Friendly Ice Cream , which operates restaurants and sells its namesake ice cream in them and in other outlets, said on Wednesday it was exploring strategic options including a sale, as it comes under pressure from an activist investor.
The company said it hired Goldman Sachs as financial adviser and Weil Gotshal & Manges LLP as its legal adviser.
Friendly shareholder Sarder Biglari said in a letter to the board released on Tuesday that he was seeking to replace board members to improve operations at the company.
In the letter, the Texas-based investor said the company's debt costs are too high and may bankrupt the company if it does not start using free cash flow to reduce debt.
He said the company should focus more on its franchising business and that executive pay should be overhauled. He also said that the company, whose market capitalization is less than $100 million, should not have a poison pill, which can make a takeover more difficult.
Friendly reported fourth-quarter net income of 2 cents a share on Wednesday. Its shares closed at $11.84 on the American Stock Exchange on Tuesday.