimatums to ensure hotel upkeep: Licensees had the choice of accepting low-interest loans to refurbish their properties or risk losing their franchises.
While positive for the hotels, none of the changes could overcome the fuel crisis nor inflationary headwinds; in 1984 Howard Johnson’s profits tumbled another 40%. After four years of unsuccessfully trying to turn Howard Johnson’s around, Imperial decided to sell. An Imperial spokesperson said the company could have solved Howard Johnson’s problems over time, but it would have “required more time and capital than the company was willing to invest.”
The Imperial Group’s ownership period was not a successful one – from 1980 through 1985 Howard Johnson’s reported lower earnings each year – but it was the last time Howard Johnson’s restaurants and motels existed as a single-entity chain, and some feel the proper end of the Howard Johnson’s era.
Fractured Under Marriott, Prime Motor Inns
In September of 1985 the new buyers for the 60 year-old Howard Johnson Company were revealed as the Marriott Corporation and Prime Motor Inns. In a complex transaction, Marriott outright purchased Howard Johnson Company (sans Ground Round) from Imperial for $314 million dollars. Marriott then sold 125 of the company-owned Howard Johnson Motor Lodges (and the franchise royalty rights to 375 franchised motor lodges and 199 franchised restaurants) to Prime Motor Inns (PMI) for $235 million ($97 million cash + assumption of HoJo’s outstanding $138 million in debt) in a subsequent transaction that closed in November. For its contribution, PMI also acquired all rights to the Howard Johnson trademarks and tradenames.
Marriott was less interested in the Howard Johnson Motor Lodges as it was in the real estate of the restaurant properties, specifically for conversion to Marriott’s Big Boy and Roy Rogers restaurants. The company announced it would gradually convert the HoJo properties to look like its own chain and would slowly stop using the name. Marriott spent much of 1985 converting or closing HoJo restaurants and hotels not sold to PMI, sharply reducing the number of Howard Johnson establishments; within two years only the franchised locations remained untouched.
The biggest winners in the deal were the Marriott shareholders, who acquired the Howard Johnson Company’s most valuable assets for a net cost of $65 million.
In 1985 Prime Motor Inns was a publicly traded hotel operator with a portfolio of 67 hotels stretching from Connecticut to Florida. Before the HoJo acquisition PMI primarily operated Ramada Inns, Holiday Inns, and Sheraton Hotels. The Howard Johnson purchase tripled the number of PMI properties and instantly created one of the country’s largest lodging franchisers.
The splitting of Howard Johnson by Marriott and PMI ultimately caused irreparable franchise attrition. By the end of 1987 only 90 of the Marriott-owned Howard Johnson’s restaurants remained, and by mid-1991 only 50 Marriott HoJos were still standing. Prime was similarly looking to wash its hands of the franchised restaurants, which the firm believed were more liabilities than assets.
Michael Hostage, steward of Howard Johnson Company for the last five years under Imperial Group, was recruited to continue his post under Prime Motor Inns.
HoJo Restaurants under Franchise Associates Inc. (1986-2005)
Marriott’s plan to eliminate and convert all of the Howard Johnson’s restaurants was met with resistance from many of the franchisees, who had much invested in the Howard Johnson brand and (among other things) did not want to incur the expense of a new brand remodel. The owners banded together and formed Franchise Associates Incorporated (FAI) on May 22nd, 1986.
FAI threatened a multi-million dollar suit against Marriott and Prime Motor Inns for essentially allowing the brand to deteriorate. FAI began to negotiate with Prime for the rights to the restaurant name. Despite the lawsuit, Prime Motor Inns was happy to accommodate. PMI’s executive vice president said ”The motels were profitable, but the restaurants were losing money… We were more anxious to get rid of [the restaurants] than they were to get them.”
After months of negotiations Marriott allowed FAI “perpetual exclusive license” to all the recipes and the Howard Johnson’s name, and to support and maintain the remaining franchised Howard Johnson’s restaurants. Initially FAI put in a decent shift, trying a prototype restaurant and unveiling new foods for the health-conscious, revealed in a new menu introduced in 1990. The company also acquired the Marriott-owned restaurants as money allowed, purchasing 19 stores in 1991. By the end of that year, FAI owned about 85 of the 110 remaining Howard Johnson’s restaurants.
According to their now defunct website, Franchise Associates Inc. developed the menu, provided training, offered quality assurance, marketing and mass purchasing, and handled public relations, new product development and operational supervision. In exchange for these services, restaurant operators paid FAI 1.5% of gross revenues.
Original Howard Johnson food products continued to be produced and sold under exclusive license. Fairfield Farm Kitchens in Brockton, Massachusetts produced most of the grocery store retail products (such as the Toastees and HoJo’s famous Mac & Cheese). The Ice Cream Club of Boynton Beach, Florida, produced Howard Johnson’s bulk restaurant ice cream while Fieldbrook Farms of Dunkirk, New York produced the retail pints and quarts.
At FAI’s first annual meeting in April of 1987, an FAI official said ”We have the concept, but it desperately needs to be modernized, internally and externally. Howard Johnson was allowed to become tired and stale. We must get rid of that plastic image… Anything can be salvageable if a great deal of time and money and effort is put in it. And Howard Johnson needs all those same things.”
The FAI official added that the company “will spend $1.4 million for restaurant services in 1987-88, compared with the $250,000 spent by the previous owner, Imperial Group PLC, in the four years it owned the chain… Howard Johnson restaurants are not out of style, but they have suffered from lack of direction for nearly a decade.” In a nostalgic move the company brought back Simple Simon & the Pieman, retired since the 1970s.
FAI was temporarily successful in staying the Howard Johnson’s execution, but it did not have the resources to expand locations or revamp the brand. In 1991 FAI owned and operated about two-thirds of the 110 remaining Howard Johnson’s restaurants, but the company did seemingly little to actively promote or refresh Howard Johnson’s while the surrounding environment became increasingly competitive.
Existing locations were aging and franchisees were either unable or unwilling to remodel. There was a stale menu and a lack of vision and capital reinvestment. The number of restaurants continued to drop as the relatives of original franchisers who inherited older HoJos sold or redeveloped their sites.
Under Franchise Associates’ 20-year stewardship, the number of Howard Johnson’s restaurants decreased 92%. FAI ceased operations in early 2005 and its website was dark by November of that year. When the company’s crown jewel Times Square location closed in July of 2005, there were fewer than eight surviving Howard Johnson’s Restaurants.
[ Final Seven Howard Johnson’s Restaurants, late 2005: Bangor, ME, Waterbury, CT, Millington, MD, Bay City, MD, Asbury Park, NJ, Lake George, NY, and Lake Placid, NY ]
Prime Motor Inns Blows up
Prime Motor Inns was a Wall Street darling, once described by an analyst as “the fastest growing company in the lodging industry with the highest profit margins.” In 1984 it more than doubled its portfolio to 67 hotels when it spent $200 million to purchase American Motor Inns. Then in 1985 it spent $235 million to acquire 125 Howard Johnson Motor Lodges from Marriott.
Between 1985 and 1987 Prime invested $70 million to renovate the company-owned hotel properties while Howard Johnson’s franchisees spent an additional $250 million. After a few more acquisitions, Prime Motor Inns had become quite large (the stock grew 640% from 1982 to 1988) – however this came at the expense of extensive leverage, which came with an enormous debt load. In August of 1986 the company began selling the more valuable company-owned Howard Johnson locations in order to lighten its debt. Sold locations were typically converted to another brand or demolished.
By the end of 1987 PMI had sold 120 of its HoJo properties for $295 million, netting $60 million in the process. However as with the Marriott holdings sales, this removed the chain’s best stores from the portfolio and left PMI with the lower-performing locations.
To its shareholders Prime reported a 39% increase in earnings for the fiscal year, however this was misleading as it was primarily from selling properties in its portfolio, not franchise fees. Nevertheless, the stock continued to outperform and was one of the top three hotel stocks from July 1982 to January 1988 (the others being Marriott Corporation and Hilton Hotels).
In 1989 Prime attempted to take over Ramada Hotels, and in the process took on too much leverage. When the hotel industry started to decline at the end of the decade, the stock price dropped and a margin call from its lenders collapsed Prime in less than six months. By April 1990 Prime reported a decline in earnings per share of 98 percent. The stock tumbled from $23 per share to fifty cents.
Prime sold HoJo in May of 1990, and by September of that year filed for Chapter 11 of the Federal Bankruptcy Code.
HoJo Hotels under Blackstone, HFS, HJI (1990-1997)
In its liquidation agreement Prime Motor Inns agreed to sell 65% of its portfolio of Howard Johnson and Ramada Inns to Blackstone Capital Partners L.P. for cash and notes totaling about $170 million. Blackstone also purchased Days Inn out of bankruptcy in 1991 and named the new hotel group Hospitality Franchise Systems, Inc.
Hospitality Franchise Systems was formed in 1990 with the intent of purchasing ailing or undervalued franchise brands and the rights to the brand names. Rather than own the hotels, HFS would simply purchase licensing rights and then provide marketing, reservation, and other value-added administrative services.
Franchisees paid HFS an up-front fee – typically around $20,000 to $30,000 – and then an annual franchise fee of six to ten percent of gross receipts. The franchise owners benefitted from access to a brand name and the reservation and marketing support offered by HFS. HFS in turn received a reliable income stream while shifting the encumbrances of inventory and hard assets to the shoulders of the franchisee.
Blackstone took Hospitality Franchise Systems public in 1992 while keeping control of 65% of the shares. In 1995 the company’s name was officially shortened to “HFS, Inc.” The hotels were healthy; by the end of the year HFS was operating 523 Howard Johnson hotels throughout North America, Europe, the Middle East, and Central and South America.
HFS continued its buying spree into the mid-1990s, eventually becoming the largest hotel franchiser in the world after adding Super 8 Motels, Park Inns, and Village Lodges to its holdings. It also purchased Century 21, Coldwell Banker, and ERA Real Estate brokerages, and in 1996 added Knights Inn, Travelodge, and the Avis car rental business to their portfolio.
New HFS management was firm with franchisees. The company increased its discontinuation of struggling franchises while setting strict property upgrade guidelines that alienated many of the hotel operators. It also considered discontinuing the orange roof, as HoJo’s then-president Eric Pfeffer declared, “As we change with the times, we’ve got to show the newness.”
Hotel franchise owners banded together, and like the restaurant owners formed their own company in attempt to steer their future. In 1996 the owners formed Howard Johnson Acquisition Corporation and successfully negotiated the rights from HFS to maintain and support the franchised Howard Johnson motor lodges. Once the rights were secured, HJ Acquisition Corp. changed its name to “Howard Johnson International” (HJI) and incorporated a logo change.
HoJo Hotels under Cendant (1997-2006)
In 1997 HFS merged with Comp-U-Card International (CUC) Inc. to form a new company, Cendant, in an $11 billion deal. CUC was a telephone-based, mail-order shopping club with 30 million members. Cendant assumed control of all HFS properties, which included HFS subsidiary Howard Johnson International and its 550 Howard Johnson hotels.
Under Cendant Howard Johnson launched a new line of fewer-frills hotels in 1997. The Howard Johnson Express Inn (aka “HoJo Lite”) was geared toward business and leisure travelers looking for lower-price accommodations without full-service restaurants. HoJo Express Inns served a continental breakfast but did not have an orange roof.
With the introduction of this new line of hotels HJI’s chief executive claimed “We want to double the size of Howard Johnson in the next three years.” The expansion was worldwide; in 1998 HJI announced plans to open new hotels in eight European countries and it secured a master franchise agreement to develop hotels in China. An aggressive television advertising campaign was launched in 1999 to promote the company’s new hotels.
By the early 2000s Howard Johnson International was running four different types of hotels: The full-service Howard Johnson Hotels, the HoJo Plaza Hotels, the Howard Johnson Inns (which had restaurants, but no room service), and the limited-service HoJo Express Inns.
Meanwhile, HFS uncovered a disaster after its merger with CUC. It was discovered in 1998 that CUC had inflated its profits for years – the fraud was massive and led to investors losing $19 billion. A $2.8 billion class action settlement ensued, and Cendant (and former CUC) chairman Walter Forbes earned a 12 ½-year jail sentence. It was the largest case of accounting fraud on record until the Enron and WorldCom scandals, and the largest case of financial fraud against investors until Bernie Madoff in 2008.
Cendant survived the scandal, and in 2006 the board announced plans to split the company into four independent, publicly traded companies:
- Realogy: Century 21, Coldwell Banker, ERA, Sotheby’s Int’l, NRT, etc.,
- Travelport: Travel and ticketing systems, Orbitz, etc.,
- Wyndham Worldwide: Wyndham Hotels, Ramada, Days Inn, Super 8, Wingate Inn, Howard Johnson, Travelodge, Baymont Inn and Suites, Knights Inn, and more,
- Avis Budget Group: Avis Rent A Car, Budget Rent A Car, Budget Truck Rental, etc.
Howard Johnson International, once a part of HFS and later Cendant, followed the other Cendant hospitality properties under the Wyndham Worldwide umbrella.
Wyndham Worldwide & La Mancha Group (2006-present)
Initially Wyndham used the Howard Johnson brand as a parking spot for franchise conversions – previously independent motels that had recently been renovated and added to the Wyndham network. While generally in good repair, these hotels were not constructed as HoJos and thus lacked the distinctive architecture, orange roof, and attached restaurants.
When FAI folded in 2005 the management and franchise licensing rights for the Howard Johnson’s restaurant brand and its seven remaining locations returned to its previous owner, HFS (now Cendant), which by this time was concurrently spinning off its hospitality arm as Wyndham Worldwide. In January 2006 and just months after the restaurants fell into its lap, Wyndham sold the restaurant rights to La Mancha Group LLC.
La Mancha was an investment group run by New York banker David Kushner, who wanted to re-establish the brand but not “only to serve nostalgia.” Kushner announced intentions to save the restaurant chain and resurrect the food brand by way of re-introducing HoJo coffee, HoJo ice cream, and an expanded frozen food product line to stores. Once La Mancha Group could stabilize the food menu, the company intended to re-open new Howard Johnson restaurants across the United States.
Soon after the acquisition three more restaurants closed, leaving just four Howard Johnson’s restaurants at the beginning of 2007. That number would fall to three in January after Kushner revoked the Waterbury, Connecticut location’s Howard Johnson’s license for being “a substandard franchise.” La Mancha’s president elaborated, “our company is moving in a new direction for the Howard Johnson’s brand, and we felt the proprietors of the Waterbury property are not what we feel are good franchisees. Rather than have substandard operators, we decided to start fresh.”
The Waterbury restaurant owners countered that their Howard Johnson’s “operates to the standards of the other Howard Johnson’s restaurants and it was done at our sole expense.” They claimed La Mancha Group offered “no franchise support, no advertising support, and no approved suppliers of the Howard Johnson’s product.” According to the restaurant’s owners it was the lack of support that led them to end their affiliation with HoJo and La Mancha Group. “My customers come here because of the food and the service we offer them. They don’t come here because we’re a Howard Johnson’s.”
By April of 2007 only three Howard Johnson’s restaurants remained (Lake George, NY, Lake Placid, NY, and Bangor, Maine). The owner of the Bangor, Maine, location didn’t believe the HoJo name brought much traffic or resonated with the younger crowd. Once the senior patrons ‘move on,’ he feared there would be no replacement of the customers. The only reason he hadn’t changed the restaurant’s name, he says, is because he’s reluctant to spend the $15,000 to $20,000 to redo all the signs.
La Mancha’s attempt to save Howard Johnson’s fizzled out after a few years, derailed by affiliate bankruptcies, the 2008 financial crisis, and prickly relationships with restaurant owners. Howard Johnson-branded frozen foods disappeared from grocery stores after Fairfield Farms Kitchens shut down its Brockton, Massachusetts plant in 2006 and America’s Kitchen of Atlanta, Georgia shut down in May 2008. Kushner claimed the plant closures would not affect the re-launch of HoJo’s frozen foods and that La Mancha was “already in the process of securing a new manufacturer” for its retail food line. However the company was unable to find another manufacturer and Howard Johnson-branded food products never returned to the grocery shelves.
On the hotel side, Wyndham was still planning a Howard Johnson motor lodge revival in 2012. The following year the company unveiled a much-anticipated brand reinvigoration at the Global Wyndham Group Conference in September.
The revival would embrace the HoJo heritage by bringing select flavors of ice cream back to the hotels, adopting a new logo, phasing out the multiple branding tiers and giving the properties a facelift and redesign as a lower-midscale chain starting in 2015.
The Last Howard Johnson’s Restaurants
By July of 2009 three Howard Johnson’s restaurants remained but the owners “hadn’t heard from Kushner in at least a year or two.” It was a moot point; years ago they decided to go their own way, running independent restaurants without support while keeping the name alive. Kushner and La Mancha were unresponsive, apparently having walked away from the investment which sent the remnants of the restaurant chain back to Wyndham.
The Lake George location closed and the property was listed for sale in the spring of 2012, leaving just two Howard Johnson’s restaurants: Lake Placid, New York, and Bangor, Maine – and by this time the Bangor location no longer had the distinctive orange roof. However after being listed for sale for nearly three years, the Lake George HoJo property failed to find a buyer.
In 2014 property owner DeSantis Enterprises leased the restaurant to John LaRock, who spent $200,000 refurbishing the abandoned building to make the place functional again. LaRock re-opened the Howard Johnson’s restaurant on a seasonal basis in January 2015, briefly increasing the number of open Howard Johnson restaurants back to three. The realtor signs were taken down, but the property remained for sale as of late 2016.
On March 31, 2015 the Lake Placid, N.Y., Howard Johnson’s closed. A sale was pending on the building, which meant it could no longer be a Howard Johnson’s. As selling owner Mike Butler explains, “Once it leaves the hands of the original owner, it can’t be a Howard Johnson’s anymore. If it ever changes hands, it has to go to something else because the original franchisee had the right to keep the name [only] until they got rid of it.”
In September 2016 the Bangor location closed, leaving Lake George as the very last Howard Johnson’s restaurant out more than 1,000. Bangor HoJo owners David and Sally Patel had purchased from Khan years prior and kept their restaurant going even as business slowed and hours were scaled back. “It’s not worth it to keep it open. We tried for four years,” said Sally Patel, who noted the hotel side of their business remained busy. “We felt bad to close it.”
Bangor, Maine: Penultimate Howard Johnson Restaurant (now closed)
photos courtesy Aimee Seavey
In December of 2016 DeSantis Enterprises hired a new real estate firm to sell their property (see archived listing). It is interesting to note as of October 2017, this listing has been removed. The new listing and signage created a brief stir when reports of an “impending sale” hit the national newswire, leading many to believe the last Howard Johnson’s restaurant was closing. LaRock said property owner Joe DeSantis has been trying to sell this property for 15 years, he just switched to a new real estate agent who decided to put up a new sign.
When Joe’s dad Carl DeSantis paid a franchise fee of $2,500 in 1953 to open the Lake George location, he never imagined that 64 years later, his would be the last remaining Howard Johnson’s restaurant in the world. Like many, Carl has fond memories of the chain from its heyday. “You could put one at the end of a dirt road in the woods back here and you’d do business. Howard Johnson’s was the king of the road. You could make money anywhere.”
The Lake George location is an original Howard Johnson’s in name and appearance but not food; LaRock’s menu attempts to be faithful but the commissaries and suppliers closed a long time ago. Gone are the original recipe fried clam strips, “frankforts” and Mac and Cheese, and as Manager LaRock reminds, even the ice cream is different now. “The ice-cream plant closed probably 15-20 years ago.” He does sell hats, shirts, and the restaurant is littered with original HoJo memorabilia.
LaRock’s restaurant hasn’t fared well in online reviews, earning an average of two out of five stars on the popular review site Yelp.
Update: Less than a week after this story was published, LaRock was arrested and charged with sexually abusing or harassing more than a dozen of his employees. This would appear to indicate the last Howard Johnson’s restaurant will close.
What Went Wrong?
It would be difficult to single out one reason as there are several dozen factors that could be identified as contributors to the chain’s demise.
One important detail was Howard D.’s surprise visits to the restaurants to ensure his standards were being kept. Howard Sr. used to say “In the old days, I used to know every franchised dealer by his first name.” By the 1950s the chain had grown so large this was no longer possible.
Many HoJo restaurants drew their customers off the highway rather than from local repeat business, which over time led to some of the less scrupulous managers allowing standards to slip. Facility age was a concern across the board; many of the east coast restaurants were more than forty years old, and some had never received a renovation. Compounding these concerns was the lack of quality control oversight, a side effect of the company having a rapid succession of speculative owners.
Howard Brennan’s different management style and tight-fisted control of the balance sheet was not always popular. One former executive said “HoJo always seemed to have ideas to upgrade the restaurants and hotels, but they never wanted to spend the money.” Comments from former Howard Johnson chef Jacques Pépin were more critical: “Howard B. Johnson lacked his father’s charisma and genius for business. The younger Howard Johnson surrounded himself with a coterie of university graduates, who, like the manager back at the Queens restaurant, were “yes” men, with practically no interest in or knowledge of food.”
As Pépin noted, another problem for the company was the Johnsons’ mis-judgement of fast food and the failure of HoJo Junction, an issue that was compounded when the country’s eating habits changed and HoJo lost its exclusive control over highway rest stops. It was Pépin’s belief the company’s success was rooted in its founder. “It didn’t surprise me that after Howard D. Johnson’s death in 1972, his organization lost its raison d’etre. The era of fast food had dawned, and Mr. Johnson’s son, who took over management of the company, did not understand these forces.”
In an interesting way HoJo’s initial public stock offering was another contributor to the company’s decline. Before going public the company spent richly on its food and hired top architects, chefs, and designers. No expense was spared with construction, ingredients, or meal development, a formula that helped build the company’s reputation for quality. Once Howard Johnson’s became a public company, shareholder involvement brought an ongoing need for management to lower costs and improve profits. The chief executive was continually urged to present improving quarterly numbers to the shareholders, which combined with other headwinds contributed to an atmosphere of relentless cost cutting.
Everything from the menu development to the supervision budgets (which ensured timely and consistent service at each location) experienced major cutbacks. The company’s ingredients expenditures were slashed, which lowered the quality of food. Famous features such as the bottomless cup of coffee were discontinued. The features, service, and quality of the food – a one-time Howard Johnson’s staple – had declined. This hastened the demise of the restaurants, which were also contractually bound to a supply chain and brand that was rapidly deteriorating.
Perhaps the biggest dagger was that of new competition. The Howard Johnson success was so well known, over time it’s method was blueprinted and repeated by countless other companies. Some even improved it. Ultimately Howard Johnson’s failed to properly anticipate trends and innovate while cost-cutting cheapened the brand and devalued the dining experience. A handful of restaurants held out into the late 2000s, but the company has been gone for decades.
The Howard Johnson Company had its faults, but its positive contribution to multiple industries over many decades was greater. Thanks to HoJo’s, American families were able to dine and travel with confidence. Consistent good food and quality lodging became industry standard. It is these for which Howard Johnson’s will be remembered.
And the orange roof, of course.
As of 2017 Wyndham still owns the Howard Johnson hotel brand and maintains its webpage. For those wishing to see what happened to the old Howard Johnson’s restaurants, HoJoLand’s “HoJo Ghosts” pages do a good job chronicling the abandonment and changes. For all things HoJo visit Walter Mann’s impressive online museum at HoJoLand.com and a listing of old locations at HighwayHost.org. To see a copy of an original Howard Johnson’s menu, click here.