TGI Friday’s closes 50 locations in one week, faces bankruptcy threat

USA – Casual dining restaurant chain TGI Friday’s has closed 50 locations in the past week and is reportedly on the verge of bankruptcy.

The recent development represents a notable decrease in TGI Friday’s footprint, reducing its number of US restaurants from 213 to 164 as of October 28. This marks the highest number of closures since January when 36 underperforming locations were shut down.

The closures have affected multiple states, leading to TGI Friday’s complete exit from cities like Columbus, Ohio, and Buffalo, New York. At the beginning of 2024, the chain operated 270 locations in the US.

In light of these closures, Bloomberg reported that TGI Friday’s is currently “huddling with lenders” to secure a cash infusion to maintain operations while navigating the Chapter 11 bankruptcy process.

John Bringardner, head of Debtwire, indicated that TGI Friday’s is likely to use Chapter 11 to seek a buyer for some of its business, reject leases for unprofitable locations, and restructure its debt, allowing it to emerge from bankruptcy with a smaller but sustainable footprint.

He noted that the chain’s reduced number of outlets, shifting consumer preferences, and competition from lower-cost fast-food alternatives have made it “unable to service its debt.”

A bankruptcy filing is anticipated in November, prior to the next round of lease payments due. Hostmore, the UK-based operator of TGI Fridays, also announced plans to file for administration due to significant debt challenges and suspended trading of its shares from September 18, 2024.

This announcement comes as Hostmore faces ongoing issues with its loss-making TGI Fridays outlets, which have resulted in a halt to new store openings, management restructuring, outlet sales, and extensive cost-cutting measures.

The decision follows the company’s withdrawal from plans to acquire the US operator of TGI Fridays and its expectation to be wound up and de-listed after finalizing the retail outlet sale.

On August 6, Hostmore initially confirmed its intention to sell TGI Fridays’ 92 corporate stores alongside the group’s 87 corporate stores to either existing or new franchisees. Although the sale was completed, it further intensified the company’s financial pressures.

The restaurant industry has experienced a surge of bankruptcies in 2024, with chains like Red Lobster and Buca di Beppo filing for bankruptcy due to shifting consumer habits and inflationary challenges.

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