Hostmore is looking to drive future performance of its core restaurant estate by tapping into the heritage of the TGI Fridays brand – including reverting to the original name for the brand.
The group, which operates Fridays, 63rd+1st and Fridays and Go, reported a significant loss after tax of £97.5m in the 52 weeks to 1 January 2023, compared to a loss of £1.5m in 2021, on an FRS 16 basis.
As such has committed to a significant cost reduction programme as well as a new strategy focused on its core estate and the whole customer experience – particularly when it comes to dining in.
Hostmore changed the name of the UK brand from TGI Fridays to Fridays in early 2020, as part of a brand refresh designed to help appeal to a new, younger audience
However, traction has not been as high as hoped, with brand awareness of the new name standing at 50%, compared to 75% for the original name, with usage at 7% under Fridays compared to 11% for TGI Fridays.
The group said the change back would incur minimal financial expenditure, with the rebrand back on its website and internal POS comping at no incremental cost and the eight stores currently branded as Fridays able to be converted as ‘minimal cost’.
The electronic media was never updated therefore no changes are required.
Julie McEwan, newly appointed as Hostmore’s permanent CEO, told MCA that one the biggest focuses for the business over the past nine months had been on the customer experience.
“As you can see from our guest scores, they have considerably increased – and that in turn drives loyalty.”
Its net promoter score has increased from 30 at the end of 2022, to 46, with its guest opinion score rising from 73 to 78 over the same period.
She said the return to the name TGI Fridays was “fantastic for us”, and that it knew it “leverage more performance” for the change back.
The group is also going to be focusing on its Raising the Bar campaign. “What we are going to be doing is positioning our bars as the heroes of each of our restaurants and bringing back our heritage into the current day.”
The TGI Fridays brand has traditionally been known for its cocktails however share of revenue from drinks declined from c.26% in 2019 to c.14% in 2022.
In response to this, and in order to tap into the higher profit margin for drinks and the less labour intensive aspect of their production, relative to food, the group has now moved the marketing of its cocktails from a ‘2 for £12’ basis to ‘2 for 1’, which it said was neutral to margins but boosted drinks share of revenue to 25% in the six trial stores it was introduced to, in early 2023.
It believes there is the opportunity for c.£2.8m of incremental revenue per annum due to the changes, with further bar-focused revenue opportunities of c.£1m identified from the introduction of additional offerings such as masterclasses and bottomless brunches.
McEwan said the brand was looking “to leverage every possibility” for additional revenue, with a one-team approach.
“Being COO over the last nine months has really given me a great platform to build a growth strategy on for 2023 and also moving forward.”
She said the executive team were all aligned to the business priorities and that she could only see the fortunes of the business going in an upwards direction.
Commenting on the cost reduction programmes, which Hostmore is forecasting will bring total aggregate savings of £5.9m on an annual basis, Stephen Welker, chairman-designate, told MCA that around 70% of the cost savings implemented were around fixed costs, and primarily involved the reduction of corporate roles in head office and the exiting of various contracts with third party service providers.
“We are really focused on not diminishing the guest experience,” he said.
McEwan said that in terms of any redundancies, the business had been very strategic in where these had been implemented, “and hopefully with our growth strategy […] we can bring a few of these guys back into the fold – but we are going to be running a much leaner organisation.”
The business is looking to reduce its net debt, excluding lease liabilities, from £27.7m to zero, with around £13m in savings to come from the pause in new openings, as agreed by its franchisor in the US.
