TGI Fridays has nearly 600 restaurants in 44 countries, including 89 in the United Kingdom.
After hiring a new CEO in October and closing 36 underperforming restaurants earlier this year, TGI Fridays announced today its intent to merge with United Kingdom franchisee Hostmore.
The franchisee’s acquisition of TGI Fridays is valued at about 177 million British Pounds, or about $220 million at the current exchange rate. The deal, which will take TGI Fridays public on the London Stock Exchange, is expected to close in the third quarter.
Following the transaction, TGI Fridays shareholders will own 64 percent of the combined entity, renamed TGI Fridays plc, while Hostmore shareholders will have 36 percent.
Hostmore is publicly traded on the London Stock Exchange and is the brand’s largest franchisee, with 89 stores in the U.K. TGI Fridays has nearly 600 restaurants in 44 countries and reported $1.4 billion in sales last year, down from $1.6 billion in 2022. The brand’s headquarters will remain in Dallas. The combination would give the new company 189 corporate-owned restaurants in the United States and U.K.
TGI Fridays CEO Weldon Spangler
“As a global brand, this really solidifies our position in company operations, which then really helps us to share that with the franchisees, to help bring them best practices and continue to learn from them,” TGI Fridays CEO Weldon Spangler said.
The deal was “several weeks” in the making. “The more we talked about it, the more we liked it, the more we thought that it made sense,” Spangler said.
Going public gives Fridays access to more capital, which allows the brand to “continue the work we’re doing and improving the business and growing the business,” he noted.
“I think it gives us an opportunity to really drive business both in the U.S. and the U.K. and worldwide,” Spangler said.
Since taking over leadership of the brand last year, Spangler said he’s excited about things to come for Fridays with the appointment of new corporate team members. Former CEO Ray Blanchette led the brand from October 2018 until May 2023. Following Blanchette’s departure (he now owns eight restaurants in the Northeast), Brandon Coleman took over in August and then abruptly stepped down in October.
Now, Spangler leads the brand. Fridays hired former Via 313 Pizzeria CEO Ray Risley as its U.S. president and chief operating officer late last year, along with Nik Rupp as chief financial officer and president of international markets.
Related: International TGI Fridays Franchisee Sees Massive Opportunity in Asia
TriArtisan Capital Advisors bought TGI Fridays from longtime owner Carlson Restaurants in 2014 and is the controlling shareholder. In late 2019 TGI Fridays announced plans to go public through a merger with a special purpose acquisition company, Allegro Merger Corp, but that deal fell through in early 2020 because of “extraordinary market conditions” related to the pandemic.
In the U.K., meanwhile, Hostmore has “made good progress in executing its turnaround strategy over the past year by reducing costs, revising our capital allocation policy to focus on debt repayment and shareholder distributions, and pursuing high ROI organic growth initiatives,” Hostmore Chairman Stephen Welker said in a statement.
The combined company is expected to continue utilizing Hostmore’s revised capital allocation policy framework, which prioritizes debt reduction and shareholder returns, the company said in its announcement of the non-binding agreement. Hostmore also called out TGI Fridays’ “substantial” off-premises platform, the potential for cost synergies and its well-capitalized franchisee base as benefits of the transaction.
To drive sales, TGI Fridays is emphasizing its bar offerings systemwide, Spangler said, which Hostmore is doing as well with the company’s “Raising the Bar” program. This includes its $5 happy hour deals for certain drinks and appetizers.
“We have adopted a lot of” what Hostmore’s done “in other countries and in the U.S.,” he said.
Fridays also streamlined its menu to create better efficiency and execution in the kitchen, Spangler said.
This is all meant to improve the customer experience. “In the past four months, we have moved our guest sentiment metrics by roughly 30 percent and the team has been laser-focused on that,” he said.
TGI Fridays is undergoing a refinancing with new lenders, which is expected to be completed on or before the date of the proposed transaction’s completion.