To say it has been rough on some of these businesses in the casual dining scene would be an understatement. In some cases like what just recently happened with Red Lobster it is not all bleek, as they filed for chapter 11 earlier this year and are already coming out looking better. There have been labor issues, economic headwinds and changing customer preferences to make it more challenging.
One chain that has not fared as well in its quest to regain relevancy and profitability is Fridays. The big news and a light at the end of the tunnel just a few months ago is now driving the bad news. In case you missed it TGI Friday’s was having issues getting funding again so they shopped the business and found a buyer that was willing to step in and try to turn the brand around. This same sale hit an unexpected snag as TGI Friday’s assets which have previously served as collateral for the 2017 funding are in jeopardy.
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Friday’s sold asset-backed securities in 2017 to raise capital, but they are now no longer under their control as of last week. This caused the U.K.-based operator of TGI Fridays known as Hostmore, said on Monday that is backing off its planned purchase after Fridays lost control of most of its assets. While it is unclear if it was due to paper work being filed late or other reasons the Fridays used future royalties and licensing revenue to back those bonds in 2017.