TGI Fridays Files for Bankruptcy Amid Financial Struggles

By: Epoch Times - Business Posted On: November 02, 2024 View: 3

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TGI Fridays Inc. has filed for Chapter 11 bankruptcy protection to address financial challenges.

TGI Fridays Inc., the parent company that operates the eponymous casual dining chain, has filed for Chapter 11 bankruptcy as it navigates challenges stemming from the COVID-19 pandemic shutdowns and shifting consumer preferences.

The voluntary petitions were filed in the Northern District of Texas on Nov. 2, the company said in a statement, in which it noted that all 39 corporate-owned restaurants would remain open and continue to serve customers as the brand “explore[s] strategic alternatives” that would allow it to ensure long-term viability.

The remaining 125 or so TGI Fridays restaurants in the United States, which are independently owned and operated by franchisees, are not involved in the bankruptcy process.

The company’s claims agent, Stretto, said that, in addition to TGI Fridays Inc., another 22 affiliated debtors were part of bankruptcy proceedings, with an emergency motion filed on Nov. 2 seeking joint administration and court-ordered relief by Nov. 4.

TGI Fridays Inc. said in a statement that it has secured debtor-in-possession financing to support its ongoing operations as it navigates the Chapter 11 process, allowing it to continue paying staff and suppliers, ensuring day-to-day operations remain unaffected at its corporate-owned locations.

“The primary driver of our financial challenges resulted from COVID-19 and our capital structure,” Rohit Manocha, executive chairman of TGI Fridays Inc., said in a statement. “This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.”

Many dining establishments have struggled to recover from pandemic-related curbs on businesses, which were forced to restrict operations or adjust operating models, for instance cutting in-person service and pivoting to curb-side pickups. While many have bounced back, some have continued to feel the impact.

The casual dining sector has also become increasingly competitive, with consumers favoring fast-casual and delivery options over traditional sit-down restaurants. This shift has had an adverse impact on TGI Fridays’ market share and financial health.

There are currently 163 TGI Fridays restaurants in the United States, according to a website-based store locator, down from around 240 in January, when the chain announced it was closing 36 underperforming corporate-owned locations and selling another eight. Since then, the company has quietly shut down additional locations.

Globally, TGI Fridays continues to operate over 460 restaurants across 41 countries, with international franchisees remaining unaffected by the U.S. bankruptcy proceedings.

In September, British restaurant operator Hostmore dropped plans to buy TGI Fridays, with the proposed deal unraveling as TGI Fridays lost control of key assets used as collateral for asset-backed securities issued in 2017.

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