TGI Fridays and its franchisees closed more than 30 restaurants in 2019, and finished the final quarter of the year with same-store sales down 11.3% and traffic down 9.1%, according to a regulatory filing released this week by Allegro Merger Corp.
In November, the privately held TGIF Holdings LLC agreed to merge with Allegro in a deal valued at $380 million. The merger would take the Dallas-based casual-dining chain public in March as it outlines a plan to become profitable in 2020 and 2021 after posting a $21.1 million loss in fiscal 2019.
In 2019, the company had 385 U.S. restaurants, down from 418 in 2018, according to the regulatory filing and NRN Top 200 data.
On Wednesday, the company said the restaurant closures were "part of our continual review of our restaurant portfolio performance."
"These closures were a strategic decision based solely on business demands. Impacted restaurant managers and crew members were invited to apply for open positions within our system," the company told NRN in a statement.
The company also confirmed that chief experience officer Sherif Mityas has left the company. Mityas, a 2020 NRN Power List recipient, has been a high-profile leader for the brand as he pushed conversational AI to increase customer loyalty and boost off-premise dining. Total off-premise sales have doubled during his tenure.
In the regulatory filing, Allegro said TGIF has repurchased “underperforming domestic franchised restaurants at attractive valuations” with potential for “substantial earnings upside.”
The acquisitions include 36 stores in California and the Northeast owned by The Briad Group.
Other financial highlights from the TGIF/Allegro presentation include:
- Systemwide same-store sales were negative each quarter of 2019 and reached double digits in the final quarter: -8.2% (Q1); -7.9% (Q3); -7.8% (Q3) and -11.3% (Q4).
- Year-to-date, Q1 2020 same-store sales are down 3.4%
- Negative traffic in each quarter of 2019: -8.3% (Q1); -6.8% (Q2); -3.3% (Q3); -9.1% (Q4)
- Traffic is down 1.3%, so far, in the first quarter of 2020.
- Delivery sales increased 140% from 2018 to 2019. Off-premise sales account for 13% of total sales, up from 8% in 2017.
- TGIF has focused on strengthening management at newly acquired franchised stores. Roughly 40-50% of directors of operations and general managers have been replaced in the last four months.
- Units repurchased in Boston and Florida are starting to show incremental growth.
- Since September 2018, the company has acquired 144 TGIF franchised restaurants with strong brand recognition in Colorado, California, Texas, New York and Florida.
- Of those purchases, 36 stores in California, Nevada, New York, New Jersey, Connecticut and Pennsylvania were owned by The Briad Group. Average unit volume at Briad units is $3.44 million. The Livingston, N.J. - based company is a licensed franchise for Wendy's, Marriott and Hilton brands.
- TGIF now has 176 company locations.
- Total revenue in 2019 increased to $425.9 million, compared to $293.1 million in 2018. The company posted a net loss of $21.1 million in 2019; the company projects net income of $6.2 million in 2020, and $15.3 million in 2021.
- To improve personalization and diner frequency, the company has spent $30 million on consumer-facing innovations including building its app and loyalty programs. In a January interview with NRN, CEO Ray Blanchette said the company plans to spend an additional $3 million on technology this year.
Contact Nancy Luna at [email protected]
Follow her on Twitter: @fastfoodmaven
Update, Feb. 12, 2020: This story has been edited to include a statement from TGIF on closures and recent management departures.