Key Investments

This page shows Electra's current significant Buyouts and Co-investments (valuation as of 31 March 2018).

TGI Fridays
American-styled restaurant chain

TGI Fridays

Year ended 31 December    
  2015 2016
  £m £m
Sales 190.3 211.0
Operating Profit 20.4 21.0
EBITDA 29.6 31.0

In December 2014, Electra invested £99 million in the management buyout of the UK franchise of TGI Fridays (“TGIF”) from its American parent. In July 2017, Epiris’ 1% interest in the investment was purchased for £2 million. In August 2017, Electra invested a further £35 million as part of a refinancing which reduced third party debt and interest payments. In January 2018, £7 million was invested to buy out TGI Inc, the US franchise holder’s stake in the business.

TGIF, which has the exclusive UK rights to operate under the TGI Fridays brand, has 82 American-styled restaurants in a range of locations, including city centres, shopping centres and leisure parks. This is an established brand which works well across the country. It offers bold, distinctive American food as well as an innovative cocktail list, and provides a high-energy, fun environment with a wide demographic appeal. Key to the success of the customer experience is the company’s focus on hiring and retaining enthusiastic front-of-house staff to offer a high level of service. It demonstrates attractive financial characteristics, outperforming its peers across a range of key performance indicators and offering a high return on capital expenditure.

The casual dining sector is in a challenging period as reduced consumer discretionary spending and cost inflation has squeezed margins. A rapid expansion of a number of chains has led to overcapacity in the market and further depressed prices, as competitors resort to discounting to maintain sales volumes. Despite this difficult environment, TGIF has performed well, with 2017 growth of 2% in revenue on a 52-week basis. Severe weather in February and March 2018 impacted trading this year, but performance has since improved, indicating that this was a short-term effect.

TGIF’s differentiated product, wide consumer appeal and focus on experience rather than discounting, leaves it in a stronger position than its competitors. The intention is to continue to grow through new restaurant openings as well as improving yield via pricing and marketing initiatives.

Activity:

American-styled restaurant chain

Date of initial investment:

December 2014

Type of deal:

Buyout

Equity Ownership:

83%

Cost:

£143m

Valuation:

£149m

Multiple of cost:

1.0x

Location:

UK

Website:

www.tgifridays.co.uk

Management:

Karen Forrester, CEO; Murray Hennessy, Chairman

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