- TGI Fridays plans to file for Chapter 11 bankruptcy protection in the coming weeks, joining a growing list of struggling 2024 restaurant chains.
- The company aims to restructure its operations, seeking new financing and lender support to remain viable.
- The broader restaurant industry is grappling with decreased customer spending, fast-casual competition, and soaring costs, leading to increased bankruptcies this year.
TGI Fridays, a well-known casual dining chain, is the latest restaurant operator preparing for bankruptcy, reports Bisnow.
With roughly 200 locations left, the chain plans to file for Chapter 11 protection in the coming weeks to restructure operations, as reported by Bloomberg. The move follows persistent financial struggles as the industry copes with decreased dining traffic, rising costs, and stiff competition.
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Sector Challenges
Casual dining chains like TGI Fridays have been hit hard by evolving consumer preferences favoring fast-casual alternatives like Chipotle, Cava, and Sweetgreen. Overall restaurant sales have fallen, with same-store sales down 3.3% year-over-year, while casual dining traffic specifically dropped 4.5%, according to Black Box Intelligence.
Bankruptcy Landscape: This year is shaping up to be one of the toughest for restaurants, second only to 2020 in terms of bankruptcy filings. Legacy chains like Red Lobster and Buca di Beppo have already undergone restructuring. Fast-casual operators like Roti and Tijuana Flats have also filed for bankruptcy. Fortress Investment Group’s managing director, Morgan McClure, noted that private equity firms and banks are cautious about the sector’s volatility.
Recent Struggles: TGI Fridays has closed half of its U.S. restaurants over the past decade, including 36 locations earlier this year. It recently experienced management disruption after failing to file required documents on time. A planned $220M acquisition by Hostmore, its U.K.-based largest operator, fell through, worsening its financial outlook.
Next Steps: TGI Fridays is pursuing new financing to support its operations throughout the bankruptcy process. Founded in Manhattan in 1965, the chain introduced popular concepts like happy hours and ladies’ nights. Whether it can emerge stronger from this bankruptcy remains uncertain, given ongoing industry headwinds and changing consumer behavior.
What’s Ahead: The restaurant industry is likely to see further shake-ups, as analysts predict continued financial pressures. Restaurant operators must balance high interest rates, labor costs, and shifting consumer preferences to stay afloat.
