Carlson selling TGI Fridays to two private investors

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: May 20, 2014 - 8:28 PM

Selling the restaurants biz to 2 private groups will allow the hotel and travel giant to invest in its core business. Terms weren’t disclosed.

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More than 500 TGI Fridays restaurants, such as this one in Burnsville, are located within the United States. Nearly 400 others operate in other countries.

Photo: GLEN STUBBE • gstubbe@startribune.com,

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For most of the past 39 years, TGI Fridays was Carlson’s entree to the restaurant world for the hip, young and casual demographic.

It was a mix between a burger joint, sports bar and singles hangout long before the likes of Chili’s, Applebee’s and Buffalo Wild Wings became the go-to spots for a new generation of diners and imbibers.

But after growing Fridays from 12 locations in 1975 to 934 in 2014, Carlson is parting ways with its restaurant side.

On Tuesday the Minnetonka-based company announced that it is selling the well-known brand to a pair of New York-based investment groups. Terms of the deal were not disclosed, although previous estimates of a potential transaction put the purchase price in the range of $800 million to $900 million.

“That might be a little high, but it’s in the ballpark,” said Darren Tristano, executive vice president of Technomic, a consulting firm for the food service industry.

The acquiring firms are Sentinel Capital Partners, which has an extensive background in the restaurant business, and TriArtisan Capital Partners, the merchant banking arm of Morgan Joseph TriArtisan.

Carlson CEO Trudy Rautio said proceeds from the sale of Friday’s will be plowed back into the travel conglomerate.

“For Carlson, the transaction frees up resources that the company can deploy to focus on and accelerate the growth of its hotel and travel businesses, at a time when significant opportunities exist in these markets,” Rautio said.

Although Rautio declined to comment about the deal beyond her remarks in a news release, Carlson has been flexing its hotel muscles in recent years, unveiling a new urban concept called Radisson Red, spending hundreds of millions on its fledgling upscale Radisson Blu product, expanding overseas and overseeing an upgrade of its traditional Radisson Green line of hotels as well as Country Inns & Suites by Carlson.

Carlson also owns Carlson Wagonlit Travel, a large travel management operation.

Carlson put TGI Fridays on the auction block six months ago. The deal is expected to close in July.

John McCormack, a senior partner at Sentinel Capital Management, said the Fridays existing management team, led by CEO Nick Shepherd, will continue to run the chain, which has about 70,000 employees.

“TGI Fridays is an iconic global brand with a long history of solid performance and a significant opportunity for future growth,” McCormack said in a statement.

Restaurants are hot

Restaurant properties have been a hot commodity in recent post-recession years as capital returned to the marketplace. In announcing Carlson’s decision to explore “strategic alternatives” for Friday’s in November, Rautio called the timing “optimal” for the restaurant’s sale.

Indeed, Darden Restaurants Inc. last week sold its Red Lobster chain of 700 units to a San Francisco private equity firm for $2.1 billion.

“If you’re an equity company looking for an investment, the restaurant industry represents a significant opportunity,” Tristano said. “For a legacy brand like TGI Fridays, there’s always the opportunity to enhance efficiencies and the financial statement. It’s easier to increase profitability by maintaining operating costs than growing market share.”

Fridays, which lost some of its luster in recent years, started a remodeling program two years ago to appeal to a younger, more social clientele. The chain got a new slogan: “In here it’s always Friday.” It also enhanced its menu with Jack Daniel’s-accented meats and sauces and expanded its collection of mixed specialty drinks.

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  • Rautio

  • About TGI Fridays

    Business: Among the first U.S. casual dining concept chains

    Founded: 1965, New York City

    Acquired: Carlson acquired the 12-restaurant chain in 1975 and it grew to 934 stores, nearly half of them outside the U.S.

    In the news: Carlson has reached a deal to sell TGI Fridays to Sentinel Capital Partners and TriArtisan Capital Partners. Terms were not disclosed.

    Global revenues: $2.7 billion

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