For decades, food was part of what a Walgreens was. The company, Jim Collins wrote, had invented the malted milk shake. Food service was a family tradition that went back to the chief executive’s grandfather, and some outlets were named after the chief executive himself: a restaurant chain called Corky’s.
That chief executive was Charles R. “Cork” Walgreen III. His executive team had debated for years what to do with the food business. Eventually, Collins wrote, Walgreen sensed the team had reached a conclusion: the company’s brightest future lay in convenient drugstores, not in food service.
Dan Jorndt, who later succeeded Walgreen, described to Collins what happened next. “Cork said at one of our planning committee meetings, ‘Okay, now I am going to draw the line in the sand. We are going to be out of the restaurant business completely in five years.’ At the time we had more than 500 restaurants. You could have heard a pin drop.”
Six months later, at the next planning meeting, someone mentioned in passing that they had five years to get out. Walgreen was “not a real vociferous fellow,” in Jorndt’s words. He tapped on the table. “Listen, you now have four and a half years. I said you had five years six months ago. Now you’ve got four and a half years.”
The next day, Jorndt said, things really clicked into gear for winding down the restaurants.
The restaurants were not the largest part of the business, Collins noted, but they did add substantial profits to the bottom line. In his telling, the hard part was more emotional than financial.
Collins made Walgreens one of the 11 companies in Good to Great. He summed up its strategy as the most convenient drugstores with high “profit per customer visit,” and by his count the company outperformed the stock market 16 to 1 from its transition in 1975 to 2000.
On September 1, 1988, the Deseret News reported that Marriott had completed its purchase of the Wag’s family restaurant chain from Walgreen Co.: 91 free-standing, 24-hour restaurants in Florida and Illinois, four of them still under construction. Marriott would keep the Wag’s name “for now.” The sale, the paper reported, “substantially removes Walgreens from the restaurant business, allowing it to concentrate on drug store expansion.”