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The Chapter 11 bankruptcy protection that American casual dining chain TGI Fridays, Inc., is attributed to the lingering effects of the COVID-19 pandemic.
The company said that the fallout of the COVID-19 pandemic was the “primary driver of our financial challenges,” and it will use the Chapter 11 process to “explore strategic alternatives in order to ensure the long-term viability of the brand,” according to a CNN report Saturday.
“The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world,” the report said quoting a statement of Rohit Manocha, TGI Fridays’ executive chairman.
The report said the bankruptcy will affect TGI Fridays’ parent company that operates 39 restaurants, and not the franchisees that control the remaining locations. The company has secured financing so all restaurants will operate as usual while it navigates the bankruptcy process.
The reports quotes John Bringardner, head of Debtwire, as saying TGI Fridays has “stopped the clock on payments of this month’s rent to landlords and other vendors, giving them breathing room to restructure.” He added that the parent company “will likely have to close or sell unprofitable locations as part of the restructuring.”
Launched in 1965 in Manhattan as a place for singles to meet each other and one to popularize the “happy hour” concept, TGI Fridays, popularized several American comfort food staples, including chicken wings, potato skins and hamburgers.
Reports say TGI Fridays never fully recovered from the pandemic that affected indoor dining at restaurants for several months. The restaurant chain was also hit by inflationary pressure on its middle-class customers.
TGI Fridays is privately owned by TriArtisan Capital Advisors, a private equity firm, so financial results aren’t released. The company said that total sales were projected to reach $1.6 billion in 2022 with same-store US sales growing at 8% compared to 2019.
The company ran into trouble in September as a proposed acquisition by its UK franchisee fell through and it went bankrupt. It’s in the process of closing dozens of restaurants in the region and causing 1,000 job losses.
TGI Fridays follows Red Lobster and Buca di Beppo chains, both of which recently filed for Chapter 11 bankruptcy protection. But, Buca di Beppo emerged from bankruptcy and has tapped a P.F. Chang’s executive to turn the business around.