The casual dining chain TGI Fridays has initiated Chapter 11 bankruptcy proceedings in Texas, marking a steep decline for a restaurant brand that once dominated American popular culture. The Dallas-based company announced the filing on Saturday, Nov. 2, in a press release stating it would “use the time and legal protections made available through the Chapter 11 restructuring process to allow the Company to explore strategic alternatives in order to ensure the long-term viability of the brand,” per RetailWire.
Executive Chairman Rohit Manocha attributed the company’s financial difficulties primarily to the pandemic’s impact and capital structure challenges. “The primary driver of our financial challenges resulted from COVID-19 and our capital structure,” Manocha stated via the outlet. “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.”
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The restaurant chain’s presence has diminished dramatically from its peak in 2008, when it operated 601 U.S. locations and generated $2 billion in business, according to Kevin Schimpf, director of industry research at Technomic, per AP News. Current figures show a sharp decline, with U.S. sales dropping to $728 million in 2023, representing a 15% decrease from the previous year. The chain now maintains just 163 U.S. locations, a significant reduction from 269 establishments in 2023, following the closure of 36 restaurants in January and numerous others in recent weeks.
TGI Fridays Inc., which directly owns and operates 39 U.S. restaurants, represents only a fraction of the brand’s global presence of 461 TGI Friday-branded restaurants. The bankruptcy filing doesn’t affect TGI Fridays Franchisor, the separate entity owning the intellectual property and managing franchise agreements with 56 independent owners across 41 countries. Those locations remain open, the outlet reports.
The company’s international operations have also faced challenges. In the United Kingdom, over 1,000 workers lost their jobs following the closure of 36 locations last month. However, a joint acquisition by private equity firms Breal Capital and Calveton U.K. preserved approximately 2,400 jobs by maintaining 51 of the 87 locations previously operated by former U.K. master franchisee Hostmore PLC, according to Nation’s Restaurant News.
Founded in 1965 as a Manhattan cocktail bar and restaurant, TGI Fridays evolved into a suburban cultural phenomenon known for its distinctive red-striped decor, Tiffany-style lamps, and signature dishes like ribs and potato skins topped with cheese and bacon. The chain’s influential impact extended to Hollywood, with its bartenders reportedly training Tom Cruise for his role in the 1988 film Cocktail and its serving staff’s button-filled uniforms being parodied in the 1999 film Office Space.
The bankruptcy filing reflects broader challenges facing traditional sit-down restaurant chains, as consumers increasingly favor food delivery services or upscale fast-food alternatives like Chipotle and Shake Shack. This trend has particularly affected established casual dining brands, with seafood chain Red Lobster receiving approval for its reorganization plan in September after experiencing mounting losses and diminishing customer numbers.
TGI Fridays joins several major retail and restaurant brands filing for bankruptcy protection in 2024, including Red Lobster, Big Lots, Tupperware, Express, and Joann. The restaurant industry faced unprecedented challenges during the COVID-19 pandemic, with dining establishments forced to suspend operations or dramatically alter their business practices, leaving many unable to regain their financial footing in the following years. According to earlier company statements, the targeted U.S. restaurant closures earlier this year affected locations that were not performing well in their respective markets, per RetailWire.
The company has secured financing to maintain operations at its corporate-owned locations during the restructuring process, with franchised restaurants continuing normal operations under a Transition Services Agreement that provides ongoing funding and support to franchisees, the outlet reports. This arrangement aims to minimize disruption to the brand’s global operations while the corporation pursues protection under the Chapter 11 filing.
