TGI Fridays files for bankruptcy, blaming COVID-19 pandemic for financial woes

Casual dining chain TGI Fridays Inc. filed for Chapter 11 bankruptcy in Texas on Saturday. The company's CEO said the company has still not fully recovered from the COVID-19 pandemic.

The bar and grill chain known for serving $5 hamburgers, stuffed potato skins and happy hour drinks said the move was made to “address legacy issues and position restaurants for long-term success.” , the company said in a press release.

The Dallas-based company said 39 of its company-owned domestic restaurants would remain open. TGI Fridays is short for “Thank God it’s Friday”.

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TGI Fridays has closed its longtime restaurant on Route 38 in Cherry Hill. (Jim Walsh/Courier-Post / USA TODAY NETWORK via Imagn Images / IMAGN)

In addition, the company has marketed the brand to 56 franchisees in 41 countries. All of these franchise locations, both domestic and international, are independently owned and therefore are not included in TGI Fridays' Chapter 11 process, the company said.

The Company expects to use the time and legal protections provided by the Chapter 11 restructuring process to explore strategic alternatives to ensure the long-term viability of the brand.

“The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world,” said Rohit Manocha, Chief Executive Officer of TGI Fridays Inc., in a statement.

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A closed TGI Fridays store in Princeton, New Jersey (Getty Images/Photo Illustration / Getty Images)

“The primary reason for our financial challenges resulted from COVID-19 and our capital structure. This restructuring will allow our future restaurants to continue with an optimized business infrastructure that will enable them to reach their full potential.”

The company says it has secured a commitment to debtor-in-possession financing to support operations during the Chapter 11 process.

The TGI Fridays brand and associated intellectual property are not included in the Chapter 11 filing due to a securitization agreement with a separate investor group, the company said.

The company has closed 12 locations in the U.S. and 35 restaurants abroad in recent weeks.

In January, the brand closed 36 of its “underperforming” restaurants in the US, claiming it was part of a long-term growth strategy to ensure profitability.

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A picture of the sign for TGI Fridays in New York (Bruce Bennett/Getty Images/Getty Images)

This month, the company also sold eight of its company-owned restaurants to its former CEO Ray Blanchette. The company added that this “era of change” will help further increase the chain's sales.

TGI Fridays has been serving its customers for more than 50 years.

The company says it currently operates more than 461 restaurants in 41 countries that serve “high-quality, classic American food and iconic beverages with authentic and genuine service.”

Fox News' Kristen Altus and Daniella Genovese contributed to this report.