TGI Fridays Inc., the well-known American casual dining chain, has filed for Chapter 11 bankruptcy protection.
The company announced on Saturday that the financial challenges from the COVID-19 pandemic have been a major factor in its current situation.
The bankruptcy filing will allow the brand to consider strategic options to secure its long-term future.
Rohit Manocha, TGI Fridays’ executive chairman, acknowledged the tough choices the company is facing.
“The steps we’re taking are difficult but necessary to safeguard our stakeholders, including franchisees and team members worldwide,” he said.
The bankruptcy filing only affects TGI Fridays’ parent company, which owns 39 restaurants, and does not impact the franchisees running the rest of the locations.
The company has secured funding to keep all its restaurants operating while it undergoes restructuring.
Financial expert John Bringardner from Debtwire explained that TGI Fridays has paused payments, including rent, to create space for restructuring.
He noted that unprofitable restaurants may have to be closed or sold during this process.
TGI Fridays, launched in Manhattan in 1965, gained fame as a popular spot for singles and helped make the “happy hour” trend mainstream.
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The chain is recognized for its playful interior decor, like Tiffany-style lamps and red booths, along with a vibrant bar. Its service staff, famous for wearing decorative “flair,” even inspired jokes in the 1999 movie Office Space.
However, the chain struggled to bounce back from the pandemic’s impact, which severely hit indoor dining. Inflation has also put pressure on the chain’s middle-class customer base.
Earlier this year, TGI Fridays closed several locations across the U.S., with the most recent shutdown affecting 50 restaurants, reducing the total count to 163.
Although privately owned by TriArtisan Capital Advisors and not obligated to share financial results, TGI Fridays had projected total sales of $1.6 billion in 2022, with an 8% increase in same-store sales compared to 2019.
In response to growing competition from Applebee’s and Chili’s, the chain made changes to its menu, including adding sushi and updating its cocktail offerings.
The company has also faced challenges in the United Kingdom. In September, a proposed acquisition deal fell through, leading to the bankruptcy of its UK operations, the closure of multiple restaurants, and significant job losses.
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