The casual restaurant chain TGI Friday’s filed for protection against creditors after difficulties in recovering a business pressured by increasingly cost-conscious consumers who have become more selective when eating out or prefer competitors that offer faster food.
The company filed for judicial recovery (the so-called “Chapter 11” in the United States) this Saturday (2), listing liabilities of between US$100 million and US$500 million in its bankruptcy petition. “The main reason for our financial challenges resulted from Covid-19 and our capital structure,” Rohit Manocha, the network’s executive chairman, said in a separate statement.
TGI Friday’s operates 39 restaurants across the US. Its brand and intellectual property are owned by TGI Fridays Franchisor LLC, which has 56 franchisees in 41 countries and is not included in the Chapter 11 filing, the company said.
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The order comes after Bloomberg News have previously reported that TGI Friday’s was evaluating its options to continue financing its restaurants during a Chapter 11 restructuring. On Saturday, the company said it had secured a DIP financing commitment, intended for companies in bankruptcy recovery.
TGI Friday’s is the latest casual dining chain to seek court protection as the industry continues to struggle with nimbler competitors like Chipotle. Lower-cost restaurant chains have also felt the impact of rising housing costs and high inflation on consumers, who have increasingly chosen to eat at home to save money.
A Red Lobster won court approval in September to emerge from Chapter 11 under new ownership, hoping to recover from years of declining sales, expensive leases and a money-losing “Ultimate Endless Shrimp” promotion.
The Italian Cuisine Network Buca di Beppothe fish taco chain Rubio’s Coastal Grill and the Mexican restaurant chain Tijuana Flats also filed for bankruptcy this year.
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