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--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
--:-- Heather Haddon: TGI Fridays is known for its bar, for its comfort food, for its appetizers, stuffed potato skins, and a place to meet people, maybe have a happy hour after work, maybe bring your kids.
--:-- Jessica Mendoza: That's our colleague Heather Haddon, who covers restaurants. Sum up for us what's happening at TGI Fridays today.
--:-- Heather Haddon: Yeah, so TGI Fridays is, to some degree, emblematic of a lot of casual dining restaurants. Restaurants right now are going through tough times. These vintage, you know, historically very popular restaurants now just aren't popular like they were previously. And TGI Fridays is a particularly egregious example of that. Now, after cycling through multiple CEOs and running behind on millions of dollars in bills, TGI Fridays has declared bankruptcy. It's down to about 150 restaurants from a high of about 800 more than a decade ago. And the company is struggling to find a way forward.
--:-- Jessica Mendoza: TGI Fridays is definitely not in a good place right now. It is not a happy, happy hour place right now.
--:-- Jessica Mendoza: Welcome back to The Journal. We're talking about TGI Fridays, the iconic casual dining chain that's been struggling in recent years. Let's go back in time to the 1980s, when TGI Fridays was at the height of its popularity. The 1988 film Cocktail, starring Tom Cruise, was a big part of that.
--:-- Host: The story of how the casual restaurant chain TGI Fridays has shifted in American culture can, in some ways, be told through two movies. First, the 1988 film Cocktail. A young Tom Cruise, at the height of his cool, starred as a college dropout who becomes a bartender. You know how to make a red eye, Mr. Whatcha'Name? Brian, Flanagan, no, I'm sorry I haven't had the pleasures yet.
--:-- Jessica Mendoza: Tom Cruise's character learns how to mix drinks like a pro, doing flashy tricks as he makes cocktails. And some scenes were filmed at a Friday's, which at the time was considered a gold standard of mixology.
--:-- Host: The second film came out over a decade later. Hey, guys. Office Space. What's up, G? Want to go to Tchotchke's? Get some coffee?
--:-- Jessica Mendoza: Part of the movie takes place in a restaurant that's a lot like TGI Fridays, called Tchotchkes. It sits in a nondescript strip mall and has a big wooden bar and antique Tiffany lampshades. But there's never many customers, and the staff is totally annoying.
--:-- Host: So can I get you, Jenna, something more to drink? Or maybe something to nibble on? Some pizza shooters, shrimp poppers, or extreme fajitas?
--:-- Jessica Mendoza: One of the characters, a server played by Jennifer Aniston, hates working there. If you want me to wear 37 pieces of flair like your pretty boy over there, Brian, why don't you just make the minimum 37 pieces of flair?
--:-- Host: But between these two extremes, TGI Fridays earned a solid place in American culture.
--:-- Jessica Mendoza: TGI Fridays is known for its bar, for its comfort food, for its appetizers, stuffed potato skins, and a place to meet people, maybe have a happy hour after work, maybe bring your kids.
--:-- Heather Haddon: Yeah, so TGI Fridays is, to some degree, emblematic of a lot of casual dining restaurants. Restaurants right now are going through tough times. These vintage, you know, historically very popular restaurants now just aren't popular like they were previously.
--:-- Jessica Mendoza: And TGI Fridays is a particularly egregious example of that. Now, after cycling through multiple CEOs and running behind on millions of dollars in bills, TGI Fridays has declared bankruptcy. It's down to about 150 restaurants from a high of about 800 more than a decade ago. And the company is struggling to find a way forward.
--:-- Jessica Mendoza: Welcome back to The Journal. We're talking about TGI Fridays, the iconic casual dining chain that's been struggling in recent years. Let's go back in time to the 1960s, when TGI Fridays was first founded.
--:-- Host: TGI Fridays often gets credit as one of the first singles bars in New York City. It opened in 1965, and its founder, Alan Stillman's original idea, was to create a place where single people, people like him, could go for drinks after work and mingle.
--:-- Jessica Mendoza: Here's Stillman years later in an interview on CBS. Is it fair to say you got into the business because you wanted to meet women?
--:-- Host: Absolutely fair. Not only fair but accurate and true. And it worked.
--:-- Jessica Mendoza: But the Fridays that we know today comes from when the company had already started expanding and opening up franchises. Fridays created its iconic look in the 1970s. Faux antique Tiffany lamps, a big raised wooden bar at the center of the restaurant, and a focus on cocktails that evolved into what was known as a, quote, drink Bible.
--:-- Host: The bartenders learned tricks, and they hosted regular bartender Olympics. Friday's also claims to have invented the Long Island iced tea. The food was classic barfare. Cheeseburgers, Caesar salad, onion rings.
--:-- Jessica Mendoza: One of its restaurants was in Philadelphia. That's where a man named Ray Blanchett developed an obsession with TGI Fridays.
--:-- Host: I still remember vividly the first time I saw a platter of baby back ribs, right? I mean, it's like the length of the entire platter, and then you get this big pile of fresh cut french fries, you get this big pile of coleslaw, and then you get the apple butter barbecue sauce. And I just, I remember watching it go by, and I thought, my God, that is one of the most beautiful plates of food I've ever seen.
--:-- Jessica Mendoza: Ray was hired in 1989, as TGI Fridays was on the rise. Ray would go on to become CEO. But when he started out, he was a 23-year-old manager in training.
--:-- Host: And when he walked in the door to that Philadelphia restaurant, he couldn't believe what he saw. People are yelling back and forth. Everybody had to be where they were supposed to be at the right time, where you'd drop the ball. And so it was like a Cirque du Soleil show back there in the kitchen.
--:-- Jessica Mendoza: I mean, it was crazy. And we would have people literally lined up down the entire front side of the building. We had theater ropes, and you'd have to go out there at 1.15-ish, usually, and say, you know, from this point in the line back, you're not going to get in tonight. You know, being three and four deep was an everyday occurrence.
--:-- Host: Ray was hooked. He climbed up the ranks, eventually leading the company's expansion into Europe and other overseas locations.
--:-- Jessica Mendoza: Back when I was running Europe, it was literally six years or seven years after the wall came down. Like the Berlin Wall. All the Eastern, former Soviet bloc countries were emerging markets for us.
--:-- Host: I opened three restaurants in Poland in 12 months. I opened the first restaurants in Russia and the Czech Republic and Hungary. And it was just, it was fascinating.
--:-- Jessica Mendoza: For the record, as a kid in the Philippines, I loved going to Fridays. It's funny because I grew up in Manila and my family and I would go to TGI Fridays. It was one of the restaurants on our rotation after church.
--:-- Host: And I used to, as a kid, order the cup of dirt a lot. Oh, yeah. It was the one with like, it was like a mudslide with like gummy worms. I thought it was so cool that it looked like dirt. Chocolate pudding, Oreo crumbs, and gummy worms. Yeah. Kind of leeching out a little bit. Exactly. Yeah.
--:-- Jessica Mendoza: What's your favorite meal or favorite cocktail at the restaurant?
--:-- Host: Long Island iced tea. Yeah. I can't say that I drink a lot of Long Island iced teas, but I think if I was going to tell somebody, what cocktail should you have if you're going to Fridays for the first time? Well, you got to have an LIT.
--:-- Jessica Mendoza: Ray's passion for TGI Fridays kept him at the company for nearly 20 years, though he would step away in 2007. By then, Fridays was at its peak, hitting $2 billion in U.S. sales alone in 2008.
--:-- Host: The company's rapid growth caught the attention of two private equity firms, Sentinel Capital Partners and Triartisan Capital Advisors. Together, they bought TGI Fridays in 2014.
--:-- Jessica Mendoza: Why are private equity investors interested in companies like TGI Fridays?
--:-- Host: Well, one great thing about restaurants is they generate a lot of cash. So they have steady cash flows. And especially if they're managed well, you know, there's money coming in and there's money coming to the company. And that is great for private equity and other investors.
--:-- Jessica Mendoza: And also when these private equity firms came in, they really pushed to shift TGI Fridays from an ownership model of its restaurants to having franchisees run its restaurants.
--:-- Host: And that's really helpful for the company in that it makes for this asset light model. Companies that rely on franchisees are enticing to private equity because it reduces the risk for the owners.
--:-- Jessica Mendoza: So the franchisees are taking on a lot of the potential reward and also risk of running these restaurants, and they pay royalties to the owners.
--:-- Host: So it helps kind of reduce some of the risk and liability for the company that owns them and helps them to grow. You know, hopefully these franchisees are invested in their restaurants and growing their restaurants making them successful and that benefits the parent company.
--:-- Jessica Mendoza: But by the 2010s the market was shifting. Chains like TGI Fridays were losing customers to fast-casual restaurants, like Chipotle, where people could order fresh food at the counter and take it to go.
--:-- Host: And that change was bad news for TGI Fridays. By 2018, sales at existing locations were in a nearly two-year funk.
--:-- Jessica Mendoza: It was then that Friday's financial managers turned to the old guard and called up Ray Blanchett.
--:-- Host: When Ray got the offer, he couldn't have been more excited. The private equity group that had bought Friday's called me and said, hey, would you be willing to come back to TGI Fridays? We're in kind of a situation.
--:-- Jessica Mendoza: I mean, to me, it was a job of a lifetime. It was my dream job, so I was happy to come back.
--:-- Host: But Ray quickly saw that the Fridays he returned to was very different from the one he'd left.
--:-- Jessica Mendoza: That's after the break.
--:-- Jessica Mendoza: Welcome back to The Journal. We're talking about TGI Fridays, the iconic casual dining chain that's been struggling in recent years. Let's go back to Ray Blanchett, the former CEO who's now back at the company.
--:-- Ray Blanchett: To find out just how much things had changed, I took an unorthodox approach. In 2019, months after becoming CEO, I appeared on the reality TV show Undercover Boss.
--:-- Jessica Mendoza: Today I'm undercover in my own company, TGI Fridays, to make sure our strict standards are being upheld.
--:-- Ray Blanchett: I posed as a man looking to start a new career. I wore a blonde wig and a fake goatee.
--:-- Jessica Mendoza: In the episode, he trained in a restaurant in Maryland. The bartender there pointed to a hole in the ceiling.
--:-- Ray Blanchett: We had a massive flood and this collapsed in the middle of shift. The roof has to be completely leveled out. But the waiting on the corporate approval part, it's a pain in the ass.
--:-- Jessica Mendoza: What were some of the things that stood out to you that you saw when you were on that show?
--:-- Ray Blanchett: You know, I grew up in a TGI Fridays that was fanatical about standards. I mean, there would never be broken equipment. There would never be a leaky roof that didn't get rectified immediately.
--:-- Jessica Mendoza: The standard was set at every level in the organization. And so when you see that we'd allowed the business to not adhere to those same high standards, that was distressing.
--:-- Ray Blanchett: As CEO, I and my team tried to turn Fridays around. But I says I had a different vision from the owners.
--:-- Jessica Mendoza: They were more committed to some of these initiatives that I was less excited about. And it's their ball in their field, so they get to decide.
--:-- Ray Blanchett: But, you know, I wasn't going to compromise my integrity or pretend that, you know, that I believe in these initiatives anymore.
--:-- Jessica Mendoza: What were some of those initiatives? Like sushi inside the restaurant.
--:-- Ray Blanchett: Yeah, I just thought it was ridiculous. Some customers seem to feel the same way and said so on social media.
--:-- Jessica Mendoza: Y'all, TGI Fridays has sushi. I decided to try their sushi. You see that? It was disgusting. Who's eating this? I just want to know. It tastes foul. What the f*** is this? What the f*** is that?
--:-- Ray Blanchett: Try Artisan, the private equity firm, said that sushi was part of an effort to adapt with the times and become more relevant. And it's said that I supported the sushi addition.
--:-- Jessica Mendoza: Ray maintains that he did not.
--:-- Jessica Mendoza: Sushi sabotage or not, what really hurt Fridays was the pandemic. Despite beefing up its takeout operations in 2020 the company hit its sales targets.
--:-- Ray Blanchett: In 2023 Ray left Fridays again. Three other CEOs followed in quick succession and things just continued to unravel.
--:-- Jessica Mendoza: Here's our colleague Heather again. It's a combination of T.J.R. Friday's own issues and also casual dining generally has really been struggling, and so they just couldn't rebuild in the way they had hoped.
--:-- Heather Haddon: And from what I understand, there was friction between those CEOs and the board about correct approaches going forward, and here we are in bankruptcy.
--:-- Ray Blanchett: Ray was watching from the sidelines, or sort of the sidelines. He just couldn't truly quit Fridays. Not long after he left, he had acquired eight TGI Fridays franchises.
--:-- Jessica Mendoza: When TGI Fridays filed for bankruptcy, he saw an opportunity to swoop in and revive the chain. Now he's getting that chance.
--:-- Ray Blanchett: Ray is back at the company and is now responsible for managing hundreds of TGI Friday's worldwide.
--:-- Jessica Mendoza: And his plan doesn't involve returning to the glory days. Instead, he's focusing on smaller menus and shorter hours.
--:-- Ray Blanchett: And he wants to put Fridays in transportation hubs, like train stations and airports, and in hotels, places where there's a captive audience.
--:-- Jessica Mendoza: When you walk into a hotel and you're checking in at nine o'clock at night and you look over and you see that it's a Friday's cafe or Friday's grill, whatever you call it, it's a relief because now you know your rental car is parked.
--:-- Ray Blanchett: You can trust that you're going to get a good hamburger and you don't have to leave.
--:-- Jessica Mendoza: Ray also says that the future of Fridays isn't just in the U.S. His plan includes being aggressive about expanding overseas.
--:-- Ray Blanchett: Internationally, we're still signing new development agreements. We have 30 restaurants in Manila. Well, we have zero restaurants in Bangkok, right? I mean, so when I think of South and Southeast Asia, there's nothing in Vietnam. There's hardly anything in India.
--:-- Jessica Mendoza: We still have big opportunity. We're not in Singapore. I mean, there are a lot of places for us to continue to grow with the right partners.
--:-- Ray Blanchett: And so you're going to be the guy to save the company? Is that how you feel right now?
--:-- Jessica Mendoza: I'm going to be the guy that brings the people together that change the trajectory of the business, right? I mean, if I haven't learned anything over 30 years, I've certainly learned that our brand is expressed through people, right?
--:-- Ray Blanchett: This is a labor-intensive business, and the culture and the values and sort of establishing the white lines in the road for how we're going to interact, that's a really important piece of any turnaround, but especially at Fridays.
--:-- Jessica Mendoza: It starts culturally within the Fridays family.
--:-- Ray Blanchett: I asked Ray if he was worried about Fridays not being cool anymore.
--:-- Jessica Mendoza: You should be in one of my restaurants at 10 o'clock at night. You'd have a hard time saying this place isn't fun. I mean, cool, I think, is ridiculous, right? You can't chase cool. I mean, who are we, James Dean?
--:-- Jessica Mendoza: I mean, people are going to, you know, we're not trying to be cool. We have food that people get excited about. We have an atmosphere that is conducive to social interactions and social connections.
--:-- Ray Blanchett: And so that's why I think the brand gets turned around.
--:-- Jessica Mendoza: What's the lesson from TGI Friday's Rise and Fall?
--:-- Ray Blanchett: I think TGI Friday's is a lesson on both casual dining and how much joy it has brought to America and how good of a concept it has been. But how challenging it is to keep these vintage brands going in a new America.
--:-- Jessica Mendoza: I mean, I think taste of change and younger people don't see going out to eat at all sometimes is what they want to do.
--:-- Ray Blanchett: So I think we do see something emblematic in TJF Fridays and how consumers eat out differently than they used to.
--:-- Jessica Mendoza: That's all for today, Friday, January 24th.
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--:-- Jessica Mendoza: The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Catherine Brewer, Pia Gadkari, Rachel Humphries, Sophie Codner, Ryan Knudsen, Matt Kwong, Kate Linebaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alessandra Rizzo, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jivika Verma, Lisa Wang, Catherine Whalen, Tatiana Zamis, and me, Jessica Mendoza, with help from Trina Menino.
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--:-- Jessica Mendoza: Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Emma Munger, Peter Leonard, Bobby Lord, Griffin Tanner, Nathan Singapak, and Blue Dot Sessions.
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--:-- Jessica Mendoza: Fact-checking by Mary Mathis, Kate Gallagher, and Najwa Jamal. Thanks for listening. See you on Monday.
