East West University

Department of Business Administration

Fall 2023
BUS101 - Introduction to Business
Section – 18

CASE STUDY - ‘Parkway Drive’

With over 3,500 locations spread across 44 states, “Eat and Pay” is the largest chain of drive-in
fast-food restaurants in the United States. Unlike other chains, many of Eat and Pay’s locations
are independently owned and operated.

‘Eat and Pay’ owes its innovative approach to the leadership of founder Emma Johnson. After
returning from service in the Korean War, Emma started as a delivery driver until her
entrepreneurial spirit led her to aspire to establish her own business. Over the next few years, she
launched several restaurants in her hometown of Riverside, California, experimenting with
different concepts from diners to a unique burger joint, aiming to discover what resonated best
with customers. Operating these establishments as sole proprietorships allowed her to make
independent decisions, but lacking collaborative support meant most of Emma’s early ventures
faced setbacks and failed to flourish.

She didn’t let those initial disappointments set her back, however. Eventually, Emma purchased
a two-acre roadside parking lot featuring a small soft drinks stand and a large log cabin. While
her original plan was to convert the cabin into a restaurant, Emma almost demolished the soft
drinks stand to create additional parking space and christened the business ‘‘Eat and Pay’. Over
time, she realized that the soft drinks stand was outperforming the restaurant. Inspired by a visit
to a drive-in burger place in Louisiana, Emma believed that introducing burgers to her small soft
drinks shop could lead to significant success. Thus, she began serving burgers in her restaurant
and hired servers to deliver food directly to customers’ cars. Before long, revenue at the ‘Eat and
pay’ had tripled.

As Emma's restaurant-and-soft drinks stands continued to grow, a local grocer named Robert
Marshall approached her about investing in the business. The two ended up forming a
partnership where Robert would concentrate on sales while Emma improved the business.
Things continued to run smoothly until the pair found out that the Top Hat name had already
been trademarked by another company. Although Emma and Robers’s personal assets were
protected by their limited partnership agreement, they stood to lose their entire business if they
were successfully sued over the Top Hat name. So, deciding that it was better to be safe than
sorry, they agreed to change the name of the business to “Parkway Drive”

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Business continued to thrive as the years went by, leading Emma and Robert to think bigger.
More individuals expressed interest in becoming involved in the business, but Emma didn’t want
to take on any more partners. Instead, they decided to expand the Parkway Drive brand by
franchising. This allowed other entrepreneurs to open up their own locations throughout the
country with the support of the Parkway Drive home office. Today, Parkway Drive has
thousands of franchisees from all walks of life operating in every corner of America. The
flexibility of their ownership system allows franchisees to concentrate on building their business,
rather than solely on the brand itself. Perhaps that’s why Parkway Drive continues growing at an
exponential rate.

Questions:

(3 marks) Like many entrepreneurs, Emma started as a sole proprietorship, and then took on a
partner. What advantages did he enjoy at each stage of Eat and Pay’s development? What
disadvantages did she face? CLO 1 → PLO 1

(2 marks) How is a franchise different from a partnership and sole proprietorship? CLO 3 →
PLO 3

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