TGI Fridays Files for Bankruptcy Amid Changing Dining Trends

TGI Fridays, the iconic American restaurant chain known for its lively decor and loaded potato skins, has filed for bankruptcy protection. Once a cultural centerpiece in the U.S. dining scene, the chain has faced mounting challenges that have left it struggling to keep its doors open.

The Dallas-based company made its Chapter 11 filing in a Texas federal court on Saturday. The move aims to help the brand find ways to “ensure long-term viability” after years of struggling with declining sales. The challenges have accelerated in the wake of the COVID-19 pandemic and a significant shift in how people choose to dine. As part of these struggles, TGI Fridays has been closing branches across the U.S., a stark sign of its decline from its former glory. 

Back in the day, TGI Fridays was a lively gathering spot. Its famous bartenders even helped Tom Cruise prepare for his role in the 1988 movie Cocktail, and its staff’s button-filled uniforms were satirized in the film Office Space. But in 2023, the chain’s U.S. sales were down to $728 million, a 15% decrease from the previous year, according to Technomic. TGI Fridays reached its peak in 2008 with 601 U.S. locations and a $2 billion business, but today, only 163 locations remain, down from 269 last year. In January, the company closed 36 restaurants, and many more shut down recently.

Rohit Manocha, executive chairman of TGI Fridays, acknowledged the financial turmoil, citing COVID-19 and an unsustainable capital structure as the main culprits. The problems for TGI Fridays aren’t isolated; sit-down restaurants have been struggling for years. As more diners opt for food delivery or choose faster options like Chipotle and Shake Shack, classic chains have been left behind. The competition has driven other well-known chains into financial trouble, including Red Lobster and Buca di Beppo, both of which also sought bankruptcy protection this year.

TGI Fridays has tried to adapt by entering the delivery market through ghost kitchens, which have no storefront and only make food for delivery. Despite these efforts, major creditors, like DoorDash, are listed in the company’s bankruptcy filings.

Interestingly, while TGI Fridays struggles in the U.S., many of its international franchises remain open. The chain operates just 39 company-owned restaurants in the U.S., a small portion of the 461 TGI Fridays-branded restaurants worldwide. The brand’s intellectual property is managed separately by TGI Fridays Franchisor, which has licensed operations to 56 independent owners across 41 countries.

However, it's not just a U.S. problem. A U.K.-based franchisee, Hostmore, sought debt protection in September after a failed acquisition deal and has since closed multiple locations in the United Kingdom. Meanwhile, other sit-down chains are feeling the pinch too: Denny’s recently announced the closure of 150 of its lowest-performing restaurants as it tries to revitalize its brand.

For TGI Fridays, the fight for survival continues as the chain looks for ways to adapt to a world where casual dining is no longer king.