Friendly's, a 76-year-old chain of ice cream parlor restaurant franchises known for its Happy Ending sundaes, has filed for chapter 11 bankruptcy, citing the spiraling economy and shift in consumer spending.

Friendly's Ice Cream Corp. will keep 424 of its chains open, though it has already closed 63 of its chains, costing the jobs of 1,260 individuals.

Friendly's cited the reasons for its sale and closing of chains to the challenges of the current economic downturn, according to the bankruptcy papers filed. The east coast chain restaurant hopes an auction, scheduled for Dec. 1 and finalized four days later, will allow for a reemergence of a stronger company with a strategic restructure.

An affiliate of its current owner, Sun Capital Partners Inc., has been identified as the lead bidder according to the bankruptcy claims, bidding about $120 million with cash to pay lenders and unsecured creditors. All bids for the Friendly's auction must be submitted by Nov. 24, according to court documents.

The first Friendly's restaurant opened in 1935 in Springfield, Mass., specializing in juicy burgers and ice cream sundaes. The founders of Friendly's first sold the company in 1979 to Hersheys Foods Corp before it was bought by Donald N. Smith, who created the Cyclone soft-serve dessert, in 1988, according to Business Week.

Friendly's first went public in 1997 before it was purchased by Sun Capital in 2007 for $395 million.

The Wilbraham, Mass. company's debt, estimated at about $297 million according to court documents, has prevented it from remodeling its restaurants, which are in dire need of renovation.

It's horrible, CRG partners analyst Gene Baldwin told Reuters regarding the quality of Friendly's. The facilities are terrible and need to be redone.

In addition to poor quality of its facilities, Friendly's attempted to cut back prices to better fit the budgets of frugal customers looming on the prospect of another recession, but was unsuccessful due to rising prices for cream and high rents, Reuters reports.

Since its biggest selling points are its hearty American meals followed by Happy Ending ice cream sundaes, which it also produces for supermarkets and retailers, Friendly's does not cater to the health-conscious shift in the tastes of consumers, who opt for more healthy alternatives.

 In addition to Friendly's filing for bankruptcy, Perkins,  Marie Callender's, Real Mex and SSI Group Holding Corp., which operates Souper Salad and Grandy's restaurant, went bankrupt this year.