The bankruptcy affects TGI Fridays’ 39 company-operated locations. | Photo: Shutterstock
TGI Fridays filed for Chapter 11 bankruptcy on Saturday, blaming fallout from COVID-19 and its capital structure for its financial problems.
The Dallas-based casual-dining chain reported both assets and liabilities of between $100 million and $500 million. It will use the bankruptcy process to restructure its finances and continue operating, likely under a new owner. It has secured financing to support its operations as it works through the process.
The bankruptcy, filed in the Northern District of Texas, affects only Fridays’ 39 company-owned U.S. locations. Franchised locations in 41 countries will continue operating as usual.
“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 Inc. “This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.”
The bankruptcy caps a tumultuous year for TGI Fridays, which has closed about 100 U.S. restaurants, lost control of most of its assets and had a sale fall apart.
But the chain’s struggles have been apparent for years and predate the pandemic. From 2008 to 2023, TGI Fridays lost 55% of its U.S. locations, and sales declined by 63%, according to data from Restaurant Business sister company Technomic. Its only year of sales growth during that period was 2021. Last year, sales fell 15%.
Casual-dining chains at large have suffered for years as consumers shift from sit-down restaurant meals to limited service and takeout. Those problems have been exacerbated in recent years by inflation, which has caused consumers to become more careful with their spending. Last year, casual-dining traffic fell 1.6%, according to Technomic.Â
TGI Fridays is the third casual-dining chain to file for bankruptcy this year, joining Red Lobster and Buca di Beppo. There have been dozens of restaurant bankruptcies this year.
Things appeared to be breaking bad for Fridays in January, when it announced it was closing 36 underperforming locations.
Four months later, it announced plans to merge with U.K. franchisee Hostmore PLC for $220 million in a deal that was expected to bring some stability to both sides. But by August, that plan was on hold as the two companies worked to sell corporate locations to pay down debt. Â
Then, in September, TGI Fridays was terminated as the manager of its $375 million whole business securitization (WBS). As a result, it lost control of some of its operations, including its franchise business and royalty stream. The rare termination was due in part to an overpayment of a management fee from the securitization to TGI Fridays.
Days later, Hostmore called off the acquisition, citing the uncertainty surrounding the WBS issue. Hostmore then filed for the U.K. equivalent of bankruptcy and closed 35 locations.
In recent weeks, TGI Fridays closed more than 50 additional restaurants across the U.S. As of Saturday, its website showed 163 U.S. locations.
TGI Fridays was founded in 1965 in New York City as a laid-back bar and grill and became a popular hangout for young people. It would go on to become one of the first casual-dining chains and a popular global brand known for its ribs, loaded potato skins and cocktails. As of last year, it had more than 600 restaurants worldwide.
In 2014, private-equity firms TriArtisan Capital Partners and Sentinel Capital acquired TGI Fridays from travel company Carlson for $890 million. TriArtisan later bought out Sentinel’s stake and remains majority owner.
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