The company has reportedly vacated its Dallas headquarters and stashed hundreds of boxes of documents and computer equipment in the homes of employees.
DALLAS — This article was originally published by our content partners at the Dallas Business Journal. You can read the original article here
Things didn’t look good when TGI Fridays Inc., a once-iconic casual dining chain, filed for Chapter 11 bankruptcy in November.
But new details have emerged about the situation at the North Texas-based restaurant that paint an even starker picture.
The company has reportedly vacated its Dallas headquarters and stashed hundreds of boxes of documents and computer equipment in the homes of employees.
Circumstances became so bad that four top executives, including the then-chief financial officer, quit in the fall, telling the board that they could not “risk our own personal liability for the company’s further operations,” according to a copy of a letter obtained by The Wall Street Journal.
TGI Fridays did not respond to Dallas Business Journal’s request for comment.
The Journal provided some helpful history of the chain and highlighted why it was such a big deal for decades. TGI Fridays was founded in 1965 in New York by restaurateur Alan Stillman. It rose to prominence as a fun place for dates and after-work happy hours serving up comforting American cuisine and fun cocktails. The Wall Street Journal noted that scenes in Tom Cruise’s 1994 movie “Cocktails” were shot at a TGI Fridays in New York.
The chain went public in 1983 but became private again through its 1989 purchase by Carlson Cos. The company continued to grow, especially in other parts of the globe.
The company’s U.S. sales peaked in 2008 at $1.97 billion. That year, the company had 601 restaurants.
But the rise of fast-casual dining slowly ate into the margins of chains like Fridays, and by 2017, the company’s sales had fallen 36% from 2008. The company sold stores to franchisees to reduce debt but also borrowed money, including a $450 million deal in 2017 that used a structure known as whole-business securitization, according to the Wall Street Journal. That mean bonds were backed by franchisee royalty payments, which could be claimed by lenders if TGI Fridays missed out on financial metrics like hitting at least $1.5 billion in annual sales.
Financial hardships continued to weigh on the business and in 2018 S&P Global downgraded its debt due to seven straight quarters of declining sales. The arrival of the Covid-19 pandemic was another blow, although Fridays managed to do better than some expected by pivoting to to-go food and cocktails.
But by 2024, the number of restaurants had fallen to 163, with a few dozen owned by the company. Thirty-nine locations are going through bankruptcy, according to WSJ. A plan to merge TGI Fridays with its largest U.K. franchisee, Hostmore, and go public on the London Stock Exchange fell apart in September. That led to the top executives quitting and the bankruptcy filing.
There’s hope TGI Fridays could be revived. Former CEO Ray Blanchette, who started with Fridays as a restaurant manager in Philadelphia in 1989, has since become a franchisee and is trying to buy up more restaurants. He submitted a $30.5 million bid in December to purchase nine of the 39 bankrupt locations, including one at Dallas Fort Worth International Airport.
Blanchette has a positive outlook on keeping the company alive. He said that TGI Fridays does its best business in airports and casinos, representing a need to shift the brand.
“I’ve spent the vast majority of my career here. It’s an entire body of work. I don’t want to see the brand go away,” Blanchette told WSJ.