The chain has lost a net of 156 U.S. restaurants in the past four years.

On the day news broke about TGI Fridays’ proposed merger with franchisee Hostmore, leadership held a call with the rest of its operators and conveyed a simple message. This is the next step in the brand’s transformation.

CEO Weldon Spangler says the move not only puts TGI Fridays in a solid financial position, but also demonstrates the company’s confidence in the brand, with 189 corporately operated restaurants across the globe when the deal closes.

“We work well together and what we talked about [April 16] is this won’t change for them,” the CEO says. “We have a team that supports them. We’ve got a president in the U.S. business that works with them. We have other team members who support them directly and this will only be good news for them.”

The U.K.-based Hostmore, TGI Fridays’ largest franchisee, agreed to purchase the brand for $220 million. The operator oversees 89 TGI Fridays locations in the U.K., making it the brand’s biggest international market. The franchisee also oversees Friday and Go, a fast-casual spinoff. The move will bring TGI Fridays public as Hostmore trades on the London Stock Exchange. In 2014, Carlson Restaurants sold TGI Fridays to TriArtisan Capital and Sentinel Partners for a sum exceeding $800 million.

Spangler says the two sides already work closely together and that the merger was the result of a “meeting of the minds” between TGI Fridays chairman Rohit Manocha and Hostmore chairman Stephen Welker. He also believes TGI Fridays going public will give it the necessary capital structure to build a growth runway.

The brand enters the deal with 593 locations in 44 countries, but also a recent history of sales struggles dating back to pre-COVID. In 2019, the casual giant explored strategic alternatives and had an agreement in place to merge with a special purpose acquisition company for $380 million, but the pandemic caused the deal to fall through. The brand earned $1.4 billion in systemwide sales in 2023, consisting of $672 million from the U.S. and $708 million internationally. That’s down from $1.6 billion in 2022, or a 12.5 percent decrease. The company also earned $67 million from its CPG licensing business in 2023 and thinks there’s incremental growth potential internationally.

In Q1, TGI Fridays earned $307.3 million, a decline of nearly $40 million year-over-year. The company’s off-premises business mixes 25 percent, with 40 percent of that coming through first-party channels.

The chain has 228 U.S. locations (100 corporate and 128 franchised), which is a net loss of 156 restaurants since the beginning of 2020. It began this year by announcing the closure of 36 stores nationwide. Spangler says the shutdowns in January were designed to help TGI Fridays focus capital on several restaurants that are “fantastic and can continue to grow.” He adds that the brand has an opportunity in the travel space, particularly in airports (currently five in Dallas-Fort Worth, three in Atlanta, and one in Miami). The brand said in August that a newly renovated restaurant in the Dallas Fort Worth International Airport was on track to earn $14 million.

“They are incredibly high volume. They do terrific in a sea of restaurants,” Spangler says. “There’s a ton of competition and we still excel there. And we think that there’s opportunity also for growth in restaurants, new growth in casinos and hotels. So this allows us to focus on those opportunities going forward.”

Spangler began his tenure in October, replacing Brandon Coleman III, who stepped down for personal reasons after two months on the job. Since then, TGI Fridays has worked to fill its C-suite with restaurant veterans. Ray Risley was hired as U.S. president and COO after serving as CEO of Via 313 Pizzeria, president and COO of Front Burner Society, and nearly 20 years at Del Frisco’s Restaurant Group. Nik Rupp was announced as CFO and president of international after working as COO and CFO at Papa Murphy’s.

In terms of work at the store level, TGI Fridays is leaning into its bar-forward legacy. This includes a new $5 Happy Hour with uniquely sized appetizers, premium spirits, crafted cocktails, beer, and wine. That’s paired with a smaller menu that streamlines work in the kitchen and adds 10 meals starting at $9.99. The guests appear to enjoy the changes; sentiment scores have increased more than 30 percent in the past four months. The chain is also drawing in customers with promotions hooked around big events, like a “Busted Bracket” deal in which customers who showed their NCAA Tournament bracket received six free boneless wings. And to cure consumers’ Tax Day woes, TGI Fridays introduced “The Tax Break,” a $7 cocktail available through the end of April.

“We think in the casual-dining space, we have the bar lane,” Spangler says. “We’ve had it really since the inception. We were the original corner bar. So we have the legacy in the bar and we are now moving forward to really maximize that.”

If the transaction closes in Q3 as expected, the combined entity would be named TGI Fridays plc and listed on the London Stock Exchange as “TGIF.” Hostmore shareholders would own 36 percent and TGI Fridays shareholders would own 64 percent.

The combined group would be chaired by Welker, who plans to retire soon. Manocha would be chairman-designate and then become non-executive chairman upon Welker’s retirement. U.S. and global operations would remain in Dallas. The merged entity would be led by Spangler as CEO and Rupp as CFO. Hostmore CEO Julie McEwan and CFO Matthew Bibby would stay in the U.K., but report to Spangler. The task now is determining the best way to support company operations in the U.K. without too much interference.

“It’s a unique situation to have company operations in a different country,” Spangler says. “Not a lot of companies do that. And we’ll work through that with our team to figure out how to best support them.”

Chain Restaurants, Feature, T.G.I. Friday's