TGI Fridays, once known as the ultimate spot for casual dining and a fun night out, is facing some big challenges. The popular restaurant chain just filed for bankruptcy protection, struggling with financial troubles caused by the pandemic, shifting dining habits, and fierce competition in the food industry. Once a huge player in American pop culture, TGI Fridays has seen a tough few years as it works to adapt to new customer preferences.

A Blast from the Past

Founded in 1965, TGI Fridays started as a cozy bar on Manhattan’s Upper East Side. Over time, it turned into a favorite spot in suburbs across the U.S., recognized for its mouthwatering ribs, cheesy potato skins, and festive red-and-white décor. At its peak in 2008, TGI Fridays boasted over 600 locations in the U.S. and generated nearly $2 billion in sales.

But fast forward to today, and things look quite different. The chain has closed a huge number of locations, shrinking to 163 U.S. restaurants, down from 269 last year. The Dallas-based company, which still owns and operates only 39 locations in the U.S., filed for Chapter 11 bankruptcy in Texas. This filing aims to protect the brand while it plans a way to stay afloat.

The Impact of COVID-19 and Changing Times

The pandemic hit restaurants hard, especially sit-down places like TGI Fridays. When COVID-19 struck, people stopped going out, which meant many restaurants, including TGI Fridays, faced a huge drop in customers and revenue. Even after restrictions were lifted, people seemed to prefer the convenience of delivery or quick-service restaurants.

As Rohit Manocha, executive chairman of TGI Fridays, explained, the pandemic wasn’t just a bump in the road. It changed the way people think about dining. Now, customers seem to favor options like Chipotle and Shake Shack over the traditional sit-down style. These fast-casual options offer fresh, high-quality food that can be picked up quickly or ordered for delivery. TGI Fridays, along with other sit-down dining places, struggled to keep up.

Iconic, but in Trouble

TGI Fridays holds a special place in American culture. The brand was popularized in part by movies like “Cocktail,” where its bartenders even trained Tom Cruise for his role. Its waitstaff uniforms, covered with quirky buttons, were spoofed in the comedy movie “Office Space.” But despite these cultural moments, TGI Fridays has been losing its connection with today’s diners. In 2023, the restaurant’s U.S. sales dropped by 15%, bringing in about $728 million compared to previous years.

As a strategy to stay relevant, TGI Fridays leaned into delivery and takeout during the pandemic. They even set up ghost kitchens, which are locations that only prepare food for delivery with no seating or physical storefronts. However, the competition in this area is fierce, and they’re facing mounting debt, including money owed to DoorDash, one of their major delivery partners.

Other Restaurant Chains Face Similar Issues

TGI Fridays isn’t the only casual dining chain feeling the pinch. Many sit-down restaurants are facing similar problems. In recent months, Red Lobster and Italian-American chain Buca di Beppo also filed for bankruptcy. Last month, even Denny’s—a well-known U.S. diner chain—announced it would close 150 underperforming locations in hopes of improving its financial health.

These closures reflect a big shift in the restaurant industry. People are changing how they spend their money on dining out, with many choosing delivery or quick-service restaurants over traditional sit-down dining experiences.

International Branches Still Open

Interestingly, the bankruptcy filing doesn’t affect every TGI Fridays location. Many international branches remain open, run by independent franchisees. TGI Fridays Franchisor, a separate entity from TGI Fridays Inc., licenses the brand to 56 independent owners across 41 countries. So, while the U.S. locations are struggling, people in places like the United Kingdom, Japan, and other countries can still enjoy a night out at TGI Fridays.

However, not all overseas locations are thriving either. In September, a U.K.-based franchisee, Hostmore, sought debt protection and had to close some TGI Fridays locations after a failed acquisition deal. This further emphasizes how hard the restaurant industry is being hit across the globe.

A Look at the Road Ahead

Even though TGI Fridays is closing some doors, the company says it is not giving up. Filing for Chapter 11 bankruptcy is a step toward restructuring their finances and possibly finding a way to keep the brand alive. Bankruptcy protection allows them to keep operating while working out a plan with creditors, who might agree to new terms that give TGI Fridays more time to pay off debts. They hope this will give them a fighting chance to survive and, hopefully, return to being a favorite spot for diners.

The world of dining has changed significantly, and TGI Fridays must find creative ways to adapt if it wants to keep serving customers. New competitors and a shift in dining habits mean that TGI Fridays may have to transform its identity to stay relevant. This could involve more focus on delivery, new menu items, or even a complete brand refresh.

What’s Next for TGI Fridays?

As TGI Fridays enters this new chapter, its future is uncertain. Will the brand adapt quickly enough to bring customers back? Can it find new ways to win over diners who now prefer a different style of dining? Only time will tell if TGI Fridays can pull through and make a successful comeback.

For now, the chain continues to operate some of its locations, especially those owned by franchisees overseas. The story of TGI Fridays is a reminder that even popular brands must evolve to survive. The bankruptcy filing marks the end of an era, but perhaps it’s also the beginning of a new one for this beloved chain.