UK – Hospitality group Hostmore, which operates restaurant chain TGI Fridays, has revealed it will file for administration as it faces significant financial challenges.
Hostmore’s Board of Directors has appointed Daniel Smith and Julian Heathcote from Teneo Financial Advisory as joint administrators.
The hospitality group suspended the trading of its ordinary shares from September 18 following the announcement.
The announcement follows Hostmore’s current financial struggles with its TGI Fridays outlets. The hospitality group revealed its UK sales plummeted by more than 10% in 2024 compared to 2023.
TGI Fridays reported a nearly 25% drop in sales in the second quarter of 2024 as it was affected by warmer weather resulting in fewer guests and sustained weaker consumer spending.
The holding company halted new outlet openings and conducted management restructuring as a response to the restaurant chain’s financial troubles.
Hostmore announced the sale of some of its worst-performing outlets as a cost reduction strategy.
On August 6, the hospitality group announced plans to sell TGI Fridays’ 92 corporate locations along with the company’s 87 corporate stores under different brands to new or existing franchisees.
On September 9, Hostmore hinted the sales process for these corporate locations was nearly complete, although the group acknowledged it did not anticipate recovering ‘any meaningful value’ from their sale.
However, a few days later, it was reported the bids for the sale were less than Hostmore’s outstanding debts, which implied the hospitality group may continue to incur losses even after completion of the sale.
The ongoing sale of the hospitality group is its latest effort to stabilize its finances.
The decision was made after the hospitality group’s attempted acquisition of TGI Fridays’ US operator for £177 million (US$234 million) fell through.
The proposed acquisition would have valued TGI Fridays outlets in the US 5.4 times its underlying earnings for the 2023 fiscal year, further exacerbating Hostmore’s financial troubles. Complications arose when TGI Fridays lost control of TGIF Funding, the entity holding the legal title to franchise agreement royalties.
Hostmore revealed Thursdays, its subsidiary that runs TGI Fridays, will continue with its usual operations. All of the subsidiary-run restaurant outlets will remain operational.
Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE
