3-11-2024 (NEW YORK) American casual dining stalwart TGI Fridays has filed for Chapter 11 bankruptcy protection, marking another casualty in the struggling restaurant sector as it grapples with the lasting impact of the COVID-19 pandemic.
The company, which pioneered the “happy hour” concept after its 1965 Manhattan debut, announced the filing on Saturday, citing pandemic-related challenges as the primary catalyst for its financial difficulties. The bankruptcy affects the parent company’s 39 corporate-owned restaurants, while franchised locations will continue operating independently.
Executive Chairman Rohit Manocha described the move as “difficult but necessary” to ensure the brand’s future viability. The company has secured financing to maintain normal operations during the restructuring process, though industry analyst John Bringardner of Debtwire suggests unprofitable locations may face closure or sale.
The chain has already witnessed significant contraction, with recent closures reducing its US presence from approximately 270 locations to just 163. A particularly aggressive downsizing saw 50 outlets shuttered last week alone, highlighting the extent of the company’s difficulties.
The iconic restaurant chain, known for its distinctive red-and-white striped décor and americana memorabilia, has struggled to adapt to changing market conditions. Despite efforts to modernise its menu with additions like sushi and refreshed cocktail offerings, the company has failed to fully recover from pandemic-era disruptions and mounting inflationary pressures affecting its core middle-class customer base.
The filing follows similar moves by industry peers Red Lobster and Buca di Beppo, reflecting broader challenges in the casual dining sector. TGI Fridays’ international operations have also faced setbacks, with its UK division entering administration in September, resulting in numerous closures and approximately 1,000 job losses.
The privately-held company, owned by TriArtisan Capital Advisors, had projected total sales of $1.6 billion for 2022, with same-store US sales showing an 8% increase compared to 2019 levels. However, these figures proved insufficient to prevent the current restructuring.
This development represents a significant shift for the restaurant chain that once revolutionised American casual dining culture, famous for its festive atmosphere and staff adorned with decorative “flair” – a practice that even inspired a memorable scene in the cult film “Office Space.”
