Marriott Corp. said yesterday that it has transferred the franchise rights for its chain of 914 Big Boy family restaurants to Elias Brothers Restaurants Inc. of Detroit.
The Big Boy chain has been a drain on the profitability of the Bethesda-based company's restaurant division for several years.
Financial terms of the transaction were not disclosed. However, Elias Brothers officials said the deal was mostly a paper transfer of rights of the name and royalties and involved little, if any, cash.
Marriott, one of the area's largest firms in both sales and number of employes, will continue to operate its 208 company-owned Big Boy restaurants in Southern California and in the Philadelphia to Richmond corridor.
A key part of the food and lodging giant's strategy has been to concentrate on the family or coffee-shop restaurant segment of the business -- a plan that will not change, company officials said. The transfer of the Big Boy rights will give Marriott "more flexibility ... in the family restaurant segment," said Ronald R. Powell, executive vice president for Big Boy restaurants.
"Marriott decided that the Big Boy name is not the right franchise vehicle to expand nationally -- primarily because it's an older, franchisee-run chain," said Joseph J. Doyle, a financial analyst who tracks the company for Smith Barney, Harris Upham & Co. Inc.
In addition, Big Boy franchisees have historically been very independent, particularly the strong regional franchise groups such as Frisch's Big Boys and JB's Big Boys, leaving Marriott with less control over the restaurants than the company probably would like, analysts said.
An example of that franchisee strength is Marcus Corp. of Milwaukee, a major Big Boy franchisee, which has filed suit in federal court in Milwaukee to prevent Marriott from transferring the Big Boy franchise rights.
Elias Brothers is a restaurant and food service company that also was the first franchisee for Big Boy restaurants. Officials of the company said they plan to expand the chain.
Industry analysts speculated that Marriott may now attempt to expand its coffee-shop restaurant division -- which also includes Hot Shoppes outlets -- by converting the company-owned Big Boy locations to an updated concept and name and then either adding new restaurants to the chain or buying other chains.
"I think they can come up with something better than Big Boy," Doyle said.
Marriott, which also operates more than 550 Roy Rogers fast-food restaurants and 16 Hot Shoppes cafeterias and restaurants, negotiated earlier this year to buy Denny's Inc. in a deal that would have made it the nation's largest operator of family restaurants. But the firm lost out to TW Services Corp., a New York food services firm that reportedly agreed to pay $843 million for Denny's, $26 million more than Marriott.
Marriott acquired the Big Boy system in 1967 from the originator of the concept, Bob Wian. When it acquired Howard Johnson restaurants in 1985, it began converting them to Big Boy restaurants as well.
However, in the past few years, the financial results for Big Boy have been disappointing because of soft conditions in the restaurant business and the administrative costs associated with converting restaurants to the concept.
The company does not break out sales of its various restaurant chains. Sales of all Marriott restaurants were $797.3 million in fiscal 1986, about 15 percent of the company's total sales of $5.3 billion.
The Big Boy mascot was featured two years ago in an award-winning advertising campaign produced by Washington's Earle Palmer Brown agency, which asked "Should he stay or should he go?" Marriott officials said yesterday they would continue to work with the agency for the company-owned restaurants' advertising campaigns.