TGI Friday’s has successfully auctioned off nine of its most profitable restaurant locations for $34.5 million to Mera Corp., a major international franchise operator, following approval on January 2nd. The sale encompasses five establishments at Dallas Fort Worth International Airport and four Maryland locations, with the deal including cure costs and assumed liabilities.
The transaction comes amid TGI Friday’s Chapter 11 bankruptcy reorganization, which was initiated on November 2nd. The company’s financial struggles stemmed from various factors, including ongoing impacts from the COVID-19 pandemic, economic volatility, global inflation pressures, rising interest rates, and escalating operational costs.
Mera Corp., established in 1991, emerged victorious in the December 27th bankruptcy auction, outbidding former TGI Friday’s CEO Ray Blanchette’s Sugarloaf Hospitality, which had offered $32.5 million. The Mexican-based Mera Corp. operates an extensive portfolio of 185 units across 53 different brands, including establishments like Bubba Gump, Margaritaville, and Johnny Rockets, with presence in 18 airport terminals and two cruise ports across five countries.
In a separate development, Blanchette has been appointed to oversee more than 400 of TGI Friday’s global franchised locations, as reported by the Wall Street Journal. This appointment follows a September 2nd incident where TGI Friday’s lost control of these restaurants after violating loan covenants, leading to a consulting firm’s temporary management.
At the time of its bankruptcy filing, TGI Friday’s operated 39 corporate-owned locations in the United States, while maintaining 122 domestic and 316 international franchised units, which were not included in the bankruptcy proceedings. The Dallas-based chain’s bankruptcy petition, filed in the U.S. Bankruptcy Court for the Northern District of Texas, disclosed assets and liabilities ranging between $100 million and $500 million, including $46.8 million in funded term-loan and revolving-credit debt obligations, plus $104 million owed to unsecured creditors.
This development occurs against the backdrop of broader industry challenges, with several restaurant chains seeking bankruptcy protection in recent months. Notable cases include Hwy 55, whose parent company The Little Mint Inc. filed for Chapter 11 on December 31st, 2024, affecting its 22 corporate-owned and 71 franchised locations. Similarly, BurgerFi International, which operated 144 burger and pizza restaurants nationwide, filed for Chapter 11 in September and was subsequently acquired by TREW Capital Management through a $10 million credit bid in November 2024. TREW later sold the 85-unit BurgerFi brand to Savvy Sliders in December 2024.
The restaurant industry’s difficulties can be traced to the 2020 pandemic downturn, with establishments facing multiple challenges including labor shortages, increased operational costs due to inflation, equipment expense increases, supply chain disruptions, and higher interest rates. While many chains have managed to restructure their debts outside of court, others have been forced to seek either Chapter 11 reorganization or Chapter 7 liquidation when viable solutions prove elusive.
TGI Friday’s reorganization plans include not only asset sales but also a strategic reduction of its restaurant footprint and the termination of unfavorable leases and contracts, as the company works to stabilize its operations and navigate through its financial challenges in the current economic environment.