T.G.I. Friday’s have been struggling over the last several years. CEO Ray Blanchette had been tasked with plans to change the struggling chain into a buzzy bar business and make the company public. But 2020 unrolled a pandemic, and instead of making the company public Blanchette has been busy through the first half of the year trying to make cash enough to avoid bankruptcy. With the looming recession, T.G.I. Fridays’ kicking off 2020 can be deemed as a failure. How did the pandemic make the company’s 2020 comeback go in vain? Will it be better or worse in the post-pandemic situation?
Factors that led to T.G.I Fridays’ downfall.
In the 1980s and 90s T.G.I. Friday’s were quite a fancy place to be at. It’s a fun atmosphere, predictable food quality and prices that could be afforded by an average family or a teen with a part-time job made it a decent place to hang out on a typical Friday night. But the times have changed, and TGI Fridays saw a 5.1% decline in its sales in 2017. The company growth struggles have been a result of many factors.
T.G.I. Fridays’ shift from a bar flanked mostly with young adults to a casual family dining restaurant strayed them too far from their roots. The first T.G.I. Friday’s had a homey atmosphere with imitation Tiffany lamps and walls with antique memorabilia. They developed a great fanfare a people had never seen anything like that. Ruby Tuesday, Bennigan’s and more chain started copying the look and thus quality started to decline. In 2005, T.G.I. Friday’s began revamping their décor discarding the antiques and going into a minimalistic look, but it failed to capture the coolness factor of it in the ’70s, ’80s, and ’90s.
The death of popular industry in the ’80s and ’90s can easily be put on the shoulder of the millennials, and it is not surprising that such is the case with T.G.I. Fridays’ decline in popularity. Millennials prefer faster services, cheaper prices, and more customizable options that are offered by fast-casual chains like Panera Bread or Chipotle. These chains provide fresher food and more global option compared to T.G.I. Fridays’ deep-fried appetizers. And adding on to that home delivery had made it worse since you can’t have an Elderflower Martini or a Cosmopolitan home-delivered, they are bound to lose out on the sales.
Fridays’ plan to kick-start 2020
T.G.I. Friday’s had made a turnaround plan for 2020, and in January 2020 Ray Blanchette, Fridays’ rehired senior alumni, was quite optimistic about the future of TGI Fridays. They not only planned to re-launch its bar but also planned to bring the chain back to its roots. In 12 months, ending in November 2019, Fridays saw a shrink in 6.7% same-store sales in company-owned locations and an 8.1% decline of the same in domestic franchised locations. This year they aimed at meeting customer requests better. For example, a policy of theirs did not allow serving a beer along with a shot, which is a sought-after combination of many happy hour customers. They planned in annulling these policies, doing more than just reshaping their drink menu. They were looking forward to changing décor and the seating to have an arrangement that encourages socializing. Blanchette was determined to turn Fridays into a go-to place for a night out, adding cheaper drinks to the bar menu and communal tables, and transform it into a buzzy, party-friendly place. But the pandemic unrolled a different scene.
The pandemic chose to tell a different story about the chain’s future in 2020 and the years to come.
Fast forward five months, now most people are banned from crowding in a buzzy bar even if they choose to. The social distancing norms and regulations have made the idea of being in the proximity of strangers and even known people a thought of the distant past. Blanchette’s job changed almost overnight from making the chain public to crisis management with sales plummeting in huge numbers. Even before Blanchette was rehired, the chain was trying to get into track and was stepping away from ‘casual dining’. Blanchette’s plans to reinvigorate the chain came to a sudden halt, instead T.G.I. Friday’s had to furlough thousands of its workers. The sudden witch to delivery-only and carry-out mode changed their goals from earning profits to making just enough to keep the chain away from going bankrupt. Before the pandemic, T.G.I. Friday’s made just 13% of its revenue from carry-out or home delivery and suddenly that became their only source of income.
TGI Friday’s added a new option called The Butcher Shop which sells uncooked meat and large family meals. They even started a curbside service to boost up their sales. A makeshift call center was created to hire back workers to takeout orders.
Even with such prompt efforts to keep the chain alive and in form, TGI Friday’s had to close a significant number of outlets. Before the pandemic, 386 outlets were open in the US, and that number went down to 311 in late May. Previously, the CEO Blanchette stated that the Fridays might close 10-20% of its outlets, and if there is no renewal of leases from the landlords then they might have to shut down dozens of outlets permanently. The chain’s struggles are too far from being over. They have never fully recovered from the last recession when the present looming recession came as another nail to its coffin. The recession which has unrolled due to the pandemic is going hamper the employment of many youths and add on to the existing problem of unemployment. And with such a high rate of unemployment and with such a grave economic crisis, it is very unlikely that people will eat out often.
But TGI Friday’s is determined not to crumble down due to the crisis. Instead, its focus now is to make its employees and customers feel safe. CEO Blanchette’s primary goal now is ensuring that the employees feel comfortable to return to work after the pandemic hiatus. And the management is now focusing to develop a longer-term comeback strategy. Blanchette is quite optimistic about the brand’s future and that together we will all get through this.