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TGI Fridays was first launched back in 1965 by Alan Stillman, who opened the first restaurant in Manhattan. His goal was to establish a venue for fashionable young people to socialise via a ‘cocktail-party’ atmosphere. At the time he had no experience in the restaurant business whatsoever.
The theming of the brand was, from the early days, based around the ‘Gay Nineties’ aesthetic – the idealised 1890s American style which was drawing particular nostalgia at the time of the chain’s founding (with films such as Hello Dolly being released around the same time).
This distinctive aesthetic would go on to become the hallmark of the restaurant chain. This was particularly from the perspective of customers abroad when the company expanded to the UK (specifically Birmingham) in the 1980s (around which time, the branding was also adjusted to suit families rather than young singles).
There are a number of issues at play here. First, the UK high street (and ‘eating out’ on the whole) has experienced significant downturns in recent years. This is especially in light of the cost of living crisis, which has made consumers far more frugal in terms of their expenditure (and many consumers, anecdotally speaking, often found TGI Fridays to be relatively expensive in the first place).
The aftermath from the Covid pandemic has also affected habits such as eating out. Some consumer research suggests that takeaways are now a far more promising area of the market – see TGI Fridays’ failed attempt to launch a takeaway service in Scotland a few years ago.
Another key consideration is the fact that, in their own words, the brand struggled to keep up with changing consumer demands for ‘healthier and vegan foods’, especially in markets like the UK (where the demand for such variety is stereotypically higher than in the US at the moment).
The buyers of the chain are Breal Capital and Calveton UK. They already own a number of restaurant chains active in the UK, including well known burger-joint Byron Burgers and the D&D London group. These two buyers are private equity firms, which are well-known for rescuing distressed assets like TGI Fridays (and then attempting to build them back up to profitability through ruthlessly improving efficiency).
They stepped in after previous buyout attempts had failed, and after TGI Fridays’ UK operator Hostmore officially slipped into administration last week due to crippling amounts of debt (thus looking for a buyer urgently).
Breal Capital and Calveton UK have announced their plans to ‘both modernise the business and capitalise on the heritage of this iconic brand’ according to a recent press release, saying that the deal aims to ‘preserve a significant proportion of jobs’.
In reality, however, the cuts appear relatively bleak. More than 1,000 UK staff will be made redundant as a result of the restructuring, leaving just 2,400 jobs. To analyse the figures from a location-based perspective, 51 sites are being saved while 35 are closing. Most of those being cut are in regional locations outside of London (though many sites in other major city centres, such as Manchester and Bristol, are still on the chopping block).
This news regarding ongoing redundancies comes in the wake of heavy criticism over staff treatment. Unite union boss Bryan Simpson made headlines this week by calling the treatment ‘a national disgrace’, with employees left in the dark over unpaid wages and tips which they were due to collect.
Many appear to have received no advance notice, either – simply turning up to work and finding the doors were locked.
There are a number of points that the solicitors or barristers of tomorrow could take from this ongoing saga of financial struggles for TGI Fridays – points which would make for excellent talking points on applications and at interviews for opportunities such as training contracts, vacation schemes, or pupillage.
Generally speaking, there is a lot of commercial awareness on display here for anyone managing to pick apart the business aspects of this story. Corporate law firms in particular often list this as one of the most important skills for their future trainees to develop (and thus showcase at interviews).
Think about the public image of the brand following allegations of staff mistreatment, or how the failure to account for the rising interest in alternative meal choices contributed to the downfall of such a prominent restaurant chain, to give just a few examples.
Of course, thinking in terms of practice areas is always a logical way to approach these stories, too.
Most obviously, this will require a strong team of insolvency and restructuring lawyers. This is particularly true of large law firms in the City who draw a large portion of their profits from such work (think Magic Circle, Silver Circle, etc). While a complete winding up has been avoided, there will have been plenty of work to do relating to issues like the order of priority for creditors (as we know, TGI Fridays’ UK operator were riddled with debt just before the buyout).
Private equity lawyers will also be key here for advising on how the buyout process (a rather complicated one for companies on this scale) will need to work. This is an area which the elite US firms in London are particularly well-known for, with many of them maintaining top tier rankings year after year.
Employment lawyers will be needed to unpack the situation facing ongoing layoffs and staff concerns over mistreatment while the chain was going under (particularly in light of union bosses suggesting legal rights may have been violated).
You might even want to think about how aspects of such as well-established brand, such as its intellectual property (IP) will be handled going forwards.
In short, there are a huge number of angles you can attack this story from in regard to an application – and diving deep into real stories such as these (before applying the work involved to the work being done by your target firm or chambers) is a great way to get started.
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