TGI Fridays, a popular casual dining chain, announced its filing for Chapter 11 bankruptcy protection on Saturday, following in the footsteps of the well-known seafood chain Red Lobster, which has also faced financial difficulties.
The company filed for bankruptcy in the United States Northern District of Texas court in Dallas on Saturday, citing the impact of the COVID-19 pandemic as one of the reasons for its financial distress. The application involves 39 TGI Fridays locations owned by TGI Fridays Inc. in the United States.
In a statement, TGI Fridays acknowledged that the consequences of the pandemic have been a major driver of their financial challenges. The company stated that it will utilize the procedures under Chapter 11 of the U.S. Bankruptcy Code to “explore strategic alternative options to ensure the long-term viability of the brand.”
CEO Rohit Manocha emphasized in a press release that the announced measures, though difficult, are necessary to protect the interests of stakeholders, including domestic and international franchisees and valuable team members across the globe. He mentioned that the restructuring will enable their restaurants to continue operating on an optimized corporate infrastructure basis to reach their full potential.
The parent company of TGI Fridays, TGI Fridays Inc., operates the 39 restaurants affected by the bankruptcy filing, while other locations controlled by franchisees are not impacted. Funding has been secured for these 39 locations to remain open as usual during the bankruptcy process.
The remaining TGI Fridays locations in the U.S. (over 160) and internationally, along with the TGI Fridays brand and intellectual property, are owned by another entity, TGI Fridays Franchisor, LLC, which confirmed that those outlets will continue to operate.
According to John Bringardner, head of the financial information platform Debtwire, TGI Fridays has halted rent payments to landlords and other suppliers for the current month to provide breathing room for restructuring efforts. As part of the restructuring, the parent company may need to close or sell unprofitable locations.
Established in Manhattan in 1965, TGI Fridays was a popular gathering spot for singles and one of the early promoters of the concept of “happy hour,” where dining out was not just about food but also about seeking a weekend party atmosphere on Friday nights. Its menu featured a variety of American-style dishes like chicken wings, potato skins, and burgers.
Struggling to fully recover from the pandemic, the restaurant chain faced months of indoor dining closures. Coupled with inflation pressures on middle-class customers, the nearly 60-year-old chain found itself in financial distress.
In January, TGI Fridays abruptly closed dozens of locations across the U.S. Last week, another 50 stores were shuttered. Before this recent wave of closures, TGI Fridays had around 270 locations in the U.S.
To compete with rivals, particularly Applebee’s and Chili’s, TGI Fridays made menu changes by adding sushi, revamping its cocktail menu, and completely overhauling its appetizer selections.
In September, TGI Fridays encountered difficulties in the United Kingdom. A buyout plan proposed by its UK franchisee fell through, leading to the company’s bankruptcy. Several restaurants in the region are being closed, resulting in 1,000 job losses.
With this latest development, TGI Fridays joins the ranks of Red Lobster and Buca di Beppo chains in seeking Chapter 11 bankruptcy protection.