TGI Fridays Faces Closure Crisis Amid Rising Costs and Changing Consumer Habits After 60 Years of Operation

According to the Washington Post on Wednesday, TGI Fridays, a popular casual dining chain in the United States, filed for bankruptcy protection on Tuesday (local time). The restaurant chain is said to have closed more than 100 stores in the United States in the past year. According to an analysis by Bloomberg on the 2nd, the main reason for TGI Fridays' bankruptcy is that its business difficulties are difficult to reverse. Consumers are increasingly concerned about cost, leading to eating out less often and preferring competitors that offer fast food.

Founded in 1965 and located in Manhattan, TGI Fridays was once a popular meeting place and one of the big restaurant chains that popularized the concept of "happy hour," according to CNN. The outbreak, which shut down the restaurant's in-room dining service for several months, coupled with persistent inflationary pressures on middle-class customers, has left the nearly 60-year-old chain in financial trouble. Before the current wave of store closures, TGI Fridays had about 270 stores in the United States. Although the parent company has been affected, the 39 directly operated stores under the brand will continue to operate normally.

TGI Fridays follows the bankruptcies of several restaurant chains in the US this year, including Red Lobster. The Wall Street Journal analysis identified empty tables and rising costs as the main reasons for the challenges facing restaurant chains. Bankruptcies of restaurant chains and operators are expected to hit a decade high this year, except in 2020, according to BankruptcyData, an industry analyst.

Restaurants catering to low - and middle-income families in the United States have struggled with a sharp decline in traffic in recent years as many core customers have abandoned sit-down dining in favor of eating at home, the Washington Post said, citing restaurant executives and industry analysts. "The tide has gone out in this industry," said Andrew Wolf, a senior restaurant analyst at a New York investment bank. Some chains filed for bankruptcy protection, and other restaurant chains have announced cost-cutting measures. Last month, Denny's, a well-known restaurant chain, announced plans to close about 150 restaurants, or 1 in 10 of its nationwide locations, as its executives noted declining sales at family restaurants overall.

It is worth noting that overall U.S. restaurant industry revenue is expected to grow this year, and GlobalData analyst Saunders said that U.S. consumer spending at restaurants is expected to grow by 4.9% in 2024. But Saunders said that likely reflects higher restaurant prices to cover increased restaurant costs, rather than an increase in consumer demand. Same-store sales traffic at US restaurants fell 3.3 per cent in the year to October 6, while casual restaurant traffic fell 4.5 per cent, according to research firm Black Box Intelligence.

In addition to rising costs and changing consumer habits, some industry observers believe that restaurant chains' struggles are also the result of generational changes, as the place of small restaurant-style restaurants in American culture has declined in favor of take-out restaurants. Restaurant industry analyst Eric Gonzalez says many meals at traditional family and casual restaurants can be easily replicated, and customers know it.

In the face of these difficulties, some restaurant chains are also taking measures, such as revising menus, closing unprofitable stores, and seeking bankruptcy protection is one of the methods. The investors who bought the bankrupt restaurant chain say they believe they can turn around the brand by cutting costs, closing stores and improving efficiency.