The UK arm of popular restaurant chain TGI Fridays faces an uncertain future as its parent company, Hostmore, has entered administration. This move has put approximately 4,500 workers jobs at risk and threatens the closure of 87 outlets across the country.
In a statement, Hostmore attributed its downfall to a “highly challenging trading and macroeconomic backdrop,” citing the difficulty of navigating the post-pandemic economic landscape. The hospitality company has struggled with significant financial losses and mounting debts, leading it to delist its ordinary shares and appoint administrators to oversee the business’s future.
Despite these efforts, the company was unable to secure a long-term solution to stabilize its operations and it appears they have taken down their website. Hostmore had already undertaken several cost-cutting measures, including halting its expansion plans, making management changes, and selling off outlets in an attempt to balance its books. However, these initiatives were not enough to prevent the company from entering administration.
One of the key issues that compounded the company’s problems was the collapse of a £177 million deal to buy its US parent company earlier this year. The deal fell apart after the US-based parent lost control of TGIF Funding, a key source of royalties and intellectual property for the franchise. This event, which Hostmore described as being “outside of the board’s control,” severely impacted its ability to move forward with its plans.
While the company remains in administration, Hostmore is actively seeking a buyer for its UK-based restaurants. The hope is that a successful sale by the end of September will allow the TGI Fridays brand to continue operating on British high streets and secure jobs for many of its UK workers. Hostmore has emphasized that, for the time being, all existing TGI Fridays outlets remain open and continue to operate as normal.
The restaurant chain’s situation reflects broader struggles within the UK’s casual dining sector, which has faced numerous challenges in recent years. The rise of online shopping, coupled with declining footfall on high streets, has created an increasingly difficult trading environment for brick-and-mortar businesses. On top of these factors, the lasting economic effects of the COVID-19 pandemic have left many companies in hospitality and retail industries grappling with reduced revenues and higher costs.
The collapse of Hostmore makes TGI Fridays the latest casualty of these harsh conditions. Its situation mirrors the struggles of other well-known dining chains that have either been forced to downsize or enter administration in the face of declining demand and rising operating costs.
Daniel Smith and Julian Heathcote from Teneo Financial Advisory Limited have been appointed as joint administrators of Hostmore, tasked with overseeing the company’s administration process. Their focus now will be on finding a buyer for the chain, which could allow the brand to continue in the UK while preserving jobs for many of its staff.
The Workers Union says…
As the sale process moves forward, the future of TGI Fridays in the UK remains uncertain. However, with the possibility of a successful buyer emerging, there is hope that the iconic American-style restaurant chain may still have a place on Britain’s high streets in the coming months.
