The UK operator of the TGI Fridays cocktail bar chain endured a tumultuous year in 2023, as the company put in place a new leadership team and embarked on a turnaround plan against the backdrop of challenging conditions in the hospitality market.

Trading has continued to be tough since year-end, with shares falling sharply today as it reported “reduced consumer demand” in the first quarter. But bosses at Hostmore will be hoping that a brighter future is in store for the operator, as the firm looks to complete a £180 million takeover deal for TGI Fridays Inc in the US.

Over the course of a “transitional year”, Hostmore appointed senior hospitality figure Julie McEwan as chief executive, implemented a turnaround plan, and introduced a revised capital allocation policy which saw it defer new store openings in 2023. The changes helped the company slash losses from operations to £11.1m from £95.8m in 2022, though revenue dipped to £190.7m from £195.7m amid “macroeconomic uncertainty and fluctuating consumer behaviour”.

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Hostmore, which has around 90 outlets across the UK, declared it had shown “remarkable resilience” during what it said had been a “year of two halves”, with the changes that took place in the first half followed by a “significant profit improvement”, including a “positive” Christmas period.

Trading conditions, however, remain challenging. Hostmore said today that revenue fell in the first quarter by 7% compared with the same period last year, “due principally to reduced consumer demand across the sector”. But it made an underlying profit of £0.3m, an improvement of £3.2m on the first quarter of 2023.

The company has further deferred new store openings and reached agreement to exit two units, saving further cash.

And it is looking to improve its prospects further still with the acquisition of TGI Fridays Inc, a move it described as a “natural fit”. The reverse takeover, which would reunite two businesses that went their separate ways in 2014, would see Hostmore shareholders hold 36% of the enlarged business, with TGI Fridays shareholders holding 64%.

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Hostmore chairman Stephen Welker said: “Subject to completion, the transaction will give the Group increased scale, flexibility and re-rating potential that will allow us to accelerate our existing strategy of prioritising debt reduction and enhancing the scope for shareholder returns."

Hostmore floated on the London Stock Exchange in November 2021, as part of TriArtisan Capital Advisors’ final asset disposals of Electra, the UK-listed private equity group. TGI Fridays has been majority-owned by funds managed by TriArtisan Capital Advisors LLC or its predecessor, TriArtisan, since 2014.

The company mainly operates through franchising and licensing agreements in the US and it 43 international markets; it also has a network of company-owned stores across the Atlantic.