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TGI Fridays sells UK franchise

Dec 23 2014 18:20

London - TGI Fridays, the casual dining restaurant chain known for its retro American-themed setting, has sold its UK franchise business to Electra Partners in the latest private equity buyout in Britain's eating-out market.

Electra said on Tuesday it has injected £100m ($155m) of equity alongside TGI Friday's UK managing director Karen Forrester and other executives.

Britain's high-street restaurant chains have long been on the radar screen of yield-hungry private equity investors with several sector deals coming to fruition in 2014.

Dallas-based TGI Fridays was itself sold to investment firms Sentinel Capital Partners and TriArtisan Capital Partners earlier this year. It operates 66 venues in Britain, some of which are located in shopping centres and leisure parks.

Electra's Chief Investment Partner Alex Fortescue called the British franchise a "promising opportunity". He said Electra Partners has invested £410m on behalf of Electra Private Equity this year.

Cinven's dismantling of its Gondola Group has put brands including Italian chains Prezzo and Pizza Express on the market, the latter being snapped up by China's Hony Capital in a record 900 million pounds deal in June.

In its final move to exit Gondola, Cinven sold ASK Italian and Zizzi restaurants to London-based private equity firm Bridgepoint for £250m on December 1.

British celebrity chef Jamie Oliver, who has campaigned to improve standards of school canteen food, could become the latest food entrepreneur to finance growth with private equity help.

Franchise benefits

TGI Fridays, which celebrates the weekend with its name standing for "Thank Goodness it's Friday", is looking to cut operating costs worldwide. Its previous owner, US leisure chain Carlson, cashed out in May after 39 years.

In September it announced plans to sell most of its 247 US venues and all of its UK assets, following similar moves by US rivals Burger King, Dunkin Donuts and Applebee's to focus on franchising.

Most McDonald's US restaurants are already run as part of its global franchise network.

TGI Fridays, which launched in New York in 1965, targeting single adults, made $1m in revenue in its first year. It now operates more than 900 restaurants in 60 countries with 2013 revenue of $2.7bn.

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