TGI Fridays Inc., owner and operator of 39 domestic restaurants in the casual dining chain, filed for Chapter 11 bankruptcy protection in the Northern District of Texas, marking another setback for America's struggling restaurant industry.
The filing comes at a critical time for the nearly 60-year-old chain, which has already closed 50 locations last week, bringing its total U.S. presence down to 163 restaurants from approximately 270 at the start of 2024.
The brand's intellectual property, owned by TGI Fridays Franchisor, LLC through a securitization agreement with a separate investor group, is notably excluded from the bankruptcy proceedings.
Newsweek contacted TGI Fridays' press contact via email on Saturday for comment.
"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," said Rohit Manocha, Executive Chairman of TGI Fridays Inc., in a statement.
Manocha identified the COVID-19 pandemic and the company's capital structure as the primary drivers of their financial challenges.
The once-popular restaurant chain, which started in 1965 in Manhattan as a singles bar that helped popularize the "happy hour" concept and decorative "flair" for their employees, has secured debtor-in-possession financing to maintain operations during the restructuring process.
The company has also filed motions with the Bankruptcy Court to continue its customer programs without interruption.
For the chain's extensive franchise network - spanning 56 franchisees across 41 countries - operations will continue as usual. TGI Fridays Franchisor, LLC has implemented a Transition Services Agreement and provided interim funding to maintain support services while developing a new long-term support structure for its franchise operations.
The bankruptcy filing follows recent troubles in the company's international operations. In September, TGI Fridays' United Kingdom division faced its own crisis, resulting in multiple restaurant closures and approximately 1,000 job losses after a proposed acquisition by its UK franchisee fell through.
TGI Fridays joins other casual dining casualties of the post-pandemic era, including Red Lobster and Buca di Beppo, which have also sought Chapter 11 protection in recent months.
The chain's restructuring efforts come amid broader challenges facing the restaurant industry, including changing consumer preferences, inflationary pressures, and the lasting impact of COVID-19 restrictions.
"This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential," Manocha added.
The bankruptcy court must still approve various motions to allow the company to maintain its normal business operations during the restructuring process.
While the immediate future of the 39 corporate-owned locations remains uncertain, the company's franchise network continues to operate independently under the protection of the bankruptcy proceedings.
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