(Bloomberg) -- TGI Friday’s Inc. is seeking financing as the casual-dining chain prepares to file for bankruptcy protection in coming weeks, according to people with knowledge of its plans, after struggling to turn around a business pressured by customers’ tighter budgets and preference for faster food.
The company is huddling with lenders in search of a loan that would help it continue running restaurants through the Chapter 11 process and emerge as an operating company, said the people, who asked not to be named discussing confidential information.
TGI Friday’s is working with lawyers from Ropes & Gray LLP on its bankruptcy preparations, which aren’t final and may still potentially change, the people said. Representatives for the company and for Ropes & Gray didn’t respond to requests for comment. Debtwire earlier reported on the potential for bankruptcy.
The chain’s obligations include asset-backed securities, which were the source of some drama last month after the company’s management breached their terms by failing to file documents to bondholders on time. As a result of that breach, they had to turn over control of some assets to an outside manager.
TGI Friday’s is one of several casual dining chains that have had to grapple with the reality of popular fast-casual eateries like Chipotle eating into their market share in recent years. Prolonged closures and a drop-off in traffic due to the Covid-19 pandemic exacerbated the impact of that trend.
Red Lobster Management LLC entered bankruptcy in May after years of losses, punctuated by a money-losing “Endless Shrimp” promotion.
Hooters, the dining chain famous for chicken wings and skimpy server uniforms, is also in talks with lenders and advisers as its own declining revenue forces it to close locations, Bloomberg recently reported.
TGI Friday’s began on Manhattan’s Upper East Side in the 1960s, pioneering the idea of a singles’ bar and restaurant that women could go to without being on a date. The chain spread across the US, decorating restaurants with a wide array of antiques and memorabilia, often local — a look it’s since shed.
--With assistance from Scott Carpenter, Immanual John Milton and Carmen Arroyo.
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