TGI Fridays bankruptcy update: Will more restaurant locations close amid Chapter 11?

American casual dining restaurant chain TGI Fridays has filed for Chapter 11 bankruptcy protection, citing financial difficulties from the COVID-19 pandemic as the main factor. It joins a long list of restaurant chains to file for bankruptcy this year, including Red Lobster, BurgerFi, Roti Mediterranean, Buca di Beppo, and others.

TGI Fridays announced earlier this year that it was closing dozens of underperforming restaurants, and the store locator on its website has only diminished since then.

The company said on Friday that it would use the bankruptcy process to explore options for ensuring the brand’s long-term success.

“This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential,” said Rohit Manocha, TGI Fridays’s executive chairman, in a statement.

Will more TGI Fridays restaurants close?

The company has not announced any additional closures. The Chapter 11 filing affects the parent company, which operates 39 corporate-owned restaurants, but does not affect the 56 franchisees in 41 countries that own the majority of TGI Fridays locations. These franchise locations are independently owned, meaning they are not included in TGI Fridays Inc.’s Chapter 11 process. As a result, they continue to operate and serve customers as usual.

Moreover, Fridays says it has secured financing to keep its company-owned restaurants operating during the Chapter 11 process.

Why is TGI Fridays filing for bankruptcy?

According to Manocha, the decision was “necessary to protect the interests of stakeholders, franchisees, and employees worldwide.” The company has also paused rent payments to landlords and other vendors, giving it room to reorganize.

Founded in 1965 in Manhattan, TGI Fridays quickly became known for its “happy hour” and menu of American comfort food. In recent years, TGI Fridays has worked to refine its global strategy by introducing localized menus and remodeling some international locations to better align with regional dining customs, which has helped sustain success in select markets.

The chain has seen varying degrees of success outside of the United States, with its strongest markets typically found in the Middle East, Latin America, and parts of Asia. In these regions, the chain has often adapted its menu and dining experience to local tastes, helping it resonate with customers.

The brand has struggled in some European countries, including the Netherlands, where it exited the market twice due to financial challenges. The chain’s struggles in the Netherlands reflect similar challenges faced in other competitive and health-conscious markets, such as Germany and some Scandinavian countries.

TGI Fridays also faced significant challenges in its UK operations, culminating in the equivalent of bankruptcy proceedings there.