TGI Fridays’ UK owner enters administration

Hostmore, the owner of restaurant chain TGI Fridays’ UK franchise, has filed for administration with plans to sell all of the chain’s 87 outlets by the end of September. The company has appointed Daniel Smith and Julian Heathcote of Teneo Financial Advisory as joint administrators for the company. The company also said filing of administration will have “no direct impact on the operations of the trading subsidiary”. It noted that several bids had been received for the restaurants but that the offers were lower than expected and would not cover the company’s debts. The sales should be completed by late September, but all restaurants remain open for now. Hostmore’s shares will be cancelled and the company will be wound up, but TGI Fridays could continue in the UK under new ownership. In April this year, Hostmore reached an agreement to merge with TGI Fridays in the US in a £177m all-share deal. But last week the company announced that it had cancelled the acquisition because the US franchise owner of TGI Fridays lost the rights to key royalties and payments generated by the brand. The company also revealed that sales in July dropped by 23% compared to 2023 and, overall, year-to-date sales are down 12% compared to last year. Matthew Bibby, chief financial officer of Hostmore, said: “The board inherited a very challenging set of circumstances, but a focus on reducing costs, revising the group’s capital allocation policy and implementing both board and senior management changes, meant that the group was able to reduce annualised expenditures by £12m, significantly reduce losses from unprofitable stores, and operate the group’s stores at a best-in-class efficiency level for the sector, all while improving guest scores to our highest levels on record. “Unfortunately, all of the board’s efforts to implement a lasting solution to support the long-term financial future of the business came against a highly challenging trading and macroeconomic backdrop, and efforts to create value for shareholders through the proposed acquisition of TGI Fridays, while well-advanced, encountered adverse events outside of the board’s control.”