The popular casual dining chain TGI Fridays has announced that it will close 36 of its U.S. locations after seeing a decline in sales.
The closure of the restaurants, which represent 5% of the chain’s restaurant portfolio, will take place in phases with all locations expected to be closed within the next two months. The company has cited a need to “rationalize its footprint, reinvigorate the brand and refocus its resources on more profitable locations” as the main reason for the closures.
At a time when the casual dining industry is struggling to stay afloat amid increasing competition from fast-casual and quick-service restaurants, the decision to shut 36 locations is a bold yet necessary one. The combination of rising operating costs, staff hourly wages and rent expense, have put considerable strain on casual dining businesses.
The closures follow news of an earlier decision by the company to close 13 locations in December. The company’s statement goes on to say that the decision to shutter the businesses has been made in consultation with the landlords.
TGI Fridays will also be altering the design of its remaining locations with a focus on what it describes as “modernizing the dining experience and bringing increased value to guests”. This includes new interior design elements and menu items that have been developed specifically for the restaurant chain.
These are positive steps for the chain as it looks to adapt to the changing dynamics of the casual dining space and set itself up for long-term viability. With the U.S. casual dining market expected to reach $246.8 billion in 2021, there is still potential for TGI Fridays to gain a significant share of the market if it can react quickly and effectively to the changing customer preferences.
Overall, while TGI Fridays might be taking a big financial hit by closing 36 of its locations, the decision should actually reward them in the long run. By focusing on the more profitable locations, reducing operating costs and implementing new design elements and menu items, the company has set itself up for a potential comeback in the casual dining sphere.