‘Game over’ for TGI Fridays’ UK owner as shares plummet
Hostmore said it was no longer pursuing a takeover following a management change
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The UK owner of TGI Fridays’ is set to be wound down in a move that could wipe out its shareholders, after revealing it had dropped plans to buy the US restaurant chain for £177 million.
Shares in the London-listed company Hostmore tanked by more than 90% following the announcement on Monday.
Hostmore, a hospitality firm which runs 87 restaurants in the UK, is in the process of selling its UK restaurants to new owners, as it looks to become a fully franchise-operated model.
But the company revealed that it was not expecting to “recover any meaningful value” from the sale of stores, which is likely to amount to less than it owes to creditors and banks.
The sale process, which is predicted to complete by the end of the month, is expected to result in Hostmore being wound up and delisted from the London Stock Exchange.
Its UK restaurants, which have a New York-influenced food and cocktails menu, continue to stay open as normal.
Russ Mould, an investment director at AJ Bell, said it is “effectively game over for Hostmore as a listed business”, adding: “The company’s share price crashed 90% after an expansion plan went up in smoke, implying there is little to no value left in the listed business for shareholders.”
The plan to become fully-franchised formed part of a deal, struck in April, to merge with US-based TGI Fridays Inc, to create a larger firm that will remain listed in London.
But on Monday, Hostmore said it was no longer pursuing a takeover following a management change which means it would not be able to collect royalties from the TGI Fridays brand.
This could affect the future revenue of the business, with the royalty stream being the main attractive feature for Hostmore in pursuing the deal, it said.
While it is no longer actively pursuing an acquisition, the two firms said they were “open to re-engaging discussions” in the right circumstances.
“Having operated under the TGI Fridays brand in the UK for some time, Hostmore had been trying to buy the global master franchise owner,” AJ Bell’s Mr Mould explained.
“The acquisition would have significantly increased Hostmore’s scale and given it a big presence in the US.”
But he said the acquisition was scrapped after becoming “significantly less appealing”, while TGI Fridays continues to compete against a “growing number of modern chains”.
The brand’s biggest market is in the US where there are 128 sites, including franchised stores, as well as more than 270 in countries around the world.
Last year, total global restaurant sales hit 1.4 billion dollars (£1.1 billion).
Hostmore also revealed that UK sales have fallen by more than a 10th this year, compared with last year.
Over the first three weeks of July, sales dropped by nearly a quarter compared with the same period in 2023, as it was affected by warmer weather resulting in fewer visitors and continued weaker consumer spending.
Nevertheless, conditions started to improve slightly in September with sales declines slowing, the group said.