Fears over future of family favourite chain with 87 restaurants at risk
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 takeover the US restaurant owner of TGI Friday’s for £177 million had collapsed.
The deal has broken down because the ultimate owner of TGI Friday’s 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 there is a viable future for the business.
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.”
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 over the year to mid-May 2024 were a tenth lower than the same period the previous year, on a like-for-like basis.
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.
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.
Some well-known retailers have shut a handful of branches, while others have disappeared from the high street for good.
In January 2023, Byron Burger fell into administration with owners saying it would result in the loss of over 200 jobs.
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.
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.
Retailers closing stores in 2024
RETAILERS have been hit by soaring inflation and a downturn in spending due to the cost of living crisis.
High energy costs and a move to shopping online are also taking their toll.
Some high street shops have closed due to businesses opening up in different locations such as larger retail parks.
Shops may also close due to a number of other reasons, such as rising rents.
We explain which retailers are closing in 2024:
- Argos – The brand announced plans to close 100 standalone UK branches last year as it looks to move away from the high street and focus on expanding its presence in supermarkets.
- B&Q – The chain has over 300 shops across the UK, with two stores closing this year due to leases not being renewed. It has plans to open more in 2024 too.
- Boots – The health and beauty chain announced that it would be closing 300 stores last July. Closures are ongoing and this will see the retailer’s estate reduced from 2,200 to 1,900 shops.
- Clintons – Clintons mulled plans to close 38 shops in a bid to avoid insolvency late last year. We’ve listed the stores affected.
- Costa Coffee – The caffeine giant has around 2,000 sites nationwide, so chances are you’ll have one near you. The chain has shut the doors to dozens of its sites recently. We’ve revealed which stores are due to close this year.
- Iceland – The supermarket has more than 900 stores but closed nearly two dozen sites in 2023, and more selected shops are due to shut.
- Lidl – The supermarket, which has 950 stores, is changing up shop locations, which has meant that some stores have to close. But the retailer is also looking to open 12 new supermarkets.
- M&S – M&S, which runs 405 stores across the country, has been closing a string of branches across the country in a blow for shoppers. It’s not all bad news, though, because the chain also has big plans to open dozens of new shops.
- Trespass – The firm announced in July last year that it was closing six branches, but more are on the way.
- WHSmith – The retail giant, which runs over 1,100 stores, has shut eight stores since March 2023, but more are coming.
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