At the close of 2024, the well-known restaurant chain TGI Fridays, a symbol of casual dining in various cities in the United States and the world, has filed for bankruptcy protection under Chapter 11 of the Bankruptcy Act. With this move, the company seeks to ensure its long-term viability, halt the decline in sales and avoid a major impact on the employment of its employees.
The news has shaken the sector, which had already been shaken by the recession and changes in consumer habits since the Covid-19 pandemic. TGI Fridays, famous for its iconic bars and relaxed atmosphere, added this announcement to the series of store closures it has been implementing since January 2024, when it closed 50 stores in the United States and Colombia. Below, we detail the keys to this restructuring, the current situation of the restaurants that remain active and the company’s plans to overcome the crisis.
The impact of the pandemic and low sales
The health crisis of 2020 hit casual dining chains, which relied heavily on in-person consumption, particularly hard. TGI Fridays was no exception. The obligation to temporarily close stores and the subsequent restrictions drastically reduced revenues, especially in the United States, the company’s base market. According to Rohit Manocha, the brand’s CEO, the pandemic has been “the main factor driving our financial difficulties”. In addition, rising inflation put further pressure on its traditional customers, forcing them to look for lower-cost alternatives or to limit eating out.
The situation was also aggravated by changes in consumer habits: the rise of delivery and the preference for fast food establishments with more competitive prices eroded the market niche that TGI Fridays historically dominated.
Closure of 50 stores in the United States and Colombia
TGI Fridays was born in 1965 in Manhattan as an informal space for people to meet after work, with a close and cheerful atmosphere, popularizing the “happy hour” concept. With a menu focused on American food-chicken wings, burgers, fries and original cocktails-it quickly became an iconic brand in casual dining. The first major blow of the restructuring came in January 2024, when TGI Fridays announced the final closure of 50 restaurants between the United States and Colombia, leaving the operation on U.S. soil with 163 locations at that time.
Although the strongest impact was registered in its North American market, some franchises in Latin America, such as those in Colombia, also suffered the effect of the closure. At this point, the company pointed out that the decision was taken to safeguard the global structure and concentrate on the most profitable establishments. Even so, TGI Fridays maintains a presence in countries such as Spain, Mexico, Argentina and 37 others, where it operates through independent franchises.
The viability plan: filing for Chapter 11 bankruptcy protection
For many analysts, the next step was imminent: the company has filed for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Act, which allows companies to reorganize their operations and debts while continuing to operate. According to documents filed with the U.S. District Court for the Northern District of Texas on Nov. 2, 2024, TGI Fridays declared assets and liabilities ranging from $100 million to $500 million.
This measure, which has already been adopted by other chains such as Red Lobster and Buca di Beppo, seeks to allow the brand’s 39 corporate restaurants in the U.S. to continue operating normally, thanks to a debtor-in-possession (DIP) financing commitment that will cover the most urgent expenses and day-to-day operations.
Separation of the brand and franchises
In the midst of the financial turbulence, TGI Fridays wanted to make it clear that the brand, as well as the intellectual property rights, belong to TGI Fridays Franchisor, LLC, an entity that is not part of the bankruptcy process. This means that the 56 franchises operating in 41 countries will continue to operate normally, as they are not directly linked to the situation of TGI Fridays Inc.
In addition, the firm assured that it has signed a Transitional Services Agreement (TSA) to continue providing support to the franchised restaurants throughout the restructuring process. In this way, operations will not be affected, nor will the supply of basic supplies or branded products be interrupted.
What’s next for TGI Fridays
In the Chapter 11 context, the company will focus on “exploring strategic alternatives to ensure the long-term viability of the brand,” according to Manocha. This could involve the sale of less profitable locations, agreements with new investors or the renegotiation of lease agreements that are currently putting pressure on financial statements.
For the time being, the 39 corporate restaurants will continue to operate on a regular basis, while the company works to clean up its finances and protect the jobs of hundreds of workers who depend on the direct operation.
In parallel, TGI Fridays insists that consumers can continue to enjoy its proposition in more than 461 franchised restaurants worldwide, in nations including Spain, Mexico and the United Kingdom, with no major changes to the experience or menu.
An uncertain but hopeful future
TGI Fridays’ bet is clear: to make this legal process a rescue tool and not the definitive closure of a brand with almost 60 years of history. In an increasingly demanding and competitive market, the company will seek to renew itself to respond to the needs of the public, which today values convenience, price and gastronomic variety above all else.
We will have to follow the upcoming court decisions and the response of investors to find out if TGI Fridays manages to save itself from the storm and return to serving its dishes with the same strength that made it one of the most recognized restaurant chains in the United States and the rest of the world.
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