THE future of a family-favourite restaurant chain is in doubt after its UK owner announced it would be winding itself up by the end of the month.
Analysts warned that it could be “game over” for TGI Fridays, which owns 87 restaurants that are run by franchisees.
TGI Fridays is owned in the UK by Hostmore, a London-listed company that floated in 2021.
But shares in Hostmore crashed by 90% today after it revealed that its plans to take over the US restaurant owner of TGI Fridays for £177million had collapsed.
The deal has broken down because the ultimate owner of TGI Fridays has taken back the royalty rights to the restaurant brand.
As a result, Hostmore also no longer has access to the TGI Fridays’ brand name.
It now plans to hand back its UK restaurants to the franchise owners but does not expect to get enough cash back to cover its debts.
The business said it “will be wound up and delisted” from the London Stock Exchange by the end of this month.
Shares in Hostmore, which were listed at 147p in 2021, are now worth just 1.1p on the stock market.
In the meantime, TGI Fridays will keep trading but it is not clear who the franchisees will have a licence from and whether restaurants will stay open.
While Hostmore is no longer actively pursuing the acquisition of the US restaurant owner of TGI Fridays, both firms said they were “open to re-engaging discussions” in the right circumstances.
Russ Mould, analyst at AJ Bell, said: “It’s an awful start to the week for restaurant group Hostmore, which will certainly be saying ‘Thank God It’s Friday’ in four days’ time after the turmoil it’s going through.
“The company’s share price crashed 90% after an expansion plan went up in smoke, implying there is little to no value left in the listed business for shareholders.”
He added: “A deal to sell Hostmore’s corporate stores has also taken a turn for the worse.
“While the transaction is expected to proceed, the value of the stores is now expected to be less than the value of the secured debt.
“It’s effectively game over for Hostmore as a listed business, with the board saying the company will be wound up and delisted.”
Mr Mould also said TGI Fridays was continuing to compete against a “growing number of modern chains”, with its biggest market in the US where it has 128 restaurants.
It comes just weeks after TGI Fridays’ spin-off cocktail bar brand 63rd+1st disappeared from the high street for good.
The brand, known for selling New York-inspired food and cocktails, grew to four sites following openings in Harrogate, Edinburgh and Glasgow.
But in early June Hostmore confirmed its last remaining site in Glasgow would shutter by the end of the month.
Hostmore said it had seen its results pick up in the preceding months as a result of a restructuring process.
However, it also said sales in the UK over the year to mid-May 2024 were a tenth lower than the same period the previous year, on a like-for-like basis.
This was despite total global restaurant sales hitting £1.1billion last year.
The company had previously said it was weighing up opportunities to shut restaurants that were losing money and had taken steps to improve the performance of 20 struggling sites.
TGI Friday sites in the UK
- Aberdeen Beach
- Aberdeen Union Square
- Ashton-under-Lyne
- Barnsley
- Basildon
- Birminghm
- Birmingham NEC
- Bluewater
- Bolton
- Bournemouth
- Bracknell
- Braehead
- Braintree
- Brighton Marina
- Cabot Circus
- Cardiff Newport Road
- Cardiff St David’s
- Castleford
- Cheadle
- Chelmsford
- Cheltenham
- Cheshire Oaks
- Coventry
- Crawley
- Cribbs Causeway
- Croydon
- Derby
- Doncaster
- Durham
- Edinburgh
- Enfield
- Fareham
- Fort Kinnaird
- Gateshead
- Glasgow Buchanan Street
- Glasgow Fort
- Gloucester Quays
- Halifax
- High Wycombe
- Jersey
- Lakeside Quay
- Lakeside Retail Park
- Leeds Junction 27
- Leeds Wellington Bridge Street
- Leeds White Rose
- Leicester
- Lincoln
- Liverpool One
- Liverpool Speke
- London Leicester Square
- London Stratford City
- London the O2
- Manchester Royal Exchange
- Meadowhall
- Metro Centre Gateshead
- Milton Keynes
- Milton Keynes Stadium
- Newcastle Eldon Square
- Newport Friars Walk
- Northampton
- Norwich
- Nottingham
- Prestwich
- Reading
- Romford
- Rushden Lakes
- Sale
- Sheffield
- Silverburn
- Solihull
- Southampton Retail Park
- Staines
- Stevenage
- Teesside
- Telford
- Trafford Centre
- Trinity Leeds
- Walsall
- Watford Central
- Watford North
- Wembley
- West Quay
In May 2023, it closed a loss-making site in Manchester, and four months later announced it would not open any new restaurants until at least 2025.
Restaurant chains continue to feel the pinch
The hospitality sector has struggled to bounce back after the pandemic, facing challenges including soaring energy bills, inflation and staff shortages.
TRG, which owned Frankie & Benny’s, Chiquito and Wagamama, revealed that it would shut down around 40 sites by April 2024 and went on to sell its Frankie & Bennys and Chiquito brands to Cafe Rouge owner The Big Table group.
Tasty, the owner of Wildwood, said it will shut sites as part of major restructuring plans.
Stonegate has also raised fears about its survival as it races to plug its debts.
Earlier this year, Whitbread revealed plans to slash its chain of branded restaurants across the UK.
Italian dining chain Prezzo revealed plans to shut 46 restaurants back in April 2023 as a result of soaring energy and food costs, putting 810 jobs at risk.
And in January 2023, Byron Burger fell into administration with owners saying it would result in the loss of over 200 jobs.
Why are retailers closing shops?
EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre’s decline.
The Sun’s business editor Ashley Armstrong explains why so many retailers are shutting their doors.
In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping.
Falling store sales and rising staff costs have made it even more expensive for shops to stay open. In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed.
The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing.
Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns.
Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead.
Boss Stuart Machin recently said that when it relocated a tired store in Chesterfield to a new big store in a retail park half a mile away, its sales in the area rose by 103 per cent.
In some cases, stores have been shut when a retailer goes bust, as in the case of Wilko, Debenhams Topshop, Dorothy Perkins and Paperchase to name a few.
What’s increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online.
They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places.
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