WTF is happening with TGIs?

As Ferris Bueller once opined, life moves pretty fast. Take TGI Fridays UK, for example. Back in the summer, the long-beleaguered causal dining chain announced it was entering a ‘new era’. Timed to coincide with the brand’s 60th anniversary, as well as US Independence Day, the 49-strong group unveiled a reset that included a revamp of its menus and service style: half of dishes served were refreshed, pricing was overhauled, and a renewed focused was placed on in-venue theatre and the brand’s hospitality ethos. It was dubbed the ‘ultimate comeback campaign’ – the group reborn on the 4th of July.

Coming after a challenging couple of years, which eventually saw TGI’s UK franchise bought by Breal and Calveton after its previous owner, Hostmore, filed for administration – a deal that led to dozens of closures, including of the brand’s flagship London Leicester Square restaurant – it felt like a pivotal moment for what was once a powerhouse brand.

Speaking to Restaurant’s sister title MCA, TGI Fridays UK CEO Julie McEwan said: “It’s a powerful statement that we are back. It’s not just me; you can feel it across the brand. We’re all really excited about what lies ahead.”

As it turns out, what lay ahead was more uncertainty. In late October it was announced that Breal and Calveton had sold TGI Fridays UK to Sugarloaf, the global manager of the TGI Friday’s brand, just a year on from acquiring the business.

Then, last week, it emerged that Sugarloaf has brought in Interpath to explore strategic options for the business. Sky News reports that the financial advisory firm was hired to canvas appetite for another potential sale of the 49-strong group and contacting investors about a possible deal. Less than five months on from its supposed turnaround, the press was once again full of reports questioning the brand’s future.

In a statement, Phil Broad, president of TGI Fridays International, said TGI Fridays UK directors are exploring all available options to secure the long-term future of the business. “Since assuming control last month, our priority has been to protect jobs, support our employees, and continue to deliver the welcoming, celebratory experience guests expect from TGI Fridays,” he said. “These discussions are progressing constructively, and we will provide further updates when appropriate.”

Making sense of the situation

Initially, at least, it looked as if TGI’s brand reset was having the desired effect. In late August, Breal and Calveton reported a marked improvement in sales with covers up 10% and dish ratings, NPS and GOS scores all climbing beyond industry benchmarks. When the business was sold to Sugarloaf in October, a spokesperson for Breal and Calveton said: “During 12 months of our tenure, we have stabilised the team and supply chains, as well as completing the first phase of repositioning the brand through a national relaunch on July 4th this year, which has seen improvements in both revenues and covers growth versus run rate. We hand the reins over with positive like-for-like sales growth and festive trading currently a healthy 25% up on bookings versus this time last year.”

From the outside looking in, however, it’s hard to believe the picture was so rosy. Broad’s mention of the need to ‘secure the long-term future of the business’ suggests Sugarloaf’s acquisition of the brand could have been the result of a distressed sale. As one industry analyst told MCA: “It can’t have been a growth sale.”

What on earth has gone wrong then? In terms of Breal and Calveton, it’s possible the disastrous fallout of the 2024 budget played a role; its acquisition of the business coming just days before the Chancellor hiked employment costs and cut business rates relief for the sector. An industry source familiar with such situations explains that often with restructuring deals the cut isn’t as deep as it needs to be. “Breal and Calveton took on quite a lot of sites, and I would imagine the 2024 budget moved the goalposts and left them with a much more challenged estate with a lot of sites that are not trading well and losing money.”

Sugarloaf, similarly, may suddenly be feeling a pressure to unburden itself of the brand considering the announcements in this year’s budget, which came just a day before the Sky News story broke. Many of TGI’s UK sites are big restaurants and thus likely to have their rates pushed up next year. With that in mind, it wouldn’t be too much of a stretch to imagine Sugarloaf wanting to sell up sooner rather than later.

A strategic move?

Maybe, though, there is more nuance to be found here. Gary Digby, founder of hospitality consultancy business Digby + Fox, told MCA he sees plenty of sense in Sugarloaf’s decision. “On paper it looks like another legacy brand in trouble. In reality, the move is far more strategic,” he says.

“Sugarloaf has not rushed to sell. It is looking for capital and partners, not an exit. And that tells you everything about the true state of the estate. Fridays still has value. But it is value that can only be unlocked with fresh capital and a modern format. This is not a ‘sell it and walk away’ scenario, it’s legacy brand that needs a rebuild.”

Digby’s argument has some weight. He highlights Sugarloaf’s recent decision to hire Giles Fry as chief operating officer and Jonathan Grenville Grey as operations director; two TGI UK veterans who worked for the casual dining chain in the 90s. “They wouldn’t hire those two for a cultural direction and an understanding of the brand only to sell it,” he adds.

Fixing the business, though, isn’t exactly a small endeavour. Digby describes the estate as ‘oversized, inefficient and design-tired’, and in need of ‘resizing and reflowing with a sharper bar-led energy’. Operations need ‘simpler lines and fewer steps per order’; the menu is ‘too big, too mixed, and too complex for the kitchens it sits on’; and while the brand’s celebratory DNA is still relevant, the experience ‘needs a 2026 lens’ with ‘faster welcomes, cleaner journeys, better lighting and clearer zoning’.

Gauging investor interest

Digby is clear he believes that there is a strong investment case for TGIs UK. “The casual dining sector is unforgiving, but good turnaround opportunities are scarce. Investors do not want to build this from scratch. They want a platform they can modernise.

“Handled properly, this could be one of the most significant legacy turnarounds in UK hospitality.”

He references the recent refresh of Prezzo, now known as Prezzo Italian. Earlier this year the embattled casual dining group’s CEO James Brown, who joined the business last year, unveiled a new brand look and menu that included brighter, colourful and contemporary interiors alongside a revitalised F&B offering.

“When Prezzo was down to its last chapter, new leadership resharpened the offer, modernised design, simplified the menu, and rebuilt the guest experience,” Digby continues. “It shifted from slow decline to a fit, focused estate. That is the correct playbook for Fridays. Reinvention works when done early, decisively, and with operational clarity.”

Perhaps this is too optimistic a reading, though. Afterall, TGIs has already undergone a recent brand relaunch seemingly to little success.

Generally, the mood music when it comes to these once powerhouse brands is that recovery in the current market is tricky, requiring buyers to inject huge sums of capital. “That’s the case for a lot of stranded brands right now,” an industry analyst tells me. “It’s very difficult for them to be acquired as standalone businesses if there’s no obvious growth platform. Investors need to be able to see you can grow profit.”

One suggestion mooted would be for Sugarloaf to sell the brand for nothing. The new owner could then offload the loss-making sites through an insolvency process, retain those that are in profit, and pay Sugarloaf back over a set period through brand royalties. It’s an interesting idea, one whereby both buyer and seller are incentivised to have the business trade profitably in the future. For the seller it means they’ll keep getting royalties, and the buyer will ultimately be making money. Given the high risks, it could be the closest to a win-win solution.

Certainly, there will likely be investors tempted to take on the TGI brand. “Looking backwards, TGI was the performer,” says Ted Schama, founder of property consultancy One Voice Hospitality. “It outperformed its American mother for some years in the UK. And so, someone might have a twinkle in their eye for it.”

You just have to look at the recent acquisition of Byron, another former titan of the casual dining world whose star has long faded, by Niyamo Capital, which is led by 21-year-old investor and founder Akshat Tibrewala, to see there is still an appetite for legacy brands like TGIs. “There are a lot of business for sale on the cheap,” Schama continues.

He points to the recent movements of Cherry Equity Partners, the investment platform set up earlier this year by Ed Standring and Jamie Barber, who previously led London-based restaurant group The Hush Collection. Since its launch, Cherry Equity Partners has acquired Latin American-inspired bar and grill Cabana, which was previously owned by The Hush Collection, through a management buyout. It has also taken on both French restaurant group Bistrot Pierre and northern-based brand Gusto Italian via pre-pack administrations.

“There are distressed businesses being picked up by shrewd operators and good for them, they know what they’re doing, But if you don’t know what you’re doing in this market, what appears to be a great deal can very quickly turn.”

And that’s the main point worth bearing in mind for the investor that does eventually pick with the reins of TGIs. “In these fine line times, what might look quite cheap can suddenly become a liability,” Schama adds. “It can be as quick a turnaround as that.” Life moves pretty fast indeed.

Since this article was first published, Liberty Bar & Restaurant, TGI Fridays UK’s holding company, filed a notice of intention to appoint administrators.

James McAllister is business editor at MCA. Click here to subscribe to its daily newsletter.