Maid Rite Corporation Business Information, Profile, and History

Company Perspectives:

Maid-Rite is one of America's first quick service casual dining franchise restaurants since we first opened in 1926. We were ahead of our time when we developed one of the first drive-up, walk-up windows for customer convenience. Our philosophy of doing whatever it takes for our customer's satisfaction in serving great tasting made to order food at an affordable price in a friendly environment of hometown hospitality has always been the cornerstone of Maid-Rite's customer service philosophy.

History of Maid Rite Corporation

Maid-Rite Corporation's franchise restaurants have been serving their signature "loose meat" ground beef sandwiches since 1926. While at one time there were as many as 400 Maid-Rite restaurants in small midwestern towns, only some 60 to 80 stores now remain in business. They are something of an institution in eastern Iowa and Illinois, with a few locations in Missouri, Nebraska, Wisconsin, and Minnesota as well. The chain was a fast food pioneer decades before McDonald's entered the scene, but it did not have the centralized effort and resources to partake in the franchising boom of the 1960s and 70s. The Maid-Rite franchise was loosely managed during this period and, as a result, Maid-Rite restaurants differ significantly from one another in their menus, decor, and store hours. Most of the franchises are locally owned and have a strong local flavor. The parent company owns only two locations. Although the restaurants are little known outside their home territory, many people who grew up near a Maid-Rite developed a strong attachment to the restaurant. One store even operates a mail-order business that ships frozen sandwiches as far away as Texas and Florida. In 2002, a group of investors purchased the chain with ambitious plans to tighten operations and open hundreds of new Maid-Rites across the Midwest.

An Early Fast Food Operation: 1926 to World War II

Iowa butcher Fred Angell created the first Maid-Rite sandwich in 1926. Legend has it that he served a crumbly beef sandwich with a special seasoning blend to a passing delivery man, who proclaimed that it was "made just right." Angell thereafter dubbed the sandwich "Maid-Rite," a name that he regarded as conveying a wholesome and pure aura. He opened his first restaurant in Muscatine, an Iowa river town just across the Mississippi from Illinois. Angell sold his sandwiches at a walk-up window, an innovation that would eventually develop into the familiar fast food drive-up window. The only other fast food franchise existing at the time was White Castle, which had been founded five years earlier.

As a franchise, the Maid-Rite concept spread largely through word of mouth. In 1927, Angell sold franchise rights to a woman in the town of Newton, about 25 miles east of Des Moines in central Iowa. Clifford Taylor, a resident of Newton, bought rights for Marshalltown, Iowa, in 1928 and opened Taylor's Maid-Rite Hamburger Shop. Taylor's contract was signed by a certain Floyd Angell, whose relationship to Fred Angell remains unknown. The contract had no stipulations related to royalties; Taylor simply paid $300 to use the Maid-Rite name and operated his store independently. He baked pies at home, bought pickles from the local vinegar works, and got his hamburger buns from the bakery down the street. Another early restaurant was located in Springfield, Illinois. This location had been started in 1921 by Arthur Knippenburg, who gave it to his friend Clyde Holbrook. After Maid-Rite was founded, the Springfield store adopted the chain's name but remained independent.

The chain continued to expand using an owner-operator strategy, so that most franchisees owned a single restaurant and had strong local roots. Maid-Rite's first logo was a friendly-looking maiden who adorned the top of most restaurants opened in the early years of the franchise. The classic Maid-Rite sandwich was made of ground beef cooked in a special steamer and served on a hot bun with a spoon to scoop up the filling that fell out. Angell developed a special seasoning for the filling and began to require that all franchises use it. However, Taylor's Maid-Rite in Marshalltown never adopted the seasoning; Angell respected the original terms of Taylor's contract, which was drawn up before the seasoning was created. In addition, some franchises stopped using the seasoning during World War II because of rationing and never switched back, since their communities had gotten used to the unseasoned sandwich. The original sandwich came with only three condiments: mustard, pickles, and onions.

Decentralized Growth: 1950-82

Franchising and distribution continued to be handled out of Muscatine as the Maid-Rite chain grew. The Maid-Rite Franchise Association estimates that the chain had between 300 and 400 stores at its high point. There were locations in nearly 20 states. Fred Angell's son Francis and his wife Bea became involved in the business. Over the decades, the Angell family sold franchises to people in Missouri, Nebraska, Minnesota, Wisconsin, and Michigan, but the largest concentration of Maid-Rites continued to be in eastern Iowa and western Illinois. Store owners began to vary the menu as they saw fit, adding such items as French fries and milk shakes. Without a strongly centralized chain identity, the development of the Maid-Rite franchise was largely determined by the steps individual locations took to respond to customer demand in their area.

For example, Nina Scudder bought a restaurant in downtown Toledo, Iowa, in 1946 and converted it into a Maid-Rite. Ten years later, she moved the restaurant to a new location on the recently built U.S. Highway 30. Her sons Bob and Gene joined the business; in 1972, it was sold to Dick Ridout. Ridout remodeled the interior and added menu items such as broasted chicken, fresh-baked donuts, and breakfast foods. In the 1980s, he built an addition for more table space. The store attracted customers with a Sunday breakfast special and a Saturday dinner special. In 2002, local residents Brad and Robin Crawford took over the operation. Robin had started as a waitress at the Toledo Maid-Rite in 1975 and subsequently acted as their bookkeeper for 25 years. They planned to carry on with the store's decades-old method of operation.

A location in Rolla, Missouri, opened in 1955. Bill Smith was the original owner. He bought an ice cream shop with a walk-up window and converted it into a Maid-Rite. For two decades, the restaurant had no interior seating. Larry Sherrell bought it in 1973 and added indoor tables, expanding even further in the 1980s when people began having trouble finding a place to sit. Maid-Rite stores were free to adopt whatever operating hours they desired. Sherrell opted to close his store for a full two weeks every Christmas, and regular customers eagerly anticipated its reopening every new year.

Meanwhile, the original Maid-Rite restaurant in Muscatine was still in operation, along with a second location that had opened along the river in 1928. In 1973, after the site of the original store was condemned and converted to a parking lot, the restaurant moved to a new downtown location. Francis Angell died a few months after the move, and his son Bill began to operate the Muscatine stores and oversee the whole chain. Larry Meyer, a childhood friend of Bill Angell who had helped out at Maid-Rite as a child, bought the two Muscatine stores in 1997. He closed the ailing downtown location but retained the riverside store, which had survived two fires and a car crash through its wall. Meyer diversified the menu with breakfast items and a regular hamburger.

Taylor's Marshalltown Maid-Rite, on the other hand, stuck firmly to the traditional menu. Founder Clifford Taylor had died in 1944, and his son Don took over. Don built a cooler in the basement so that they could freshly grind hamburger daily and in 1958 moved across the street to a new state-of-the-art location with all stainless steel equipment and two cash registers. A Marshalltown native told the Des Moines Business Record in 1999, "Every Saturday night, this place was the big deal. We'd stop here and get two Maid-Rites and a malt and take them to the races with us. Every Saturday night." After Don died, his wife Polly operated the store. In 1985, she asked Clifford's great-grandson Don Taylor Short to help out. While other Maid-Rites were enlarging their menus, the Marshalltown franchise did not even provide ketchup: they honored the original contract, which stipulated that mustard, onions, and pickles were to be the only seasonings. Furthermore, Short did not add French fries to the menu because he did not want to have to bother cleaning a fryer. The Maid-Rite sandwich alone was enough to keep the customers coming in Marshalltown.

Gillotti Ownership: 1982-2002

In the 1970s, the food service industry began getting more and more competitive. McDonald's stores and other franchises were starting to blanket the nation. While the competition pushed many Maid-Rites out of business, others reported that the McDonald's phenomenon improved business, since it got people in the habit of eating out more frequently. Stores with a strong local following survived, but the Maid-Rite chain as a whole was left behind in the franchise boom. The Angell family did not have the money to expand nationally but at the same time it became increasingly difficult to run all the distribution out of Muscatine. Consequently, stores were allowed to buy their own supplies. Bill Angell continued to sign franchise agreements but did not conduct any centralized marketing.

In 1982, Angell went into the financial advising business and sold the Maid-Rite chain to Clayton Blue. Blue's partner John Gillotti provided most of the money for installment payments on the chain, and when Blue eventually defaulted on the contract Gillotti acquired all the assets of business. Blue remained involved in selling franchise contracts. A publicly held company called Maid-Rite Ventures, Inc., headed by Larry Meurlott and Brad Schoech, was formed around 1985. Gillotti was also on the board of directors. Schoech had a string of bankruptcy filings in his background and a history of questionable business dealings. Maid-Rite Ventures announced that it had acquired a chain of stores that expanded the franchise into Texas, Colorado, Nebraska, Kansas, Arkansas, Oklahoma, South Carolina, California, New Jersey, Pennsylvania, Washington, Oregon, Florida, and the greater Chicago area. However, the company is not known to have actually opened any stores, and it eventually changed its name and pursued unrelated business opportunities. Under the Gillottis, the Maid-Rite chain continued to be loosely managed. They did invest quite a bit of money into the business and hired a consulting firm from Chicago to present recommendations on franchise development. In the end, however, they did little more than open a few company-owned stores in Des Moines. The chain had a total of about 150 stores in the mid-1980s.

The largest Maid-Rite franchise to actually operate stores started in 1982 in the Quad City area of Illinois. Dave Collins, Joe Montenguise, and Larry Selser, three partners with a background at McDonald's, bought two stores in the cities of Milan and Moline. They dubbed their enterprise CSM Holding Company. Over time, they bought other locations and opened new stores until they had about a dozen locations in all. Their efforts greatly improved the chain's reputation in the Quad City area. They began remodeling stores to a 1950s theme in the late 1980s and added dinner items such as roast beef, pork chops, meat loaf, and spaghetti. In 1993, CSM Holding opened a store in Springfield, Illinois, where the 1921 Maid-Rite was still operating in its original location, a distinctive wood-framed tugboat-shaped building. In fact, the site had been put on the National Register of Historic Places and the owner, Clarence Donley, claimed it had the world's first drive-up window. Donley sued successfully to have the new Maid-Rite closed, claiming he had the original right to the Maid-Rite name, and CSM pulled out of Springfield.

Marlo Gillotti was running the Maid-Rite chain by the mid-1990s. After John Gillotti died in 1991, Clayton Blue produced a contract indicating that the business should pass to him. Following a legal battle, the court ruled in favor of the Gillotti estate, noting that the contract showed signs of tampering.

Maid-Rite got some unexpected publicity around 1993 thanks to the television show Roseanne, starring Roseanne Barr and Tom Arnold. Arnold happened to be a native of Iowa. On the show, Roseanne opened a diner serving a "crumbly burger from Iowa," and Midwesterners who knew about Maid-Rite picked up on the reference. The Maid-Rite mail order business started up around the same time, when a one-time Marshalltown resident asked Don Taylor Short to freeze a few sandwiches and mail them in an overnight box. After the customer reordered, Short began advertising mail order service, and by the late 1990s the store was sending out about 1,000 shipments a year. The service was advertised on the Marshalltown store's own web site.

A New Owner and Ambitious Plans: 2002-04

Late in the 1990s, the total number of Maid-Rite stores fell under 100. The Gillotti family hired Bradley Burt, a former Des Moines banker with his own marketing firm, to help them develop the chain. Burt ended up buying the chain in 2002 with a group of 13 other investors and afterward became the company's president and CEO. He had ambitious plans to revive the Maid-Rite franchise by standardizing operations, increasing promotional support for stores, and providing intensive training for franchisees. The new owners developed operating manuals, quality standards, and a seven-day "Maid-Rite University" for new store owners. Building on the successful formula of some franchisees, the new management came up with a 1950s style store design and an enhanced menu featuring mini-donuts, a pork sandwich, fresh-ground gourmet coffee, and cinnamon rolls for breakfast. "We have what I think is a treasure chest that just needs to be opened and given what it needs to be successful," Burt told the Nation's Restaurant News in 2002.

However, Burt's plans clashed with existing stores that had been operating successfully for decades in their own idiosyncratic way. Stores that ground their own beef, for example, did not want to use the precooked product provided by the Des Moines headquarters. The new management put the pressure on by starting to strictly enforce contracts that had been handled lackadaisically for years. Some stores closed, worried they would have to construct a new building and adopt a new menu when the time came for contract renewal. Other stores banded together to form the Maid-Rite Franchise Association, with Dave Collins of CSM Holding acting as president. After the Franchise Association found legal representation, the Maid-Rite headquarters toned down its approach and gave the existing restaurants more leeway. Meanwhile, Burt planned to opened 35 new stores by 2006 and hundreds more over the next several years. Neal Schuerer and Herbert Neubauer of Amana, Iowa, opened a local store conforming with the new style and also acquired a franchise for the Kansas City, Missouri, area, with plans to build 19 stores there. In Des Moines, company stores that had adopted the new menu reported improved business. The chain was also negotiating development agreements for Arizona, Florida, and parts of Chicago. Burt was doing his best to transform the underdeveloped chain into a consistent and widely recognized brand.

Principal Competitors: McDonald's Corporation; White Castle System Inc.; Subway; Burger King Corporation.

Chronology

• Key Dates:
• 1926: Fred Angell opens the first Maid-Rite in Muscatine, Iowa.
• 1970s:Fast food franchising takes off, but Maid-Rite remains loosely managed.
• 1982: Clayton Blue and John Gillotti acquire the chain.
• 1993: The Marshalltown, Iowa, location begins to offer frozen mail-order Maid-Rites.
• 2002: Bradley Burt takes control of the chain with plans to expand and tighten its operations.