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00:00The iconic casual dining chain is betting on international expansion and a brand overhaul as it targets more than 1
00:06,000 locations by 2030.
00:08The turnaround comes at a challenging time for the restaurant industry with economic uncertainty weighing on consumers and food safety
00:14back in focus following a parasite outbreak linked to fresh produce.
00:19Joining us now is TGI Friday's Global President Phil Broad.
00:23Phil, welcome. It's been a minute since we've been into a TGI Friday or thought of one, right?
00:28It's been a troublesome time for TGI Friday's.
00:31What is the plan to rescale this brand and find your sliver of the fast casual dining experience in America
00:38again?
00:40Well, firstly, good morning and thank you for having me on the call.
00:43Look, we're really excited about TGI Friday's in the U.S.
00:47We now operate over 80 restaurants across the country.
00:51We're seeing strong momentum.
00:53We're seeing a lot of interest in the brand and sort of more franchises wanting to come to us.
00:57But globally, we're seeing significant expansion.
01:00So, you know, we still are the largest casual dining restaurant company by a number of restaurants in a number
01:05of countries we operate in.
01:07We're seeing the target of 1,000 restaurants.
01:10And we're on the way to do that.
01:12We've already signed 150 restaurants into our pipeline over the past 12 months and with many more to come.
01:19So, you know, we're excited about what the opportunity is there for TGI Friday's.
01:23To be clear, I have definitely thought of you all, especially if, you know, I find myself walking through Times
01:28Square, which I try not to, and see your iconic locations there.
01:31So, you post-bankruptcy have shifted to something that looks more asset-light.
01:34Is that correct?
01:35You're more of a franchise model.
01:36With the parent company being owned by a private equity company, I wonder what you're thinking about long-term opportunities
01:42and the long-term strategy.
01:44Could you, for example, go public?
01:48Well, in the long-term, we could do.
01:49But at the moment, we're really focused on just bringing the Friday's brand back.
01:53We already operate in 40 countries.
01:55We continue to grow that.
01:56We'll see another three or four countries sign over the next couple of weeks, which is exciting for us.
02:00We believe that Friday's is an iconic brand.
02:03It's been around 60 years.
02:04I believe it will be around another 60 years.
02:07I worked for the brand 30 years ago and still celebrate the fantastic brand it is.
02:12So, we are very positive about the growth opportunity that exists for us.
02:15So, Phil, you're concentrating a lot on the international expansion, and I get that, and you have experience with Starbucks,
02:20for example.
02:21So, you know that some of these franchises can have a difficult time of it in foreign countries.
02:29Sometimes they have to, you know, change the menus, and sometimes that doesn't work, and then there's a lot of
02:33strategy shifts.
02:35What are you going to do to sort of square that circle?
02:39First, I'd say we have some incredible partners already.
02:42I mean, we've got some that have been around with us for 30 years, real entrepreneurs who continue to build
02:46the brand from where they are today.
02:48But we do know that we have to flex the menu.
02:51So, in certain countries, we'll flex 10% or 15% of the products on the menu to suit local
02:55taste, and that certainly seems to be working.
02:58But you look at the World Cup we've just been through, and we're still going through.
03:01We're seeing so many restaurants fall to the gunwales, people celebrating, coming to join Fridays, drinking our cocktails, ribs, steaks,
03:09and flying out the door.
03:10So, look, we're really seeing a momentum in the brand globally, and we think that will continue.
03:14And as I said, you're going to see signings of more countries coming up shortly.
03:18We have a really solid base of franchisees who are excited about the brand.
03:22And our franchisee in Greece, who's been with us now for over 30 years, has just signed another development agreement
03:28to open more restaurants.
03:30Peru continues to grow again.
03:32They've been with us for 30 years, and they want to open more restaurants and take more territory.
03:37So, we generally are seeing big momentum.
03:39We believe there's a gap in the market for casual dining because a lot of people have left the market.
03:44But we're excited about having this wide space that TGI Fridays can fill.
03:49Yeah, Phil, if I can just jump in, because I want to pick up on that point.
03:52Because there's a reason not a lot of people have left this market.
03:55And it's some of the woes that TGI Fridays originally experienced when you went through bankruptcy.
03:59Some of them are still with us.
04:01Consumers feeling the cumulative weight of inflation, challenges from more of the fast, casual-type chains.
04:07And then competitors who have started to really cut costs or cut prices, rather, in order to draw in that
04:14challenged low-income consumer.
04:15How do you bring people in, especially here in the U.S., without completely destroying your margins?
04:22Look, I believe we're in the people business serving food.
04:25And we've always got to have everyday value on our menu.
04:28And we continue to strive to do that.
04:30But people will still eat across our menu.
04:32And guests want to come in and have a great experience.
04:34They want to celebrate.
04:35But they don't want to empty their pockets.
04:36And so, you know, we're very closely monitoring that.
04:39We've seen some of our competitors and we've watched them very closely what they're doing to make sure we're competitive
04:44and make sure that we do protect our margins.
04:46I mean, we're in the business to make money, have fun, and look after the people that work for us.
04:50But I believe that, you know, where we're sitting at the moment, we're in a very strong, positive position.
04:55And we're actually seeing our like-for-like sales come back pretty strongly, as well as on delivery, which we
05:00think is very exciting as well.
05:01Phil, do your international units and franchisees source locally in their countries?
05:06And if, you know, if not, is it from the States?
05:10And what are your U.S. stores and franchises doing about this parasite that seems to be, you know, invading
05:18fresh produce and maybe turning away customers?
05:21Look, we have no reason to believe we have any of that in our business.
05:24I mean, yesterday I had every single franchisee on a call.
05:27I personally spoke to them to talk through the procedures we have in place.
05:31We've had all our suppliers.
05:32We've spoken to all of them.
05:34You know, number one priority for us is safety of our guests and safety of the team members that work
05:38for us.
05:39And so our procedures are very, very strong.
05:41We also liaise continually with the health authorities to make sure our procedures are very strong and some of the
05:46strongest in the world.
05:47And as I said, we've been in the industry a very long time.
05:49So our systems are very strong in our restaurants and we'll do everything we can to protect our consumers.
05:54And that's all we can really do at the moment.
05:57But we're watching it every single day.
05:58It has grabbed a lot of headlines, Phil, perhaps because of the truly horrifying ramifications of contracting this parasite.
06:06And I wonder, even if you're taking all the safety precautions in the world, if you have seen consumer behavior
06:11change, maybe less fresh vegetables, avoiding salads, anything like that?
06:17We haven't seen that change.
06:19But what we are watching is where does the parasite potentially come from?
06:22There could be certain ingredients coming through the supply chain that could be more prone to it.
06:26And as we get more and more advice, if there are certain products that we think could have a more
06:31susceptible to cause this issue, well, we draw it from our supply chain to protect the team.
06:36But again, we have a really great supply chain team, very professional, been with us 15 years, who continually monitor
06:42this to make sure we do everything we can to secure the safety of our guests.
06:45So for us at the moment, it's really on the radar.
06:48We're laser focused on it and our guests can be assured that we're doing everything we can to make sure
06:52they're safe.
06:54So you're in Dubai at the moment, Phil, and obviously the Middle East is, you know, a difficult market for
07:00many businesses now.
07:02Are you in the Middle East at all?
07:04And what, you know, beyond the countries that you mentioned, what are you targeting in terms of United States re
07:09-expansion?
07:12I currently live in the Middle East.
07:14I live in Dubai.
07:15We have an office in Dubai, an office in London, an office in Dallas.
07:18But we are targeting growth in the USA.
07:21I mean, we are laser focused on that.
07:23I'm there again in a couple of weeks' time.
07:25Ray Blanchett, our CEO, I've been with TGO Fridays for over 35 years.
07:29We know the franchisee base.
07:31And because we're seeing a lot of success in our current restaurants and we're seeing like-flight sales growth, our
07:35franchisees are feeling more confident about the brand.
07:38We've launched Fridays United for the World Cup.
07:42We've got kids.
07:43We've got celebration.
07:44We've got a real quality focus, delivery, and good value.
07:48We've got four current franchisees talking to us who actually want to get back into TGO Fridays.
07:53They want to do a development agreement with us to grow the brand again.
07:56So there's a lot of momentum behind the brand.
07:59People love it.
08:00They love the food.
08:01It's wide variety.
08:03We've got some really classic dishes that people just crave for.
08:06You know, our whiskey glaze has been around a long time, but you can't get it anywhere else.
08:09So people crave it and want to come back.
08:11Our Cajun Chicken Shrimp Pasta, number one seller in every market in the world, and people just crave it again.
08:17So I think we've got some really good gangbuster products that are really going to help us drive momentum.
08:22But we certainly are seeing momentum of franchisees.
08:25We've got a brilliant COO in the market who's doing a great job of doing deals for us.
08:29So, look, we see a very bright future for TGO Fridays.
08:31So when I think of TGO Fridays, I think of, like, one of my first jobs in a mall that
08:36had a TGO Fridays in it, too.
08:38And when we would close, all of us would go together and go to TGO Fridays and, like, stuff our
08:41faces on these huge, like, pasta dishes and burgers and stuff.
08:44But that also has me thinking.
08:46It's these quite indulgent meals.
08:48How much has the rise of GLP-1s affected your business?
08:52Look, people come to us for a celebration, but people also can have half portions.
08:56So people learn to eat through our menu.
08:58And if they want a lighter meal, they can have it.
09:01And we're continually getting guest feedback saying, fantastic, that we can split the salad, we can share the main course,
09:06we can halve the dessert.
09:08So we're very aware of what's happening with consumer trends.
09:11And we're on top of it and make sure that what we can offer suits people with different dietary requirements.
09:16I mean, the industry has been at that forever, right?
09:18There's always something new we have to adapt to.
09:21And I think we've adapted very well to the latest.
09:24But, you know, we have a lot of employees who work for us on the same.
09:26We have a lot of people in the support center.
09:29So we're mindful that every guest who comes through the door has to have a tailored experience.
09:33And our people have to be trained to really well look after them.
09:36So I think, you know, every trend will continue and we'll make sure we look after guests in the right
09:42way.
09:42But, you know, you've got to come to Fridays and have fun.
09:44I mean, the brand is all about fun and celebration and lifting your spirits when you come through the door.
09:50But also eat carefully through our menu and you can have a fantastic time and watch your calories.
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