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Ramada Inns Purchases Callender's for $90 Million

February 07, 1986|BRUCE HOROVITZ | Times Staff Writer

Marie Callender's Pie Shops Inc.--the grandma of pie and sandwich shops that has been for sale for almost a year--was sold Thursday to Ramada Inns for nearly $90 million in cash and stock.

The sale to Ramada, the nation's third-largest hotel company, is expected to speed up franchising of the Long Beach-based firm.

The 115-unit chain, founded 38 years ago as clean place to grab a piece of pie and cup of coffee, was passed up by a long chain of potential buyers, including Marriott Corp., Greyhound Food Management and W. R. Grace & Co., said Donald W. Callender, president of Marie Callender's, who will remain chief executive.

Industry analysts, who generally regard Marie Callender's as a well-run operation, say that it was the high price tag that stalled the sale. With locations primarily in the West, Marie Callender's tried to move upscale a few years ago by expanding its menu and improving its decor. But now it intends to return to more of a coffee shop setting, Callender said.

The purchase by Ramada, however, caught industry analysts by surprise. To pay off some debt, Ramada has sold more than 70 properties over the past four years, lowering its worldwide total to about 500 operations. The Phoenix-based company laid off some 400 corporate workers in 1985.

Marie Callender's represents "a logical extension" of Ramada's existing business lines, said Richard Snell, Ramada's chairman.

Ramada on Thursday reported a 95% boost in net income for the 1985 fiscal year to $17.2 million from $8.8 million in fiscal 1984. But most of that income came from the sales of struggling hotels. Ramada's operating income for the year ended Jan. 2 was down 8.6% to $73.8 million from $81.3 million.

Marie Callender's, which posted fiscal 1984 revenue of $87.6 million, will abandon its recent efforts to go upscale, Callender said. "We will go back to what we do best: sell pies."

That future now revolves around Ramada, which intends to place Marie Callender's restaurants in or near new hotels that it builds. But Ramada said it does not intend--at least immediately--to convert its restaurants into Marie Callender's.

Marie Callender, Don Callender's 79-year-old mother who founded the chain, had little to say about the sale. "I really have no feeling about it," she said from her Leisure World residence in Laguna Hills. "I've been out of the business for too long."

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