Tags: tgi fridays | bankruptcy | restaurant | red lobster

TGI Fridays Files for Bankruptcy

By    |   Saturday, 02 November 2024 06:22 PM EDT

TGI Fridays, the renowned casual dining chain, filed for Chapter 11 bankruptcy protection in the Northern District of Texas this week as it grapples with financial challenges exacerbated by the pandemic and shifting consumer demands, Newsweek reported.

The move, aimed at restructuring its finances and supporting operations, arrives as the 59-year-old chain contends with the challenges facing the restaurant industry post-pandemic. The filing affects 39 corporate-owned locations, while the brand's domestic and international franchise network will continue operations unaffected.

The bankruptcy announcement follows a recent wave of restaurant closures.

TGI Fridays shuttered 50 locations last week, reducing its U.S. footprint to 163 restaurants from 270 at the start of 2024. Despite this downsizing, the brand's intellectual property — held separately by TGI Fridays Franchisor, LLC under a securitization agreement — remains protected from bankruptcy.

In a statement, TGI Fridays executive chairman Rohit Manocha acknowledged the company's difficulties, describing the bankruptcy decision as a "necessary action to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world." Manocha cited the COVID-19 pandemic's impact on the company's financial structure as a primary factor behind its struggles.

Established in Manhattan in 1965 as a unique singles bar that popularized "happy hour" and its employees' signature "flair" style, TGI Fridays has secured debtor-in-possession financing to maintain operations as it navigates the restructuring process. Additionally, the company has filed motions with the bankruptcy court to ensure customer programs, such as loyalty rewards and promotions, remain active and uninterrupted.

While corporate locations face an uncertain future, the chain's 56 franchisees across 41 countries are expected to continue operations as usual. TGI Fridays Franchisor, LLC has implemented a Transition Services Agreement to support these franchisees further, offering interim funding and resources as it develops a long-term support strategy.

The brand's financial difficulties are not confined to the United States. In September, TGI Fridays' U.K. division also faced significant issues, leading to several restaurant closures and approximately 1,000 job losses following a failed acquisition attempt by its U.K. franchisee.

TGI Fridays joins other casual dining brands, including Red Lobster and Buca di Beppo, that have recently filed for Chapter 11 amid mounting industry pressures. The restructuring reflects broader challenges in the sector, from evolving consumer preferences to inflation and the lingering effects of pandemic restrictions.

"This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential," Manocha said, expressing optimism for the company's future. However, the bankruptcy court must still approve multiple motions to allow TGI Fridays to sustain its business operations as the restructuring unfolds.

Jim Thomas

Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.

© 2024 Newsmax. All rights reserved.


StreetTalk
TGI Fridays, the renowned casual dining chain, filed for Chapter 11 bankruptcy protection in the Northern District of Texas this week as it grapples with financial challenges exacerbated by the pandemic and shifting consumer demands, Newsweek reported.
tgi fridays, bankruptcy, restaurant, red lobster
441
2024-22-02
Saturday, 02 November 2024 06:22 PM
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