TGI Fridays enters $220M agreement to combine with UK franchisee

Dive Brief:

TGI Fridays and its largest global franchisee, Hostmore, have reached a non-binding agreement regarding a proposed all-share acquisition by Hostmore, the chain said in a Tuesday press release.
Hostmore, which currently trades on the London Stock Exchange, plans to purchase TGI Fridays for an enterprise value of £177 million (over $220 million), Hostmore said in a regulatory filing.
The transaction, which is expected to close during the third quarter, would create a global hospitality brand that would have “financial flexibility, increased scale and capital to deliver continued revenue and an exceptional experience to TGI Fridays Guests,” the casual chain said.

Dive Insight:

Following the merger, the combined entity will be renamed TGI Fridays plc and be listed on the London Stock Exchange as TGIF. Current TGI Fridays CEO Weldon Spangler and CFO Nik Rupp will lead the combined group, according to Hostmore’s filing, and retain leadership of the company’s U.S. and global operations. The combined company will operate 189 corporate-owned restaurants across the U.S. and U.K. The company also franchises around 400 stores across 44 countries.

“We have been laser focused on revitalizing the brand and driving growth through consumer-centric offerings, the optimization of our restaurant portfolio and the addition of senior team members,” Spangler said in a statement. “This transaction represents the next step in our journey as it increases our corporate-owned restaurant locations and provides capital to expand our presence globally.”

TriArtisan Capital Advisors has been the majority owner of TGI Fridays since 2014 and will remain a shareholder of the combined company, with Rohit Manocha, co-founder of TriArtisan, becoming chairman-designate upon completion of the transaction. In 2025, Manocha will become non-executive chairman of the combined company, as Hostmore’s current chairman Stephen Walker will retire from the board after the 2025 annual general meeting. Following the completion of the transaction, TGI Fridays shareholders, which also includes MFP Partners, will own 64% of the company, while Hostmore shareholders will have 36%.

TGI Fridays ended fiscal 2023 with global systemwide restaurant sales of $1.4 billion, which included $672 million in the U.S. and $708 million in international markets, according to Hostmore’s filing, complemented by $67 million in consumer packaged good licensing sales.

The restaurant chain had roughly $307 million in systemwide sales during Q1 2024, a decline of about $38 million, according to Hostmore’s filing, though those amounts were listed in British pounds, and may be slightly different due to fluctuations in exchange rates. Despite the decline in sales, guest sentiment in the U.S. last quarter improved significantly compared to Q4 2023.

TGI Fridays has been working to improve overall operations since last year. The chain updated its menu with a Grilled & Sauced menu in June and added new appetizers, salads and bowls in October. Fridays shook up its C-suite in 2023: CMO Brandon Coleman took over as CEO in August, but left the post about two months late.

Spangler, then a board member, became CEO in October, and in December the chain appointed COO and U.S. President Ray Risley and Rupp as CFO. Earlier this year, the chain closed 36 underperforming locations as part of its long-term strategy. It also sold eight corporate locations to former CEO Ray Blanchette.