TGI Friday's, founded in 1965 as a New York City "fern bar," popularized the concept of a varied menu and cocktails in a homey atmosphere with memorabilia-laden walls. Now the chain is reinventing itself and looking to leave behind followers such as Applebee's, Chili's and Ruby Tuesday that in recent years have been eating TGI's lunch.
January 19, 2005
TGI Friday'sGlen StubbeStar TribuneThe decision was motivated by more than just internal perceptions: Between 2000 and 2003, TGI's competition added stores, grabbed market share and grew U.S. sales, in some cases, at twice the rate of Friday's. Cut to Bloomington, where a lunchtime crowd last week ate and drank in a Friday's unlike any most customers have seen. Gone is the "brown bar" look, with dark wood replaced by stainless steel and glass. Outdoor signs are updated and natural light streams in through large windows. The menu features new salads, fish and steak platters, along with old favorites and highly successful Atkins meals. The Bloomington location was among the first to sport the chain's new look, which will reach all 530 U.S. Friday's by the end of 2007. Friday's and its franchisees are spending more than $200 million on the remodeling, along with millions more on menu development, training and increased salaries for store managers. Friday's is key to the success of Carlson Companies, which owns cruise lines, hotels, travel agencies and one of the nation's largest marketing groups. Carlson Restaurants Worldwide owns about half of the nearly 750 Friday's -- 530 in the United States and more than 200 abroad. Carlson's restaurant revenue was $943 million in 2003, making it one of the company's largest businesses. So far, the investment in Friday's is paying off. At the 80 stores that have been remodeled to date, fourth-quarter sales outpaced the casual dining sector by 7 percent, said Malcolm Knapp, a New York food-industry consultant whose "Knapp Track" is a closely watched barometer. At non-remodeled TGI stores, Knapp said, sales were 2 percent ahead of category. Comparable-store sales, an important measure of strength that compares sales at stores open at least a year, beat category leader Applebee's in the fourth quarter, Snead said, with chain-wide comparable sales about 5 percent above last year.
Friday's also improved its before-tax operating margin by 1.2 percent in 2004, Snead said, reversing a two-year slide.
Highways and shopping plazas across America are crowded with casual-dining restaurants, and consumers often see little difference among the chains. "I did a study last year and I walked away shaking my head, wondering how anybody makes money in this business," said Britt Beemer, founder of America's Research Group in Orlando, Fla.
Beemer, who conducts consumer surveys across a wide range of businesses, said diners tend to choose whichever casual chain is closest or most convenient. "There's a lot of sameness," he said. Seeking a way to break from the pack, some Friday's franchisees have been pushing to update the restaurants' look, and they say they're happy with the new direction. "We're supporting it, and we want to take the lead," said Ethan Erickson, vice president of Eau Claire-based Wisconsin Bistros, which owns six Friday's in Wisconsin and plans to expand into Iowa.