Ramada Buys Marie Callender’s : 38-Year-Old Chain of 115 Pie Shops Brings $90 Million

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

The 115-unit chain, which was founded 38 years ago as a clean place to grab a piece of pie and a 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, from his office in Irvine. Callender will remain chief executive following the acquisition.

Industry analysts, who generally regard Marie Callender’s as a well-run operation, say that it was the high price tag of the chain that stalled the sale. With locations primarily in the western United States, Marie Callender’s tried to move upscale a few years ago by expanding its menu and improving its decor. But it now plans 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 also laid off about 400 corporate workers in 1985.

Marie Callender’s represents “a logical extension” of Ramada’s existing business lines, said Richard Anell, Ramada’s chairman. He said Ramada’s “extensive experience” in franchising could result in rapid growth of Marie Callender’s.

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 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. The biggest drop was in the firm’s gaming group, which saw a 33% decline in net income for the year.

Ramada’s annual revenues fell 3%, to $583.3 million from $600.2 million.

Marie Callender’s, which posted fiscal 1984 revenues 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 includes a plan to push simple items such as pot pies instead of other, more lavish dinner entrees, he said.

Callender, who still likes to literally stick a finger in his restaurants pies by helping in the kitchen, said that it was his age--not his financial condition--that prompted the sale. “For a kid who graduated school with all Ds, I’m proud of what I’ve done” said the 58-year-old executive. “But when I look back and see how fast the past 12 years have gone, I realize that in 12 more years I’ll be 70. I have to plan for the future.”

Marie Callender, Donald 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.”