TGI Fridays files for bankruptcy; to explore alternatives
In a move that was not unexpected, TGI Fridays Inc. has filed for Chapter 11 bankruptcy protection.
In a statement, the Dallas-based casual-dining chain cited its capital structure and fallout from the Covid-19 pandemic as the “primary driver” of its financial challenges. The filing came days after the company abruptly closed 50 locations, which came on top of the 36 sites shuttered at the beginning of the year.
With the recent closings, TGI Fridays is now down to 39 domestic company-owned restaurants, which will remain open during the bankruptcy process. It also has franchised the brand to 56 franchisees in 41 countries. The bankruptcy only affects the parent company and not the franchisees that control the remaining locations. (There are currently more than 461 TGI Fridays restaurants in 41 countries.)
TGI Fridays said it expects to 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. According to court filings, the company estimated both its assets and liabilities as between $100 million and $500 million.
In addition to its financial woes, TGI Fridays is also the victim of increased competition and changing consumer tastes. Other chains in its sector have also struggled. Red Lobster filed for bankruptcy in May.
"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," said Rohit Manocha, executive chairman of TGI Fridays Inc. "This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential."
The TGI Fridays brand and related intellectual property are owned by a separate investor group, which is not included in the Chapter 11 process.
In addition to supporting franchise restaurants, TGI Fridays Inc. maintains operations across its corporate-owned restaurants in the U.S. The company has secured a commitment for debtor-in-possession financing to support operations while proceeding through the Chapter 11 process.
