TGI Fridays UK in Crisis as Hostmore Files for Administration
Posted by Emma on 18th Sep 2024
Hostmore, the UK operator of the TGI Fridays franchise, has officially entered administration following its failure to secure a lasting financial solution. The hospitality company, which manages 87 TGI Fridays locations across the UK, announced that it had appointed administrators and delisted its shares from the London Stock Exchange.
This move comes on the back of a failed acquisition deal, in which Hostmore had intended to buy the US parent company of TGI Fridays for £177 million. The deal fell through after the American operator lost control of TGIF Funding, the entity responsible for managing franchise royalties and intellectual property. Hostmore's share price reacted sharply, dropping by more than 90% in September, marking a significant decline from its November 2021 trading price of 147 pence per share.
Administrators Daniel Smith and Julian Heathcote of Teneo Financial Advisory Limited have been appointed to oversee the process. In a statement, Hostmore's Chief Financial Officer, Matthew Bibby, acknowledged the board's efforts to secure a long-term financial solution but highlighted the challenges posed by the difficult trading environment and adverse macroeconomic conditions. Despite extensive efforts, the acquisition of TGI Fridays proved unfeasible due to events beyond the company's control.
Hostmore has reassured customers that its subsidiary, Thursdays (UK) Limited, will continue to operate, and all 87 TGI Fridays locations remain open for now. However, the sale process for these restaurants is still ongoing, and the outcome remains uncertain.
The administration has put approximately 4,500 jobs at risk, with Hostmore hopeful that a buyer can be found by the end of September. If the sale is successful, it could help safeguard jobs and ensure the continuity of the popular American-inspired dining brand in the UK. However, bids received so far have been lower than the company's debt levels, casting doubt on whether the sale will fully cover Hostmore's financial obligations.
The downfall of TGI Fridays in the UK reflects broader issues faced by the casual dining sector. Once seen as a trendsetter in the British dining scene with its innovative approach to American cuisine, the brand has struggled to adapt to shifting consumer preferences, particularly the increasing demand for healthier and vegan options.
According to retail analyst Catherine Shuttleworth, TGI Fridays initially set itself apart by offering a distinctive dining experience beyond the traditional burger, but the evolving market has challenged its relevance. The administration also highlights the wider struggles of the UK's High Streets, where the lingering impact of the Covid-19 pandemic and the rise of online shopping continue to reduce footfall in physical stores.
Data from PwC illustrates the gravity of these challenges, showing that an average of 18 chemists, 16 pubs, and nine banks closed each week in the first half of 2023 alone. TGI Fridays' fate now rests in the hands of administrators, who continue to seek a buyer capable of reviving the iconic brand and securing the future of its employees.