A valuable Lewis-acid-catalysed domino reaction involving a Friedel–Crafts alkylation of variously substituted phenols followed by a direct lactonization has been successfully developed (22 examples, yields up to 98?%). This protocol tolerates not only opposite electron demand substituents on the starting materials, but also drastic modifications of the alkylating agents, and gives direct access to the corresponding 3-hydroxy-benzofuran-2-ones, which could easily undergo further chemical transformation. The relevance of our method was further confirmed by the straightforward synthesis of rac-BHFF, the recently discovered and extremely promising positive allosteric modulator of the GABAB receptor.