According to The Sun, TGI Fridays has revealed plans to close down a dozen of its restaurants as part of the company’s ongoing growth strategy. This move follows the abrupt closure of seven locations in May and 36 restaurants in January.
Recent Closures Across Multiple States
Earlier this month, TGI Fridays shut down restaurants across 10 states. According to the company’s website, several locations in the Northeast, including Clifton Park, Middletown, and Poughkeepsie in New York, as well as Allentown, Pennsylvania; Enfield, Connecticut; and Leesburg, Virginia, were among those that closed last week.
Additional closures also occurred in the Southeast and Midwest, affecting states like North Carolina, South Carolina, Wisconsin, Michigan, Indiana, and two locations in Minnesota.
Operational Optimization Strategy
TGI Fridays Chief Operating Officer Ray Risley emphasized the need for operational optimization in a previous press release. “We’ve identified opportunities to streamline our operations to ensure we are best positioned to meet — and exceed — on that brand promise,” Risley stated. By focusing on strengthening their franchise model and closing under-performing stores, the chain aims to create a more favorable environment for growth.
Current Landscape of TGI Fridays
Before these closures, TGI Fridays operated approximately 270 locations across the U.S. Additionally, eight other locations have been sold to former CEO Ray Blanchette, a long-time stakeholder, who will acquire these previously corporate-owned restaurants. The brand is also undergoing significant leadership changes, including the appointment of Weldon Spangler as the new CEO.
“As we continue along our path of transformation to revitalize the Fridays brand and implement a long-term growth strategy, we see a bright future for TGI Fridays,” Spangler stated.
The Impact of the ‘Retail Apocalypse’
The restaurant industry, along with independent stores and major retailers, is experiencing significant challenges due to changing consumer shopping behaviors. This ongoing phenomenon, often referred to as the “retail apocalypse,” has affected the sector for over a decade.
Industry experts attribute the crisis to the rapid rise of online shopping, declining mall popularity, and changes in middle-class consumer spending, as noted by Vox. The COVID-19 lockdowns further exacerbated these challenges, leading to numerous restaurant closures in 2024.
Insights from Experts on Restaurant Closures
To better understand the reasons behind these closures, The U.S. Sun spoke with Mitchell Olsen, a marketing professor specializing in retail at the University of Notre Dame in South Bend, Indiana. Olsen noted that rising food prices have had a significant impact on diners, who are now paying 4% more than they did in May last year.
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He explained that inflationary pressures are affecting fast-casual restaurants in two ways. “On one hand, it’s more expensive to operate restaurants due to higher wages and food costs. On the other hand, it’s increasingly difficult to pass those higher operating expenses onto diners, leading to rising menu prices,” he stated.
Changing Consumer Behavior
As a result of these high costs, consumers are becoming more cautious about their spending habits. “Consumers are starting to push back against the high cost of dining out by reconsidering appetizers or dining out altogether,” Olsen observed.
The cost of food rose 2.1% from May 2023 to May 2024, impacting consumer spending not only at restaurants but also in grocery stores. This trend has become especially pronounced in the aftermath of the pandemic.
Olsen concluded, “Although inflation is decelerating, it remains stubbornly high compared to pre-pandemic prices, which serve as a reference point for many consumers.”
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