Episode 390: TGI Fridays: Billion Dollar Mistake That Killed Their Success
In the ever-evolving world of business, standing still is not an option. As many enterprises like TGI Fridays have found out the hard way, failing to adapt to market trends and consumer demands can lead to significant downfalls.
In this episode, Adam dives into the rise and fall of the iconic restaurant chain, TGI Fridays, and extracts vital business lessons applicable to entrepreneurs and business owners alike. Adam identifies the critical mistakes that led TGI Fridays to face administration and closure of multiple sites, emphasizing the importance of value delivery, innovation, and adapting to market demands in a business’s success journey.
With a focus on the significance of delivering value over cost, enhancing customer experiences, and the necessity of adapting to market trends, Adam offers crucial insights and practical strategies for sustaining business growth.
Show Highlights:
- Emphasizing that business success hinges on the value delivered to customers rather than the cost, urging business owners to focus on enhancing customer experiences.
- Highlighting the crucial role innovation plays in maintaining relevance and competitiveness in the market.
- Encouraging businesses to stay attuned to market trends and consumer preferences, pivoting business strategies accordingly for sustained success.
- Advising against premature expansion until the core business model is robust and demand justifies growth.
- Urging businesses to enhance the experiential aspect of their offerings to create memorable customer interactions and build brand loyalty.
Links Mentioned:
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Transcript:
Please note this is a verbatim transcription from the original audio and therefore may include some minor grammatical errors.
[00:00:00] Adam Stott: Hey everybody, Adam Stott here. Thanks for checking out my podcast, Business Growth Secrets. You’re absolutely in the right place. This podcast is going to reveal to you all of the secrets that you’ve been looking to discover. They’re going to allow you to cure your cash flow problems, attain more clients, bring in more leads for your business, and create systems and processes that give you the growth that you want.
[00:00:30] You are going to discover the business growth secrets you have been looking for. that I’ve used to sell over 50 million pounds worth of products and services on social media and help clients everywhere to grow their businesses on demand. So let’s get started on the business growth secrets podcast. So TGI Friday is a place that I went to as a kid and I’m sure some of you watching would have been there as a kid as well.
[00:00:57] And that is where lies part of the problem. I can’t remember the last time I went back and actually had that experience. And what we’re going to do today is we’re going to talk about how does a billion dollar famous brand like TGI Fridays fail, get to the point where it goes into administration, has to close 35 of its sites.
[00:01:18] And lose over a thousand staff. What are the reasons behind this? Now there’s a public reasons and sometimes when these reasons come out to market, you read it in the news and they say it was this and it was that. But there’s something that’s underlying that I feel can help small business owners like yourselves that are watching today.
[00:01:38] to make sure that your business does not fall foul of some of the mistakes of TGI Fridays. So we’re going to look at that in this video, whether you’re listening or watching and we’re going to examine what were the issues, what happened and how can your business learn some lessons. So TGI Fridays, a business started in 1965 in New York City.
[00:02:01] Came to England in 1986 with the first restaurant opening in Birmingham, somewhere that I went with my family during the 90s. It was somewhere that we always went for birthdays, and I’m sure many of you watching would have experienced the same thing. So what’s happened? Because when you read the news and you look at the responses, a lot of people were saying, Well, you know what they just charge too much for a burger and fries and it seems to be that people are focused on the pricing.
[00:02:30] Now I don’t think that’s actually the problem because if you dig a bit deeper under the hood you can see that Five Guys, Byron Burger and other chains are actually charging similar money but they’re surviving, they’re thriving where TGI Fridays has failed. So if it isn’t pricing what is it? Now this is something that Entrepreneurs, business owners constantly have to deal with.
[00:02:58] And my first lesson that I want for this video, which is really relevant here is it doesn’t matter what it costs. It matters what the value delivered is. So you always have to look at your business and what you’re delivering Is the value somebody’s getting from what they’re actually paying and people will not worry about cost.
[00:03:19] They will worry about value. In fact, in the scale equation, value always outweighs cost. What does this mean? Give you a quick example. If can you go into Primark right now and buy a big bag that handbag that you can get? For 10 15. Well the answer is yes, it will hold loads of stuff and you’ll value that at a certain amount.
[00:03:41] Now you use that handbag every day, but when you go home with that handbag, typically it gets thrown on the side. It’s not valued intrinsically at very high because you don’t actually pay a lot of money for it. Now if we look at the other side of it, can you go into Chanel And by dinky little handbag for 10, 000 that doesn’t hold as much.
[00:04:00] That’s tiny. Yes. The answer is yes. And you certainly ain’t throwing that on the side when you get home, you’re treating that with more value. So value that you receive always outweighs the cost. Where’s the value in the Chanel bag? The value in the Chanel bag is the fact that you’ve got brand. You’ve got experience and this is something that TGI Fridays used to have but has come to escape them.
[00:04:27] You used to go there for the experience. Now people don’t go there for the experience. Instead people are choosing a different style. When you look at Five Guys, you look at Byron Burgers, you look at GBK. People are valuing now convenience in this sector, often more than value. So understand that value outweighs cost.
[00:04:52] Now what becomes really important is what are people valuing right now in the market? In this particular market, what are they valuing? Well, if you see the companies that are thriving, and obviously we know that TGI Fridays has struggled. People right now in these markets are valuing. Convenience. So convenience has become something that’s very big in this market.
[00:05:16] GBK, Byron Burger, it’s a casual setting, casual dining, that’s where it’s gone. Where many people look at TGI Fridays and you used to go there for a birthday, you used to go there for an experience, you don’t go there for a casual setting. Dining experience, and that’s where it’s lost a lot of its market share because it’s not learned the lesson off the marketplace.
[00:05:38] The marketplace will tell you what it wants, and in this instance, it wants convenience. So it’s lost some business there. It’s lost some market share there, and if people are now valuing convenience, TGI Friday should have done one or two things. Hey everyone, hope you’re enjoying the podcast. We’ve got a free training that I’m doing right now online from the comfort of your own home called Stand Out Brand.
[00:06:02] What this does is it shows business owners how to get noticed on social media, stand out, Get more leads and get more sales. So if you want to make more money in your business, head over to adamstop. com forward slash SOB. That’s adamstop. com forward slash SOB and join us on the free three day workshop, stand out brand.
[00:06:25] So first of all, number one, what could they have done? They could have shifted their focus. They could have shifted their brand and their restaurants to deliver. More of a casual dining experience and they could have competed in that market and you could say, well, would they have done? Well, would they have not done?
[00:06:43] Well, one of the reasons that they would have done well is because they had the brand, you know, TGI Fridays, as we know, has been around, you know, in the UK since 1986, you know, your GBK and your Byron Burger and these other areas, they’ve not been around that long. So they had to start and build their brand fresh.
[00:07:00] It’s just that TGI Fridays didn’t innovate. It stayed the same and when you stay the same and the world moves, you get left behind and I think that was one really big thing now. Alternatively, what they could have done if they didn’t want to go convenient, they said, this is what we are. We’re an experience.
[00:07:21] We are an experiential dining experience. They should have lent more into that market. And they should have delivered more experience. Cause the bottom line is I went there when I was a kid back in the nineties, as I’m sure some of you did and used to go there and they used to have everyone come out and they would sing songs and they’d be clapping and you got the people of all the badges on and there was an experience to that.
[00:07:43] And you went there for your birthdays and it was really cool. What’s the problem? Well, lots of other people copied that experience again and again, and by copying that experience, it just left there where all of a sudden it wasn’t very wow anymore. So the next lesson is, you gotta keep focus on how do I improve my wow?
[00:08:02] Had TGI Friday said, we’re not going for convenience, We’re going for experience with your going for experience. Your wow TGI Fridays is over. It’s stopped. That isn’t a wow thing anymore. You can go into a lot of restaurants, you know, a lot of Turkish restaurants. Now they do the happy birthday, clapping, bringing the cake out in a lot of different restaurants.
[00:08:20] They do they’ve copied that model to what could they have done when it could have said, look, we’re known for experience. We’re known for birthdays. We’re known for wow. This is what it’s all about. We’re not, people don’t come here for a casual dining experience. They come here for a wow moment. Well, that’s wow on then.
[00:08:35] So what could they have done? Well, they could have lent into table dancing, could have got people dancing on the table. They could have got fire breathers coming in when it was somebody’s birthday. They could have had mini fireworks, whatever they could have worked on as huge experience. So somebody feels like we’ve upped the game in the celebration, a little bit of focus on that.
[00:08:56] would have retained that core market and had people keep coming back for their experience. Unfortunately, and this is the big thing, they failed to innovate. You’re either growing in business or you’re dying and if you’re not innovating, you’re dying. And that essentially is what’s happened to TGI Fridays.
[00:09:19] It’s got stale, it’s got old. Other people have come into the market. Unfortunately. One thing you’ll learn about people is they like something new. They like something shiny. And if they’re like something new and something shiny, and they’ve been having the same old thing year in year out forever, then they’re going to want some change, especially when you’ve got new players coming into the market.
[00:09:42] So you’ve always got to look at. In your business, because this at the end of the day, yeah, we want to learn these lessons for your business. Keep innovating. Look at your experience. How can I make it better? How can I make it better received? How can I get in this new world, people talking about this experience?
[00:10:04] Let me ask you this question. When’s the last time you saw someone on social media post and tag themselves in TGR Fridays shouting about the experience they just had? Well, I don’t think I’ve seen that. Maybe some of you have, but I certainly haven’t seen that. Why? Because the experience ain’t that big anymore, and it certainly isn’t what it used to be.
[00:10:26] Now, another reason that TGI Fridays has essentially failed is that despite all of the things that we talked about going on, the increased competition, the failure to innovate, the experience lacking, they got a little bit Rose tinted glasses on and kept expanding when they really should have focused in on those core restaurants on their core model made it better before they over expanded.
[00:10:55] And this is a big lesson that business owners. Can really learn from you want to before you expand and before you scale, you want to make sure that your core model delivers excellence. You’re absolutely packed to the brim, full of people. They should have said, Well, look, all of our restaurants are buzzing.
[00:11:14] The social media is on fire. The experience is getting better. We keep turning people away. We can’t fit people in our restaurants. Okay, this opens some more. But instead they got the rose tinted glasses on the shareholders, got the greed in their eyes and they said, well, let’s just keep rolling them out.
[00:11:31] We’re making a bit of profit, we’re making a bit of profit. And then what ends up happening? You end up having all these restaurants, you got all of them and you got these ones that are good and you’re opening this one and this one, you’re putting your capital and your resources into these different things.
[00:11:43] And all of a sudden you got these successful ones and just sucks the profitability. out the successful to the pay the ones that are not successful. And that’s what causes the house of cards to come falling down. So what can you learn as a business owner? Let’s go over those lessons. First of all, remember, value outweighs cost.
[00:12:04] Don’t get too hooked on your pricing. TGI Fridays could have made their experience. Better and charge more and still be more successful. Not had this happen to them. Number one. So don’t worry about your pricing. Worry about your value. Number two, remember to innovate, keep innovating in your business because if you don’t, your competitors will.
[00:12:29] And you’ll go out a business. You’re either growing or you’re dying. Make sure you keep growing. Understand that people value convenience. Convenience is very important. And if you are going to compete in that market, make it convenient. If not, Give an experience, make sure that your product or service becomes more experiential and if it becomes more experiential, people are going to give more time to it.
[00:12:55] If not, give them your product or service and give it to them fast. Finally, when you expand your business, make sure you’re expanding from a place of power. You’ve got the capital, you’ve got the reserves you’re in the right place to expand your business, but also you’ve got enough demand there to expand.
[00:13:14] If people don’t want badly what you’ve already got, then now it’s not the time to expand. Now is the time to work on your existing business, innovate and make it better. Hopefully you’ve enjoyed some lessons there on how you as a business owner can learn from the rise, the fall of TGI Fridays and ensure that in the future you apply some really cool business lessons to making sure that your business grows.
[00:13:39] Hopefully you’ve enjoyed this. If you have. Go and share it with somebody that needs to raise their business acumen, get some better business growth secrets, and tell me in the comments what your perception was. You know, what do you think? What were your experiences in TGI Fridays? How did that affect you?
[00:13:56] Are you pleased? Are you disappointed? Are you gutted? I’d love to know. Love to hear your thoughts in the comments. And I look forward to seeing you in person very soon. Hi everybody, Adam here, and I hope you love today’s episode. Hope you thought it was fabulous. And if you did, I’d like to ask you a small favor.
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[00:14:55] And I’ll see you very soon. Thank you.