Dine Brands, the parent company of Applebee’s, IHOP and Fuzzy’s, laid off about 9 percent of its corporate staff on 31 January in the latest fallout from a difficult economic environment for U.S. restaurants.
Pasadena, California, U.S.A.-based Dine is one of the largest full-service restaurant companies in the world, with more than 3,500 restaurants — most operated by franchisees — globally, per Restaurant Business. The layoffs were “part of a strategic plan to better align with current market conditions,” Dine Vice President of Human Resources Christie Cook said in a statement to Restaurant Business.
“Despite efforts to improve efficiencies, these workforce reductions reflect broader industry headwinds, including inflation, shifting consumer spending and increased labor costs,” Creditsafe Head of Brand and Spokesperson Ragini Bhalla said in a statement emailed to SeafoodSource. “Coupled with fluctuating payment behaviors and rising Days Beyond Terms (DBT) in 2024, Dine Brands' financial stability appears strained as it works to stabilize cash flow and manage operational risks.”
New Creditsafe data found that nearly 51 percent of the company’s bills were more than 91 days past due between February and September 2024. Dine Brands’ DBT fluctuated extensively over the last 12 months, including a jump of 188 percent from February to March 2024.
TGI Friday’s has also been dealing with the difficult environment. After filing for Chapter 11 bankruptcy protection in November 2024, the chain has closed an additional 30 restaurant locations in the U.S., according to Restaurant Business, after closing around 100 others leading up to the bankruptcy filing. That leaves the company with 133 U.S. restaurants – around half the number it had at the end of 2023, according to foodservice research firm Technomic.
The global restaurant chain only has 39 company-owned locations in the U.S., with its nearly 400 other eateries worldwide operated by franchisees. The franchisees are concerned they will be left holding the bag for around USD 50 million (EUR 48 million) in unpaid gift cards, per The Food Institute. However, TGI Friday’s said it intends to honor the gift card obligations despite the bankruptcy filing.
Meanwhile, global distributor Performance Food Group, based in Richmond, Virginia, U.S.A. – one of the largest creditors in the bankruptcy action – is expected to receive repayment for seafood and other food deliveries, according to Bradford Sandler, an attorney working for the creditors’ committee in the bankruptcy case.
“They will be okay at the end of the day,” Sandler told SeafoodSource. “I expect PFG to get their claim paid in full.”
When it filed for bankruptcy, TGI Friday’s listed its liabilities between USD 100 million (EUR 97 million) and USD 500 million (EUR 484 million).
The company had a slew of troubles throughout its existence, which led to the bankruptcy filing, Pacific Management Consulting Group Principal John Gordon told SeafoodSource. One of the challenges was that Friday’s did not keep up in the 1990s, particularly with tired bar programming, Gordon explained, and by the early 2000s, a slow wave of restaurant closures began.
“The franchisees failed first, and then the company units. In the U.S., Friday’s continued to re-franchise, because of the weak returns they were getting. That was not wise,” Gordon said.
Gordon said he does not believe the company can turn things around, like Red Lobster is doing post-bankruptcy. There are very few executive staff left at the corporate office in Dallas, Texas, U.S.A. he explained and “there are too many stores that have closed in the U.S. That destroys restaurant brand worth and perception.”
Additionally, the company was already marketed to potential buyers last year, and those efforts failed, Gordon said.
