Electra Partners, the private equity backers of TGI Fridays UK, has appointed advisers to review its options for the Karen Forrester-led group.
MCA understands that the firm is working with advisers from Morgan Stanley on the process, which could lead to the sale of the 81-strong business. Electra acquired the then 66-strong TGI Fridays in a c£225m deal at the end of 2014.
It is thought that company’s trading has been robust relative to the rest of the UK’s eating-out sector and its expansion plans remain on track, with seven new openings targeted for this year.
Electra invested £100m of equity in the original deal alongside TGI Friday’s management team. The new investment was to help the brand expand to 100 sites over the next five years, with expansion the main focus over bolt-on opportunities.
Speaking to MCA earlier this month, Forrester said she still believes the brand has the potential for 150 UK sites under its core model and up to 300 including its smaller footprint format, which has now been successfully trialled in four locations.
She said the brand will launch a “massive” overhaul of its menus in the summer, with the menu streamed lined and further emphasis placed on freshness, both in ingredients and presentation. The company is also spending £400,000 on refurbishing the bar at its Glasgow site, which will act as the template for further investment in bars across the estate.
She also said the group had been relatively unaffected by recruitment challenges, and was still attracting 5,000 applicants per month. She said the group was in a good position to tackle any fallout from Brexit, with only one in ten staff members a non-UK European citizen.
On growth, she said: “We have always run between six and seven a year. We’ll open at least six this year, another might just fall into next year. We haven’t slowed down at all. We’ve got four of the seven in the bag for next year already – the other three are in legals and we’re already looking at 2020.
“When we started the journey it took a couple of years for us to establish the relationships with the landlords and the agents because Fridays hadn’t been growing for a while. There’s no way we are going to now damage those relationships. Plus, we’re still growing and have lots of opportunities.
“Our Bracknell site is one we picked up because another brand stopped growing. There are going to be victims this year and it will be survival of the fittest again. Our limiting factor is always cultural because we could grow faster in terms of the sites we can find and the capital we can apply. We will only grow at the level of the cultural maturity of our leaders dictates.”
She added: “Twice over the last five years we have done a market scoping exercise – and they were very similar results. We could double from the core – we’ll open our 82nd site next month and there’s scope to get to 150 of the core model. They said if we can prove a smaller footprint we could probably double that again. We have already proven that – we’ve opened in Walsall, Stoke, Telford, Leeds White Rose. These are 5,000-5,500sq ft sites and all doing brilliantly.”
