The American casual restaurant chain TGI Fridays filed for Chapter 11 bankruptcy protection on Saturday, citing a flawed capital structure and joining a host of its peers that have struggled this year in the face of rising everyday prices and changing consumer trends.
The chain — recognized by its red-and-white striped logo and kitschy interior design — has quietly been closing locations since January and shuttered 50 more last week before filing for Chapter 11 protection.
The company, based in Dallas, has not disclosed the locations of the store closings.
There are five TGI Fridays in California, including one in Los Angeles near Hollywood Boulevard, according to the company’s website.
TGI Fridays said it operates 39 company-owned locations and has secured financing to keep the restaurants open during bankruptcy. The bankruptcy will not affect 56 franchised restaurants, which are independently owned and operated.
“The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders,” Executive Chairman Rohit Manocha said in a statement. “This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.”
Fallout from the COVID-19 pandemic has also been a major driver of the company’s financial struggles, Manocha said. The chain plans to use its bankruptcy protection “to explore strategic alternatives in order to ensure the long-term viability of the brand,” the statement said.
The company did not respond to a request for comment.
TGI Fridays offers customers a wide array of classic American entrées along with milkshakes and ice cream sundaes. The chain, which got its start in Manhattan in 1965, helped popularize the “happy hour” concept and was at its peak a popular spot for celebrations and gatherings.
TGI Fridays bartenders trained Tom Cruise for his role in the 1988 film “Cocktail,” the company has boasted, and its waitstaff’s colorful button-filled uniforms were parodied in the 1999 film “Office Space,” starring Jennifer Aniston.
The chain has been owned by private equity firms TriArtisan and Sentinel Capital Partners since 2014 and does not release financial results. According to the market research firm Technomic, company sales in the U.S. declined to $728 million last year, down 15% from the prior year, the Wall Street Journal reported.
TGI Fridays’ woes are part of a dominant trend that has also affected American casual restaurant chains such as Red Lobster and Denny’s. Middle-class consumers who once frequented such places are cutting back on discretionary spending, experts say, and the high price of goods and labor are squeezing profits.
Red Lobster filed for bankruptcy protection earlier this year after an all-you-can-eat shrimp fiasco contributed to financial losses; Rubio’s Coastal Grill did the same following the abrupt closure of 48 locations in California. The fast-casual burger spot Shake Shack closed nine underperforming restaurants in September, including five in the Los Angeles area.
The Associated Press contributed to this report.