A new day at Friday’s

Chain shakes up operations with menu revamps, international growth

When T.G.I. Friday’s opened its doors in 1965, it was the first concept to bring singles together in what founder Alan Stillman called a “public cocktail party.” Then, more than 25 years ago, it was one of the first chains to step across the Atlantic Ocean into the international arena.

Today, as the 900-unit chain approaches its 50th birthday in 2015, Friday’s is working to recapture some of that early momentum by shrugging off the malaise of middle age and differentiating itself from the numerous bar-and-grill competitors its early success spawned.

In the past year, the Carrollton, Texas-based chain has begun a major facelift of its menu, decor and service style; signed three new franchise groups with the help of a new domestic president of franchising; and unveiled plans to add in the coming year 40 new international units to the 354 already open in 60 countries.

“Our journey is to move our brand out of the sea of sameness, and move it to a place where the experience and the quality of what we offer come together, and we offer value by doing that,” Nick Shepherd, president and chief executive of T.G.I. Friday’s parent Carlson Restaurants Worldwide Inc., said recently in his Carrollton offices.

“We’re the smallest of the chain operators, and we’re the oldest,” Shepherd said. “We’re not going to play in that sea of sameness.”

Freshening up

Like much of the casual-dining segment, 46-year-old Friday’s has been buffeted by the lingering economic downturn. The chain, which is owned by privately held Carlson, saw U.S. domestic sales shrink by nearly 2 percent from 2009 to 2010, and by 7.2 percent since 2008, according to Nation’s Restaurant News Top 200 research.

“There are numerous reasons casual dining has had a hard time,” Shepherd said. “Let’s face it: There was an oversupply. We spent a number of years building up a marketplace, and the ratio of seats to guests got overbuilt.

“Casual dining just lost touch with the guests,” he continued. “They weren’t able to discern between us. You hit a recession where you’ve got too many seats, a lack of differentiation between the various players and then a tightening of the wallet, you are going to feel that.”

Friday’s also made its share of miscalculations, Shepherd said.

“To lift the kilt a little bit, Friday’s had pursued for several years a strategy of dumbing down the concept to make it more marketable,” Shepherd said. “That might give you a short lift to the bottom line,” but it didn’t help the brand in the long run.

Shepherd said Friday’s set out to create a restaurant “where you want to stay a little longer than you should and perhaps have a little more fun than you should.”

The result was the Rise initiative, in which Ricky Richardson, Friday’s chief concept officer, was tasked with revamping six units in the Denver market and putting the spotlight back where Friday’s had first made its mark: the bar.

“It starts at the bar being the heart of the occasion,” said Richardson. “It’s the engagement, energy and socialization that the bar can provide to a guest.”

The Rise initiative started in a Dallas “lab store” in 2010 and was moved in August 2010 to the Denver market, where the company “blew the menu up,” Richardson said, taking it from 100 items to 70, of which 30 are brand new.

The most recent menu has about 80 items. New offerings include warm pretzels with beer-cheese dip, chipotle Yucatán chicken salad, sizzling chimichurri steak and fries, and berry shortcake sliders.

Friday’s also remodeled about half of the Denver restaurants.

“One of the first things was to open up the bar to the dining room,” Richardson said. “With smoking laws, barriers had been put up. It really started tying one hand behind our back. You had the vibrancy in the bar, and then you had the dining room that was really blocked off.”

The decor was updated “to still be Friday’s, but not be as heavy and cluttered as the brand has been,” he said.

Service was also addressed.

“We invested hard in [the servers’] product knowledge so they could answer guests’ questions,” Richardson said.

Changes will be rolled out gradually to the 600-unit U.S. system, he said.

Spreading the stripes

As Friday’s tested new ideas in domestic restaurants this year, the company also beefed up its international division.

Friday’s now has 354 international units in 60 nations, said Ian Saunders, who was named president and chief operating officer for T.G.I. Friday’s International in February 2010. The company opened 27 new stores last year and plans to open 40 this year.

“The brand has significant ambitions to grow,” said Saunders. “A huge part of our growth will come from the international business.”

Last year, Carlson bought back a 60-percent share of its stores in the United Kingdom from a private-equity firm, and it plans equity development there as well as in China, Saunders said.

“We have a joint venture in Beijing, although we are fairly far advanced in negotiations to acquire our share of the joint venture and make it a company-owned business and improve its growth there,” Saunders said.

With 25 years of international experience, he said, “there aren’t many situations that we haven’t encountered and learned our lessons from.” But, he added, “If we went back and started again, we’d probably focus our growth more clearly on a smaller number of markets.” 

The bar is also the focal point in international units.

“The thing that makes us different in the international space to our direct competitors is our bar and how the bar forms the hub of the restaurant,” Saunders said. “It’s the center point, both physically and spatially. The noise and light cascade down onto the rest of the restaurant.”

The plan is to grow Friday’s international business to 600 units in the next five years.

“Clearly, China by far is the most enticing opportunity,” Saunders said. “It is also where we have done a significant amount of work on understanding the Chinese consumer with some major pieces of research over the past couple of years.”

The first adapted version of Friday’s is slated to open in Beijing in October, Saunders said.

The company also sees opportunities in Brazil, he added.

Closer to home 

Efforts also are underway to grow the U.S. business. In January Carlson hired Lee Sanders as president of franchising for T.G.I. Friday’s USA. Of Friday’s 600 U.S. units, 283 are currently franchised, with 12 new franchises set to open in 2011 and 20 under development in 2012.

In the past year, franchised units have opened near New Orleans and Niagara Falls, N.Y., and six units are in development in Elk Grove, Calif.

One company-owned store in Valley Stream, N.Y., is pulling in 120 percent of anticipated sales, he said.

Newer stores are 8,000 to 8,500 square feet, compared to 7,000 square feet for older stores, and seat from 275 to 290 people, Sanders said. 

Friday’s uses a new evaluation tool for sites and trade areas, Sanders said, and “that’s allowed us to identify trade areas for successful restaurants.”

Still, the road ahead is not an easy one. In a recent report, Goldman Sachs securities analysts Michael Kelter and Chris Cerrone said they expect the segment to remain under pressure in 2012 due to continuing consumer entrenchment. While privately held Friday’s was not named in the report, competitors such as Applebee’s and Chili’s were said to be poorly positioned.

Shepherd acknowledged the magnitude of the challenge: “It’s not an 18-month journey; it’s a five-year journey.” 

Contact Ron Ruggless at [email protected] [3]
Follow him on Twitter @RonRuggless [4].