Now that Big Boy is here to stay, he is growing bigger than ever.
The chubby cherub in the checkerboard pants, who survived a company-sponsored ballot on whether he should stay or go, will move to as many as 250 new locations nationwide over the next two years, according to Big Boy's parent, Bethesda-based Marriott Corp.
Since acquiring Howard Johnson Co. in November, Marriott has begun converting many of the familiar orange roofs and blue steeples of roadside HoJos to Big Boys as a way to expand its operations rapidly without the heavy capital expenditures required to build restaurants from scratch.
The Big Boy conversions (locally, they're called Bob's Big Boys; elsewhere they carry other first names, depending on the franchisee) further accelerate Marriott's race to beat Denny's Inc. as the nation's number one restaurant in the hotly competitive coffee-shop market, analysts say.
"Marriott's acquisition of Howard Johnson Co. certainly gives them a heck of a leg up in that direction," said John J. Rohs, an analyst with Wertheim & Co. Inc.
"They have been saying for quite some time now that they intend to revamp the Big Boy system and to make it the clear leader in the coffee-shop segment of the market," said Stephen A. Rockwell, who monitors the company for Alex. Brown & Sons brokerage firm in Baltimore.
The HoJo acquisition was considered a bargain because Marriott believes it can make the outlets immediately more valuable by converting them to Big Boys. HoJo restaurants average only about $750,000 to $850,000 per unit in sales, while the average Big Boy takes in about $1.1 million per unit, according to analysts.
After the Big Boy conversions, the chain will include as many as 1,122 restaurants. Denny's, founded in 1953 in California, has about 1,163 units, predominantly on the West Coast.
The first Big Boys being converted are two company-owned restaurants in Fredericksburg and Winchester, Va., said J. Michael Jenkins, executive vice president and general manager of Big Boy Family Restaurant System.
Many of the new Big Boy outlets will be located on the East Coast, where Marriott feels it needs to increase the chain's market penetration, analysts say. A large portion of Big Boys are now in California and Michigan.
Marriott acquired the 60-year-old HoJo restaurant and hotel chain from the Imperial Group, a British conglomerate, for about $300 million. Almost all hotels and lodges operated by Howard Johnson and its Howard Johnson Motor Lodge & Restaurant Franchise Systems unit were sold to Prime Motor Inns Inc. of Fairfield, N.J., for $235 million.
Marriott retained 350 Howard Johnson company-operated restaurants and 68 turnpike restaurants plus vending, manufacturing and distribution operations and several hotel-related operations.
One hotel developed by Howard Johnson, The Baltimore Plaza, will become a Marriott franchise on March 7. It was one of the hotels sold to Prime Motor Inns, but Prime subsequently contracted to make it a Marriott franchise. It will be managed by Prime but will bear the Marriott name and use the Marriott reservations system.
The hotel, to be renamed the Baltimore Marriott Inner Harbor, will be the first downtown Baltimore Marriott and the second hotel in the Baltimore area to bear the Marriott name -- after the Marriott Hunt Valley Inn.
Much of the $65 million the company spent in acquiring Howard Johnson's restaurants is expected to be recouped through the sale of some of the operations, as well as income from the new Big Boy locations.
"Marriott ended up paying a very reasonable price to acquire the company-owned Howard Johnson restaurants," said Rohs. "And they intend to convert . . . the best sites to Big Boys and sell the rest." Marriott might also convert some HoJos to Roy Rogers restaurants, its fast-food subsidiary.
Of the 250 conversions, approximately two-thirds will be franchised shops and the rest will be company-owned restaurants, Rohs said. There are now 872 Big Boy restaurants both here and abroad, of which about a quarter are company-owned.
The acquisition is expected to add about 10 to 15 cents to 1986 earnings per share, Wertheim & Co. estimates. Marriott earned $5.18 per share in 1984, and Wertheim predicts 1985 earnings will climb to about $6.20 and 1986 earnings should reach about $7.40.
Alex. Brown & Sons predicts a 12 to 15 percent increase in revenue for Marriott's restaurant group -- Big Boy and Roy Rogers -- over the next three years as a result of better market penetration and the effects of national television advertising.
Big Boy made his debut on Aug. 6, 1936, in Glendale, Calif., in a 10-stool counter shop called Bob's Pantry, run by Bob Wian.
Bob's expanded during the next 30 years, and Marriott bought the 22-restaurant chain in 1967, reportedly for about $7 million.
In the early 1960s, there were no Big Boys in the Washington area, while there were several Howard Johnsons. It is a commonly accepted part of Marriott's corporate folklore that J. W. (Bill) Marriott Jr. once looked at his father, Marriott founder J. Willard Marriott, and said, "I hope one day we can be as big as Howard Johnson." The elder Marriott died in August 1985 at the age of 84; Bill Marriott is now president and chief executive officer.
Today there are seven Howard Johnsons and 29 Big Boys in this area; analysts say the ratio is similar across the nation because Howard Johnson has lost market share over the years to other coffee-shop chains. Marriott's sales in 1984 reached $3.5 billion. However, Howard Johnson's restaurant-chain sales, for the same period were only $520 million, according to Joseph J. Doyle, an analyst with Smith Barney, Harris Upham & Co.
"Whether it is Roy Rogers, its hotels or Big Boy, Marriott has just been operationally better," said Rohs.
"The bottom line is to produce appetizing food in an attractive atmosphere and to service it quickly and well," Rohs added. "Big Boy extensively trains people to carry out that dictum."
HoJo failed to keep pace with the dynamically changing industry over the years, according to analysts who followed the company. "HoJos didn't evolve with a change in customers' tastes," said Rohs. "That extended to an inadequate emphasis on training and service levels, mediocre food and a stagnant menu.
"Combine that with a unit that is not as bright and sparkly as the shop down the street and you end up with a recipe for declining sales and profit," added Rohs. "And that's exactly what happened."
Big Boy and Denny's, on the other hand, tried to keep in tune with transforming tastes.
Marriott turned to its patrons last year to vote on whether Big Boy should spiff up his image and change out of those checkerboard pants. "Should he stay or go?" Marriott asked customers of the pompadoured corporate symbol, who stands enshrined in plastic outside most of the company's restaurants. Customers voted for the little guy to stay.
Marriott also has been upgrading Big Boys by changing the menus, toning down the decor and going for more of a fern-bar effect. Officials of Denny's, with annual sales $1.35 billion, declined to comment on the Big Boy expansion.
With the health and diet craze, both Denny's and Big Boys have introduced lighter and low cholesterol entrees. They also started offering senior citizens specials. During the last year, Big Boy introduced all-night breakfast bars and salad bars, as well as greenery decor.
Competition in the coffee-shop market is "extraordinarily rough" today, according to analyst Rohs.
Some of the stiffest competition is coming from fast-food restaurants, according to Dennis Crawley, a spokesman for Denny's, which became privately owned through a leveraged buyout last year. "By expanding their menus to offer salad bars and breakfast, the fast-food people are now serving what the traditional coffee shops serve," Crawley said.
In addition, a building boom in the restaurant industry during the last three years has resulted in an oversupply of restaurants.
"Big Boy is not immune," Rohs said. "But, clearly, that's an established business that has tremendous staying power. It will emerge from the current debacle in the industry with a much stronger market share."