TGI Fridays Files for Bankruptcy Protection Amid Financial Struggles

 

The casual dining chain TGI Fridays has filed for Chapter 11 bankruptcy protection, taking this step in a Texas federal court on Saturday as it seeks solutions to ensure the long-term sustainability of the brand. This move comes after the company has closed a significant number of its locations throughout the year.

Rohit Manocha, the executive chair of TGI Fridays, attributed the financial difficulties to two main factors: the ongoing repercussions of the COVID-19 pandemic and the company's capital structure. The pandemic has had a lasting impact on the restaurant industry, leading many consumers to prefer delivery services or opt for upscale fast-food alternatives, such as Chipotle and Shake Shack.

The company, which is based in Dallas, has seen a notable decline in its operations. At its peak in 2008, TGI Fridays boasted 601 locations in the United States and reported revenues of $2 billion. However, recent figures from Technomic reveal a drop in sales, with revenues hitting $728 million in 2023, a 15% decline from the previous year. As of now, TGI Fridays operates just 163 restaurants in the U.S., a significant reduction from 269 last year, following the closure of 36 locations in January and numerous others in recent weeks.

The current bankruptcy filing follows a broader trend in the casual dining sector, which has struggled to adapt to changing consumer habits. In a related note, Hostmore, the UK operator of TGI Fridays, has also entered administration as it attempts to sell its 87 restaurants across the UK, following a failed acquisition of the U.S. chain.

TGI Fridays Inc. currently operates only 39 of its U.S. locations directly, while the remaining 124 are franchised. The brand’s international presence remains intact, with TGI Fridays Franchisor managing the intellectual property and granting franchises to independent operators across 41 countries.

As the company navigates these financial challenges, it is hopeful that restructuring through bankruptcy protection will allow it to emerge stronger and more viable in a highly competitive market.