Our story today begins with a middle school dropout not coincidentally named Howard Johnson. Born in 1897, as to why Johnson left school around 8th grade, his father, John Johnson, owned a cigar business, and, once his primary education was out of the way, Howard absconded to help run that business. This was something he continued to do for around 15 years, only taking a slight break, as it were, to serve in France during WWI. Unfortunately for the Johnsons, however, while the cigar business provided great practical lessons for the young teen in how to operate a business, market, sell, etc., with the rise in popularity of cigarettes, the company began to struggle, ultimately going into massive debt. Things only got worse when Johnson’s father up and died at the age of 57 in 1923.
Deciding to voluntarily take over his father’s debts and try to keep the company going, rather than just starting from scratch on a new venture, Johnson got to work attempting to salvage the sinking ship, but all his efforts were in vain. Unable to make the business profitable, he sold it within a year to pay off some of the debt, and otherwise worked odd jobs to try to pay off the rest.
But in all this, he also kept his eye out for a new venture that might be more lucrative, and in 1925 he found a possibility in a struggling little newsstand and pharmacy located at Beale Street in Wollaston, a part of Quincy, Massachusetts. Johnson was working at that establishment when the owner suddenly died. With the owner’s son little interested in keeping the business, Johnson negotiated to buy it for $2000 (about $35,000 today), drumming up the funds via a $500 loan from his mother and $1500 loan from a doctor friend.
His second struggling business in hand, he renamed the establishment Howard D. Johnson Co. Patent Medicines and Toilet Articles, and got to work to see if he could turn it around. First, he hired paper boys to go forth and sell his newspapers to the local community, rather than waiting for them to come purchase the papers from his shop. Next, as the soda fountain was the most lucrative part of the company, he began experimenting with ways to augment that side of the business, in particular focussing on ice cream meant for making sundaes and floats.
As for this, he eventually came up with a slight modification on normal ice cream of the era, with stories varying on how he settled on his now famous final recipe, either purchasing it from a German ice cream pushcart vendor, doing his own experiments, or that he simply used a recipe of his mother’s- with some accounts stating he did all three. Whatever the case there, what Johnson settled on was essentially doubling the butterfat in a normal ice cream recipe, both making his ice cream different than his competitors, while also being something customers seemingly loved. In the initial going, he offered three flavors using this base recipe- vanilla, chocolate, and strawberry. But in the aftermath as ice cream sales very quickly rose at his establishment, through further experimentation, he came up with his soon to be famous 28 flavors, including such things as Butter Pecan, Caramel Fudge, Fudge Ripple, Peanut Brittle, Coffee, and Butterscotch.
And it was on. With sales absolutely exploding in the aftermath, Johnson used the extra funds to expand to a second location in Wollaston in 1927, and then the next year opened several seasonal stands along the beaches of Massachusetts, primarily selling soft drinks, ice cream, and hot dogs, in all reportedly grossing some $240,000 (a little over $4 million today) in 1928, allowing him to easily pay off his and his deceased father’s remaining debts. On top of that, around this time he was able to get a $50,000 loan from Granite City Bank in Quincy to start a fully fledged restaurant on the ground floor in the bank’s new headquarters building, which at the time was the tallest building in the city.
As to why he wanted to expand into a full restaurant, with the rise of the automobile and progressively better roads connecting cities and towns, Johnson saw a huge opportunity and a need being unmet. At the time, when people traveled the country by car, the eating establishments along the way tended to vary widely in quality and fare, with little way for most to judge what they were going to get. He also foresaw that such travel across the country would only continue to become more and more popular as roads continued to be steadily improved and more and more people owned cars.
Thus, Johnson had a plan- create a restaurant with high quality meals that would remind people of home, then rinse and repeat that same restaurant throughout the nation along the highways, and make sure everything from service to look of the building inside and out to food would be the exact same regardless of which of his restaurants you ate at. A little bit of home no matter where you went.
And so it was that as the Great Depression was about to kick off, Johnson opened his first such fully fledged Howard Johnson’s restaurant in Quincy. It would eventually grow to include such culinary staples as tender-sweet fried clams, which were a creation of the Saffron Brothers in Ipswich, Massachusetts, essentially just fried clams that had their bellies removed. Beyond this, it had many home style favorites like steak, mashed potatoes, chicken pot pies, hamburgers, hotdogs, etc. As for his overall philosophy? Top quality, but without making it too fancy. He stated, “If you say Halibut Dante, the average American will never buy it. But if you say halibut with cream and tomato sauce, he’ll not only buy it, but he’ll say it’s great.”
Naturally given the stock market crash of 1929, his business expansion plans were abruptly put on hold… Undeterred, as the Depression wore on and he couldn’t get a loan to open additional locations, nor did he have the extra capital on hand himself for it, he decided to think outside the box. What if instead of him fronting the cost, someone else did so and they could just use his restaurant model, brand, suppliers, and recipes in exchange? Essentially, what if he franchised his business model and brand?
While you’ll sometimes hear that Howard Johnson was the first to ever institute the idea of franchising, this is an exaggeration. For starters, franchising in some form has been around since at least medieval times in landowner franchise-like agreements. And even in America franchise like agreements were a thing from the early going. For example, Ben Franklin instituted a franchising model on September 13, 1731 when he and one Thomas Whitmarsh entered into a deal allowing Whitmarsh to create a separate printing operation to print and sell such things as Franklin’s Poor Richard’s Almanac in the region of South Carolina, but with Franklin retaining the rights to enter into similar contracts with others elsewhere, and with Whitmarsh required to maintain all operating expenses and the location and the like.
Fast-forwarding to the next century, various businesses, some of which are still around today, started exploring the franchise model. One of the largest early adopters of the model was Harper Method Hair Parlour in 1891, started by one Martha Harper who’d worked as a domestic servant from the age of 7 to 32, at which point she used her life’s savings of $360 (about $12,000 today) to start the first Harper Method Hair Parlour, which set the model for what most salons after would soon copy. In particular, she began training other poor domestic servants in her trade and then allowing these women to franchise her model, brand, and product lines with huge success, rapidly growing to some 500 locations in the company’s over century long run. Other early modern franchise pioneers included the likes of General Motors and Coca Cola. However, with regards to restaurants, the idea was still quite novel and mostly untested. So while Howard Johnson didn’t invent the idea, as is often claimed, it was Johnson who was about to put the entire business model in the spotlight in a major way, and see countless restaurant chains afterwards copy him to worldwide success.
Going back to his second location, unable to get a loan and lacking the capital thanks to the Great Depression, in 1932 Johnson reached out to a friend of his, Reginald Sprague, whose father owned a primely located tract of land near the water in Orleans, Massachusetts. Johnson thus pitched the idea of Sprague opening a Howard Johnson’s restaurant there with Sprague paying for everything on the restaurant side, but getting to use Howard Johnson’s brand and reasonably successful restaurant template and product, including his extremely popular ice cream. In exchange, Howard Johnson would get a cut of the sales.
Sprague agreed. And the one restaurant became two, though initially leaving Sprague some $17,000, about $384K today, in debt. Remarkably, however, by the end of the first summer business was already booming at a whopping 700 meals served per day, plus ice cream sales. Thanks to this, despite only being opened seasonally, within two years the second Howard Johnson’s location was operating debt free.
Naturally, Johnson didn’t stop there. Despite the Great Depression raging, Johnson managed to expand to 41 restaurants by the end of 1936 and his company ballooning to over 100 by 1939.
As for this rapid growth despite not exactly being the best timing given the Great Depression, Johnson would state, “I think that building my 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.”
As to what he was thinking of when thinking about business, as alluded to, he made sure every restaurant looked the same and had the very distinctive bright orange roof and blue spire for easily recognizing the restaurant from a distance, as well as was among the first restaurants to ever put their name and logo on a giant pylon to be extremely visible from the road, now a staple of the industry for such establishments. On that note of highways, he also targeted areas where there were turnpikes or significant bends in the road where people would have to slow down or stop, and then be staring right at his restaurant when they did so.
On top of this, on the inside, he eventually hired famed interior designer Dorothy May Kinnicutt Parish, aka Sister Parish, perhaps most famous today for her work in the White House, to set the inside look. He also ultimately hired Christian Dior to design his waitress outfits, and fast-forwarding a bit to 1961 hired famed chefs Pierre Franey and Jacques Pepin, the latter of which turned down an offer to work as JFK’s personal chef in the White House to instead work on perfecting the Howard Johnson’s menu.
On this note of hiring Franey and Pepin, Johnson instituted a system of having his head corporate chefs start by working the line at actual restaurant locations to get a feel for everything, then come up with the best staple products they could, and then figure out how to freeze them for reheating and final preparation at the actual locations. In all accomplishing this via a sort of central commissary to make it easier and cheaper for all the restaurants in the chain to get their needed meals, while minimizing the need for skilled chefs, but still ensuring the exact same quality and product regardless of location.
On top of that, he created the Howard Johnson’s Bible outlining in incredible detail how every facet of the restaurant should be run and food prepared so everything was perfectly consistent from location to location.
Again, the idea being, if you went to any Howard Johnson’s, you’d get exactly what you expected based on whatever you were familiar with at your home Howard Johnson’s.
On top of that, he introduced a rather unique at the time idea of a kid’s menu with smaller portions, cheaper prices, and food more tailored for the pallet’s of our little human parasites, as well as making the kid’s menus into things that would help entertain the little ankle biters while their parents ate and talked, such as masks, maps, etc. He also started a birthday club where those that signed up would get a birthday card, which was essentially a gift card for one free meal, a piece of cake, and even balloons at certain locations.
In short, extreme quality and consistency was a hallmark of Howard Johnson’s at this point at every location, and something Howard Johnson himself was obsessed with. Something Pepin would later discuss in depth in his book The Apprentice: My Life in the Kitchen.
The culmination of all this was a business model and brand that often saw any new Howard Johnson’s location become debt free and profitable within a year of opening- a remarkable feat for any business, let alone a restaurant. Needless to say, the fact the whole thing was more or less idiot proof if one just followed the template exactly made it an extremely attractive business to start if one had the capital to open one. As for the utilization of the franchising model and the success franchise owners were seeing in it, Johnson would state, “This is what I like best. Help a good man to make a go of it himself.”
That said, whenever he had the money or could secure it, Johnson generally did prefer to own any new locations outright for more direct control.
But in any event, now having successfully not just weathered the Great Depression, but thrived in it, by the end of 1941, Howard Johnson’s had grown to nearly 200 locations, a mix of company owned and franchised.
…Of course, in December of 1941, the next major hurdle for the company hit when the United States decided it would like to join a lot of the rest of the world in trying to punch Hitler and Emperor Hirohito in the face.
In the aftermath, between war rationing and significantly fewer people traveling the roads, countless restaurants quite abruptly went out of business, with Howard Johnson’s feeling the sting as well, almost overnight shrinking down from 200 to just 12 struggling locations. Further, even at those dozen surviving locations, many of the staple menu items like their ice cream were difficult to keep on the menu thanks to things like sugar rationing.
On the verge of bankruptcy, to stay afloat, Johnson began supplying the military with the frozen food from his commissary that used to supply his restaurants, with most of these meals now going to recruits, war workers, and school children.
Finally, on September 2, 1945, Japan officially surrendered. Much like the nations involved in that war, Howard Johnson’s business had been bloodied, but survived. But things were about to turn around.
With the nation about to prosper as it never had since Johnson started his restaurant chain, and even the less affluent now often owning cars and ready to travel the roads, Johnson’s business was about to explode to a level no other restaurant in history had ever achieved up to this point.
Just 5 years after the war’s end, the company was back at over 200 locations, and grossing a new company record of $115 million that year, or about $1.4 billion today. Or, to put it another way, in modern dollars each location averaging about $7 million per year in gross sales. Three years later, they were up to 400 locations spanning 32 states, about 1 in 4 of which were at turnpikes, which were the most profitable of all locations.
Things only got even better when President Dwight D. Eisenhower signed the National Interstate and Defense Highways Act, nation changing legislation spurring the creation of the United States interstate system in 1956. Within a little over a decade of this, Howard Johnson’s had ballooned to over 1,000 locations and was at this point second only to the United States military in the country for number of meals served annually to people outside of the home.
Leading up to this peak, Howard Johnson also saw that by jumping into the hotel industry, he could double down on things, and thus he began the Howard Johnson’s Motor Lodges in 1954, often placed right next to his restaurant locations. In the Motor Lodges, he also followed the model of what you got at one Howard Johnson Motor Lodge, is exactly what you’d find at any of them. So, for the road weary traveler, they could now stop not just for a familiar home-cooked style dinner, but could also find a consistent, quality place to sleep for the night too.
By 1965 near the company’s peak, while fast-food upstarts like McDonalds were also rapidly rising, in McDonald’s case with now some 700 locations, Howard Johnson’s company gross sales were still more than the upstarts in McDonald’s, Burger King, and KFC combined.
So, with such dominance and perfected model, and similar restaurant chains still booming today… what happened? How was it that within only a couple decades of this peak the chain would be all but extinct?
Well, it turns out there were a number of factors involved that all more or less hit the company at the same time. But perhaps the most pertinent change was the transition of leadership from Howard Johnson to his son, Howard Brennan Johnson in 1959, though with Howard Johnson himself staying involved as CEO until 1964 and Chairman until 1968, and then peripherally involved until his death at the age of 75 in 1972.
Brennan Johnson did have some success in the early going, first by taking the company public in 1961 bringing in some $125 million (about $1.3 billion today), as well as continuing expansion efforts with these funds, including starting other chains such as Ground Round Grill and Bar which peaked at over 200 restaurants, but has since dwindled to only 15 today. He also converted many of the Howard Johnson’s locations on toll ways to Burger Kings owned by Howard Johnson’s for further diversification, as well as diligently working to buy out most of the franchise locations in hopes of phasing out the franchising model for the company.
So that was all the good side. What went wrong?
For starters, fast-food chains like McDonald’s, Burger King, and KFC were gaining market share like crazy, increasing competition, which was in part why Brennan Johnson had purchased many Burger King franchises and tried to expand to other restaurant offerings as well.
You see, unlike Howard Johnson’s more varied fare and more traditional offerings people were used to eating at home, these newer chains and their simpler menus could make the food much cheaper and quicker, and even eventually offered drive through options if you didn’t want to get out of your car. As an example, around this time you could get a burger at McDonald’s for 15 cents (about $1.50 today), whereas a burger at Howard Johnson’s cost 35 cents (about $3.50 today). On top of that, stopping at Howard Johnson’s took a lot more time and with no drive thru option to boot, in all not nearly as convenient, nor as cheap.
On top of this, while such things as a steak and mashed potato dinner while on the road has its advantages, the offerings of fast food establishments tended to cater to the human desire for greasy deliciousness, as in the likes of mouth watering KFC, in all appealing to more people’s pallets and desire to get chonky. And, as we all know, matters weren’t helped by the Colonel apparently putting addictive chemicals in his 11 herbs and spices that make you crave it nightly…
That said, then, as now, there was a rising crowd looking for the more home style cooking when not at home, or even just a place to eat when you wanted to take the family out or meet with friends and socialize, instead of inviting them to your home where they’d be confronted with the chaotic state you live in, closely resembling a dystopian landfill, but with air fresheners… Or you could clean. But why do that when you could all just go to Howard Johnson’s?
Thus, to try to adjust for the loss of traveler sales with the rise of fast-food, some Howard Johnson’s locations moved away from highways and into populated centers. They also began experimenting with revamping other aspects of the restaurants, like some locations offering 24 hour service similar to many diners, opening cocktail lounges for hangouts, as well as expanded seating.
Next up, right around the time Howard Johnson himself died in 1972, the nation experienced a major recession, followed by equally major gas shortages, all keeping people from traveling or eating out as much. Note, at this point some 85% of revenues for the company were still generated from travelers.
With the revenues on the decline, the younger Johnson then began a series of moves that only accelerated the company’s demise. First, ceasing all expansion efforts. Johnson would state of this, “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.”
Second, Johnson began analyzing how to cut costs, noting that they were spending about 48% of their gross revenues on the food itself. So, in an effort to try to compete better with the likes of McDonald’s and other such fast-food chains in prices, he tried to find ways to reduce food costs and number of employees at each location. In so doing, he extremely quickly torpedoed the quality of food and service you could find at a Howard Johnson’s, and consumers noticed… Rapidly.
Speaking of bad public perception, at least among some, leading up to all this, in the late 1950s a franchise owner in Dover, Delaware refused to serve black people. This would otherwise not have been significantly newsworthy in the era, but Howard Johnson’s was one of the most famous brands in the nation at the time, and on top of this, most famously that location refused to serve one Komla Agbeli Gbedemah, official representative of Ghana. In the end, this prompted something of an international incident and an apology from none other than President Dwight D. Eisenhower, who also invited Komla to come have breakfast with him and Vice President Richard Nixon at the White House. As for Howard Johnson’s side, he apparently personally told the Dover franchise owner that segregation was not allowed in any Howard Johnson’s. But it didn’t stop there. In 1961 another black diplomat, this time one William Fitzjohn was denied service at a Hagerton, Maryland Howard Johnson’s, sparking yet another international incident, with this time John F. Kennedy being the one to apologize publicly.
This spurred countless sit ins, boycotts, and protests at various Howard Johnson locations, even one such organized by future presidential candidate Bernie Sanders in 1962- all prompting Howard Johnson to issue a statement that he and his company opposed racial segregation, and noting, “Where it has been possible to change the operation of our company-operated restaurants in the South to conform to our national policy of service without discrimination, this has been done.”
Noteworthy, Howard Johnson’s also had an established corporate policy against discrimination of any sort, and in certain regions local Howard Johnson’s even became something of hangouts for members of the LGBTQ community, such as in the case of locations owned by Dick Leitsch, Craig Rodwell, and John Timmins in New York, with these three all members of one of the very early gay rights groups, Mattachine Society.
While none of this latter is perhaps noteworthy today, at the time in New York many establishments refused to serve anyone who was openly gay, and it was even deemed illegal, according to the State Liquor Authority, to serve gay customers alcohol because the past was the worst.
But these franchise owners did it anyway at their Howard Johnson’s locations. And in one case very publicly with the Howard Johnson’s in Greenwhich Village used for a “Sip-In”, but not in the way the organizers of the Sip-in had originally hoped. You see, they were looking for a place to refuse them service so they could sue and challenge the law, so naturally targeted one of the biggest chains in the world in Howard Johnson’s for maximal publicity. Unfortunately for them and fortunately for Howard Johnson’s, one Randy Wicker who was involved recounts, “We went to Howard Johnson’s. Said we’re homosexuals and we wanna order a cocktail. And the woman said ‘no trouble!’” and happily served them. Leaving them to have to go find another establishment who would not do so, eventually settling on a bar called Julius’s that had recently been raided by police officers when the undercover officers posing as gay men had successfully entrapped and then arrested some of the customers there for agreeing to partake in homosexual acts with them. Needless to say, Julius was not interested in serving those involved in the sip-in lest he get in trouble again, and the whole affair was front-page news in the aftermath, spurring the New York State Liquor Authority to change its rules, though undercover officers still continued to do their thing for some time because the past was the worst.
But in any event, beyond some of the bad press, declining quality of food, and rise in fast-food establishments able to make their food faster, cheaper, and more convenient, then there was the quality of service and of the general establishment at each location, which likewise around the time of Howard Johnson’s death quickly became inconsistent, as there was no real strong measure ever implemented to insure such, outside of their handbook and apparently Howard Johnson himself spending his time randomly popping around to different locations to inspect them. As a brief aside, Johnson apparently sometimes didn’t feel the need to even announce who he was when doing such surprise inspections, and in one case he headed back to one location’s freezer without a word to the staff, resulting in employees calling the police on him. The officer who showed up dutifully asked for Johnson to identify himself, to which Johnson stated simply, “I’m Howard Johnson.” With the cop quipping back, “And I’m Christopher Columbus.”
But in any event, with Howard Johnson now in the grave and all efforts to overhaul the company not just not succeeding, but seeing it decline even more rapidly, Brennan Johnson and the board decided it was time to sell the company in 1979 to Imperial Group PLC of London for $630 million, or about $2.7 billion today. What Imperial Group got for their investment was 1,040 restaurant locations and 520 motor lodges, only about 25% of which belonging to franchisers.
While there was still time to adjust and fix everything and the Howard Johnson’s brand recognition was almost unparalleled in the regions they operated, little progress was made in a turnaround and, in 1985, Imperial Group gave up and sold off the chain to Marriott Corp for $314 million (about $900 million today). Within a year, Marriott then sold off the motor lodge and trademark to Prime Motor Inns.
As for the restaurant side, the now extremely dated menu, a growing reputation for poor quality food and service, and the expense and inconvenience vs the rising stars in fast food all combined were continuing to sink the brand.
So why did Marriott buy it when they clearly had no interest in fixing any of this? Well, as Ray Krock of McDonald’s so astutely pointed out during a speech at the University of Texas in 1974, “Ladies and gentlemen, I’m not in the hamburger business. My business is real estate.”
Marriott simply wanted the locations themselves to convert to more profitable Big Boy and other fast food locations, as well as to add all the Burger King locations Howard Johnson’s owned to their own portfolio. And so it was that within two years of their acquisition, Marriott had made almost all of the company owned locations disappear, leaving only a subset of the franchised locations untouched to die a slow and agonizing death.
To try to turn things around, the remaining location owners created the Franchise Associates Incorporated, with its chairman noting in 1987, “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.”
Unfortunately for them, they were never able to expand from here outside of one single Howard Johnsons’ ice cream shop in Puerto Rico. They did briefly in 1990 debut a prototype remodel of Howard Johnson’s in Canton, Massachusetts, but the location and changes proved to be a dud. Further efforts were made to modernize the menu, with likewise no success.
And so it was that by 1995 there were only 84 Howard Johnson’s locations left. A decade later, they were down to just 8. It was also around this time the Howard Johnson branded frozen food line in grocery stores likewise disappeared thanks to the closing of the Fairfield Farms Kitchens’ Brockton, Massachusetts plant, and another similar plant in Georgia likewise closing a couple years later.
The final Howard Johnson’s restaurant from the original chain, located in Bangor, Maine, closed in September of 2016, leaving just one left in Lake George, New York. However, other than the name, at this point this location had no real connection to the former Howard Johnson’s given the menu was quite different, among other changes. Finally, in March of 2022, this last Howard Johnson’s restaurant closed its doors forever.
Today you’ll still find the Howard Johnson’s brand used by Wyndham Worldwide, with some 300 Howard Johnson’s hotels in over a dozen countries. Wyndham also now owns the rights to the restaurant and food brand as well, with occasional rumors that they plan on re-introducing the restaurant brand that started it all. But, to date, nothing has ever come of it. It would seem all that will ever remain of the restaurant side of Howard Johnson’s is its place in history- helping to give rise to the now ubiquitous restaurant franchising model and the many practices now common with that we all take for granted today.
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The post From Zero to One Thousand to Zero- The Rise and Fall of Howard Johnson’s appeared first on Today I Found Out.
Hi. I’m Designer of Blog Magic. I’m CEO/Founder of ThemeXpose. I’m Creative Art Director, Web Designer, UI/UX Designer, Interaction Designer, Industrial Designer, Web Developer, Business Enthusiast, StartUp Enthusiast, Speaker, Writer and Photographer. Inspired to make things looks better.
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