BY Richard Summerfield
Citing financial challenges resulting from the coronavirus (COVID-19) pandemic and problems with the company’s wider capital structure, restaurant chain TGI Fridays Inc filed for Chapter 11 bankruptcy protection on Saturday in the Northern District of Texas.
In a filing with the court, the company listed both assets and liabilities in the range of $100m to $500m. TGI Fridays, which is privately owned by TriArtisan Capital Advisors, will use the Chapter 11 process to “explore strategic alternatives in order to ensure the long-term viability of the brand”.
Founded in 1965 as a bar in New York, TGI Fridays rapidly expanded over the decades, peaking in 2008 with 601 restaurants in the US and a $2bn business. Today, the company counts 163 restaurants in the US, down from 269 last year. It closed 36 in January and dozens more in the week prior to the filing. The company’s sales in the US were $728m in 2023, down 15 percent from the prior year, according to Technomic.
However, thanks to the company’s franchise model, TGI Fridays said it only owns and operates 39 restaurants in the US, which is just a fraction of the 461 TGI Fridays-branded restaurants around the world. A separate entity, TGI Fridays Franchisor, owns the company’s intellectual property and has franchised the brand to 56 independent owners in 41 countries. Those other locations remain open.
“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,” said Rohit Manocha, executive chairman of TGI Fridays. “The primary driver of our financial challenges resulted from COVID-19 and our capital structure. This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.”
In September, British restaurant operator Hostmore abandoned plans to buy TGI Fridays after it was removed as the manager of TGIF Funding, which owns the right to collect royalties from the restaurant chain franchise. Hostmore's shares plummeted 90 percent, eventually leading it to announce plans to enter administration due to overwhelming debt.
The US casual dining industry has endured a turbulent few months. In September, a US bankruptcy judge approved a reorganisation plan for seafood chain Red Lobster after years of mounting losses. Italian American food chain Buca di Beppo filed for bankruptcy protection in August.
News: TGI Fridays operator files for bankruptcy amid financial woes