TGI Fridays files for bankruptcy

new York
CNN
—

TGI Fridays Inc., the American casual dining chain, filed for Chapter 11 bankruptcy protection on Saturday.

The company said in a statement that the impact of the Covid-19 pandemic was the “primary reason for our financial challenges” and that it would use the Chapter 11 process to “examine strategic alternatives to ensure the long-term viability of the brand ensure”. ”

“The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world,” Rohit Manocha, chief executive officer of TGI Fridays, said in a statement Explanation.

The bankruptcy affects TGI Fridays’ parent company, which operates 39 restaurants, rather than the franchisees that control the remaining locations. The company has secured financing so that all restaurants can continue to operate as usual during the bankruptcy process.

TGI Fridays has “stopped paying monthly rent to landlords and other vendors, giving them room to restructure,” John Bringardner, head of Debtwire, told CNN. He added that the parent company “will likely have to close or sell unprofitable locations as part of the restructuring.”

TGI Fridays, founded in 1965 in Manhattan as a meeting place for singles, was one of the first major chains to popularize the “happy hour” concept. The menu features a wide variety of American comfort food, including chicken wings, potato skins and hamburgers.

Guests immediately recognize the kitschy interior, with Tiffany-style lamps and large red booths, as well as a large bar that is usually the focus of a TGI on Fridays. Additionally, service personnel wore “flair,” or pins, and other decorative pieces on their uniforms, which became a joke in the 1999 film “Office Space.”

TGI Fridays never fully recovered from the pandemic, which caused indoor dining at restaurants to remain closed for several months. This, coupled with inflationary pressures on middle-class customers, created financial chaos for the nearly six-decade-old chain.

In January 2024, TGI Fridays abruptly closed dozens of locations across the United States and has quietly continued to shutter restaurants. Last week, 50 locations were closed, reducing the number to 163. Before the wave of closures this year, TGI Fridays had about 270 locations in the United States.

TGI Fridays is privately owned by TriArtisan Capital Advisors, a private equity firm, so no financial results are disclosed. However, the company said last year that total sales were expected to reach $1.6 billion in 2022, with U.S. same-store sales increasing 8% compared to 2019.

In order to compete with its competitors, particularly Applebee’s and Chili’s, the company also changed its menu by adding sushi, refreshing the cocktail menu, and revamping the entrée selection.

In September, TGI Fridays’ operations in the UK also ran into difficulties. A planned takeover by the British franchisee failed and the company went bankrupt. It is in the process of closing dozens of restaurants in the region and losing 1,000 jobs.

TGI Fridays joins chains Red Lobster and Buca di Beppo, both of which filed for Chapter 11 bankruptcy protection in recent months. However, the latter emerged from bankruptcy and hired a senior executive from PF Chang to get the business back on track.