- Out here, it's Monday. In here, it's Friday. - [Speaker] In the 70s and 80s, TGI Fridays grew in popularity as the first singles bar in the US. A happy hour hotspot where
the bartenders did tricks.

But TGI Fridays has since lost its flair, closing over 200 locations
across the country since 2019. And in November, the
restaurant chain filed for bankruptcy citing a
problematic capital structure and fallout from the pandemic. - TGI Fridays went from
being an American icon

to being a shell of itself. - [Speaker] So what went wrong? New York restaurateur Alan Stillman says he opened the first TGI Fridays in 1965 to meet the flight attendants in his neighborhood. - Is it fair to say you
got into the business

because you wanted to meet women? - Absolutely fair. Not only fair, but accurate
and true, and it worked. Stillman says the restaurant
started as a side hustle funded by a $5,000 loan from his mom. - I was just out to have a very good time.

It exploded so quickly. - TGI Fridays really knew its
niche and that was the bar. - The people that were
coming in were young people and they were looking to
meet other young people, they were looking to stand at a bar.

- [Speaker] In the early days, bartenders at the restaurant
went through rigorous training that involved memorizing
nearly 500 drink recipes and learning tricks to
entertain customers. - You gotta make your job fun. You're out there.

That's what bartending is all about. - TGI Fridays is famous for having this annual bar championship where bartenders would compete and see who had the best technique and skills. - [Speaker] Its bartenders also famously trained Tom Cruise

for his role in the 1988 movie "Cocktail." - [Speaker] The bartender. - [Speaker] TGI Fridays opened its first franchise location in the US in 1967, then expanded internationally in 1986.

- They've had and had a big presence in lots of other countries, and I think that did help get its name established. It kind of became synonymous with this American vibe. (upbeat music) - [Speaker] The company started to shift its strategy in the 90s

and 2000s, away from bar and grill to focus more on catering to families. Some industry experts say this was a mistake because it made the brand's messaging less clear. Its US sales peaked in 2008 and fell continuously after the recession.

Then in 2014, 2 private equity firms bought TGI Fridays. Triartisan later bought out Sentinel in 2019. - There were changes that were made, like unlimited app deals. - [Speaker] Endless apps just got endlesser.

- More focus on some kind of deals to try to get more than just the happy hour office crowd. - [Speaker] All day, every day drink specials only at Fridays. - [Speaker] In 2017, TGI Fridays signed a financial agreement

known as Whole Business Securitization. This is where investors lend money to a company in exchange for bonds. In the case of TGI Fridays,
these bonds were secured by its franchisee royalties. - Whole Business Securitization is something that some other
restaurants like Domino's

and Jimmy John's had experimented with in the 2000s and 2010s. It's a great way to borrow upfront, but there's, you know, covenants and risks if something goes wrong. And the big thing that went wrong

for TGI Fridays was the pandemic. - [Speaker] In 2020, the company closed
around 50 US restaurants and its total sales fell below
the standards it had to keep under this financial agreement. This meant that all the royalties
that franchisees had paid

to the company had to go
toward paying back investors. - An actual silver lining for TGI Fridays after the pandemic hit was
they were very quick to reopen, but then other chains opened up as well and other restaurants and that siphoned off
some of this business.

- [Speaker] So TGI Fridays got creative to compete by selling sushi. - [Speaker] TGI Fridays has Krispy Rice. - [Speaker] The private equity firm that owns TGI Fridays had invested in a ghost kitchen platform called C3.

And one of the brands on C3 was a sushi brand called Krispy Rice. The chain began by hosting Krispy Rice's to-go operations in some of its kitchens, and eventually started serving that sushi in its restaurants. - From talking to
operators and executives,

that was a bad move
because it was not on brand for TGI Fridays and it made
things much more complicated for the restaurants and it just
didn't generate enough money to justify that. - [Speaker] TGI Fridays didn't respond

to requests for comment. By 2023, TGI Fridays was
a brand in free fall. - There was some decline in
the levels of service and food and hospitality and being able to reinvest back in the restaurants because remember, all
those royalties were going

to the investors and not the restaurants. - We waited two hours for our food. - Tastes old. - [Speaker] And stress
at the management level only made matters worse. - TGI Fridays went through
a huge succession of CEOs

and I think that was disruptive
to the company overall. - [Speaker] In late 2023, TGI Fridays brought in
some veteran operators to try to improve operations, but they couldn't overcome the
company's financial issues. - This securitized debt they took on in 2017,

I think really complicated things and also led to their really
tough times they're in now, which is bankruptcy. - [Speaker] In April, the
company entered into a deal to be acquired by its
largest franchisee, Hostmore,

and to go public on the
London Stock Exchange. - This potential IPO in the UK with their biggest franchisee there was really a Hail Mary pass. They didn't really have a lot of other options at this point, but that did not come to be.

- [Speaker] TGI Fridays isn't alone in its financial struggles. Restaurant chains and operators
this year are on track to declare the most bankruptcies
in decades outside of 2020. TGI Fridays has closed dozens
of US locations this year.

- They also got kicked
out of their headquarters, so it's been a long time coming. The broader change among casual dining and where people want to go out and hang out has been a
real challenge for them. - [Speaker] The company's
franchised operations,

which are independently owned and operated, stayed out of bankruptcy. - Franchisees have a lot of questions. It's about what this
process means for them and who's the CEO of the
company and how do they get help and support, and does this brand last?

- Friday. - [Speaker] Friday. - Friday. (yodeling)

How American Icon TGI Fridays Became a Bankrupt Shell of Itself | WSJ What Went Wrong

The Wall Street Journal takes you inside carefully selected stories and events in a visually captivating way so you can dig deeper into the news and insights that matter to you. 

The Wall Street Journal

TGI Fridays' popularity in the 70s and 80s as a singles bar and happy hour spot.

Subsequent decline, closing over 200 locations since 2019 and filing for bankruptcy.

Founder Alan Stillman's motivation and initial funding.

Early success attributed to targeting young people seeking social interaction.

Rigorous bartender training and annual bar championships.

Shift in strategy from bar and grill to family focus in the 90s and 2000s.

Private equity acquisitions and implementation of unlimited app deals and drink specials.

Use of Whole Business Securitization and its consequences.

Impact of the pandemic and redirection of franchisee royalties.

Introduction of sushi (Krispy Rice) and its negative impact.

Decline in service and food quality due to financial constraints.

High CEO turnover and its disruptive effects.

Acquisition deal with Hostmore and attempted IPO in the UK.

Broader Industry Trends and Future Uncertainty

High bankruptcy rates in the restaurant industry.

Franchised operations remaining unaffected by bankruptcy.

Uncertainty regarding the future of the brand and support for franchisees.

How American Icon TGI Fridays Became a Bankrupt Shell of Itself | WSJ What Went Wrong

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