When leisure retailer and (at the time) brewer Whitbread brought TGI Fridays to the UK in the mid-1980s, hospitality was beginning an upheaval which has continued to this day – although possibly not for the same reasons expected by the FTSE100 giant.
The key word here is ‘leisure’: pub, restaurant and hotel groups, and the City analysts who influenced their share prices, believed that customers were on the brink of seismic changes in their work/life balances; rapid advances in technology – with widespread internet access still almost a decade away – were set to allow us to work fewer hours with no loss of productivity.
The three day week of the previous decade was seen as again a possibility, this time with five days’ pay. More time for eating out, boozing, hotel breaks, long afternoons in bowling alleys owned by large chains, you name it. The idea is laughable now. Computers and mobile phones seem to rule our lives, not only allowing but encouraging off-duty working. We’re putting in more days, not fewer. That’s just the way it is.
Brewers such as Whitbread, set to have their ancient monopoly on beer sales through tied pubs broken by the government in 1989, thought they spotted a continental-style opportunity to open café-bar formats, blurring the distinctions between going out for a drink, coffee or a meal, and making it possible all day long. Some remain, others quickly failed. The UK’s less-than-continental weather may not have helped.
Themed restaurant chains, many of them US-originated franchises, have generally been a more successful legacy of those times. TGI Fridays, with its bottle-juggling bartenders and American mega-portions, wowed diners and the brand grew steadily in the UK. But recent times have been less kind to the chain: its UK operator (Whitbread sold out in 2007) collapsed into administration last month and 35 branches are now closing, with 1,000 jobs lost; better news is that a financial investor has picked up the brand and is keeping more than 50 units open.
TGI Fridays in the UK has suffered alongside many other hospitality businesses still coping with the post-Covid environment. Things may have improved a little since the tough summer of 2023, when hospitality sector was feeling the worst effects of higher energy prices and the cost of living crisis, but we’re not out of the woods yet: inflation is struggling to stay down after its fall this year and wage costs remain high. A boost for the industry overall from sporting events such the Euros was offset by generally poor weather in July and August, and no ‘Indian summer’.
The first half of the year saw hospitality insolvencies rise against the same period last year, with the sharpest increase between May and June. Our own Buchler Phillips Hospitality Index (BPHI) of insolvencies, which has tracked monthly figures since January 2014, rose from 204.3 to 231.6 in June; our next quarterly figure, out next month, is expected to remain high.
Hospitality operators are hoping that a more development-friendly approach to planning under the new government will help in the longer term, offsetting the potential for higher minimum wages to squeeze margins further. For now, hopes are pinned on October’s Autumn Budget to provide some relief on business rates or VAT, although nobody’s holding their breath.
The Buchler Phillips Hospitality Index (BPHI) is compiled from monthly company insolvency statistics made available by the UK Government’s Insolvency Service. Using a base of January 2014 = 100.0, the index tracks the sector classification of Accommodation and Food Service Activities.