Restaurant chain TGI Fridays filed for Chapter 11 bankruptcy protection in Texas. The Dallas-based company wants to “ensure the long-term viability” of its casual dining brand. The decision follows the closure of numerous branches this year.
- Chapter 11 Bankruptcy: TGI Fridays filed for Chapter 11 bankruptcy to restructure its finances, aiming to stabilize and preserve its brand amidst ongoing challenges.
- Decline in Casual Dining: Facing competition from delivery services and fast-casual options like Chipotle, the casual dining industry has struggled post-pandemic, affecting chains like Red Lobster and TGI Fridays.
- Branch Closures: TGI Fridays’ US locations have decreased dramatically, with only 163 locations open today compared to 601 at its peak in 2008.
- Global Franchise Operations Remain: While the parent company restructures, the franchised international locations and independent owners are unaffected and continue to operate.
Rohit Manocha, TGI Fridays Executive Chairman, explained the financial challenges. He cited COVID-19 and the company’s capital structure as primary factors. These factors have affected many sit-down chain restaurants in recent years. Diners increasingly prefer delivery or upscale fast food options like Chipotle and Shake Shack.
Industry challenges have been significant. In September, a US bankruptcy judge approved a reorganization plan for Red Lobster, another struggling chain. TGI Fridays, founded in 1965, reached peak popularity in 2008. At that time, it operated 601 US restaurants and generated $2 billion in business. According to Technomic’s Kevin Schimpf, US sales for TGI Fridays dropped to $728 million in 2023, a 15% decrease from the previous year.
Currently, the chain has 163 US locations, down from 269 the previous year. The company closed 36 branches in January and has shut down many more recently. TGI Fridays Inc. owns and operates 39 of the US restaurants. A separate entity, TGI Fridays Franchisor, manages the brand’s intellectual property. This entity franchises the brand to 56 independent owners across 41 countries. These franchised locations remain open.
The pandemic forced many dining establishments to adapt or shut down. Casual dining chains face competition from fresher, faster, and cheaper alternatives like Shake Shack. TGI Fridays joins several well-known chains filing for bankruptcy this year, including Red Lobster, Big Lots, Tupperware, Express, and Joann.
The bankruptcy filing affects TGI Fridays’ parent company, not the franchised locations. The company secured financing to keep its locations operational during the bankruptcy process. This move aims to protect stakeholders, including franchisees and team members worldwide. TGI Fridays’ situation reflects broader industry trends as casual dining faces evolving consumer preferences.