TGI Fridays files for bankruptcy

TGI Fridays Inc., the American casual dining chain, filed for Chapter 11 bankruptcy protection on Saturday. In a statement, the company attributed its financial difficulties primarily to the effects of the Covid-19 pandemic and stated its intention to use the Chapter 11 process to explore strategic alternatives aimed at ensuring the long-term sustainability of the brand.

“The next steps we announced today are tough yet necessary to safeguard the best interests of our stakeholders, including our domestic and international franchisees and our dedicated team members worldwide,” Rohit Manocha, executive chairman of TGI Fridays, remarked in the statement.

The bankruptcy filing impacts TGI Fridays’ parent company, which operates 39 restaurants, but does not affect the franchisees that manage the majority of locations. The company has secured financing to ensure that all restaurants continue to operate as usual during the bankruptcy proceedings.

According to John Bringardner, head of Debtwire, TGI Fridays has suspended this month’s rent payments to landlords and other vendors, which provides the company with respite while it works on restructuring. He noted that as part of the restructuring process, the parent company may need to close or divest underperforming locations.

Founded in Manhattan in 1965 as a social gathering place for singles, TGI Fridays was one of the first major chains to popularize the “happy hour” concept. The menu includes a diverse selection of American comfort food, such as chicken wings, potato skins, and hamburgers. Patrons are familiar with its distinctive decor featuring Tiffany-style lamps and vibrant red booths, with a prominent bar that typically serves as a focal point. Traditionally, the service staff have also worn “flair,” which consists of decorative pins and accessories on their uniforms—a concept that gained notoriety from the 1999 film “Office Space.”

The chain has struggled to fully recover from the pandemic, which forced the closure of indoor dining at many restaurants for an extended period. Additionally, rising inflation has affected its middle-class clientele, leading to significant financial troubles for the nearly 60-year-old brand.

In January 2024, TGI Fridays abruptly closed numerous locations across the United States and has continued to quietly shut down restaurants since then. Last week, the company shuttered 50 locations, bringing its total down to 163. Prior to this closure wave, TGI Fridays had approximately 270 locations in the U.S.

TGI Fridays is privately owned by TriArtisan Capital Advisors, a private equity firm, so it does not publicly release financial figures. However, the company projected total sales of $1.6 billion for 2022, with same-store sales in the U.S. increasing by 8% compared to 2019. To compete with its rivals like Applebee’s and Chili’s, the chain has updated its menu, introducing sushi, refreshing its cocktail offerings, and revamping its appetizer selections.

In September, TGI Fridays also experienced operational difficulties in the United Kingdom, where a planned acquisition by its UK franchisee fell through, leading to bankruptcy. The company is currently in the process of closing multiple restaurants in that region, resulting in approximately 1,000 job losses.

TGI Fridays joins other chains, such as Red Lobster and Buca di Beppo, which have also filed for Chapter 11 bankruptcy protection in recent months. However, Buca di Beppo has successfully emerged from bankruptcy and appointed an executive from P.F. Chang’s to help revitalize the business.