Current Events in November 2024

When TGI Friday’s declared bankruptcy, it was just the latest restaurant chain to run up the white flag in 2024. Red Lobster filed Chapter 11 before that and Denny’s, while not declaring bankruptcy, is closing 150 restaurants to shore up its finances.

Alfred Goldberg, chief brand strategist at Absolute Marketing Solutions, says the last few years have been a unique time in the industry.

“The recent wave of restaurant chain bankruptcies, including TGI Fridays, reflects a combination of economic pressures and evolving consumer preferences rather than a single cause,” Goldberg told ConsumerAffairs. “While the economy has stabilized somewhat since the pandemic, restaurant chains are still grappling with several unique challenges.”

One of them is inflation. According to the Consumer Price Index, “food consumed away from home,” which is the category for restaurants, prices have risen each month this year. Menu prices were up 0.3% in September and have risen 3.9% during the last 12 months. That’s not great for business.

Predictable and complex

Scott Stuart, the CEO of the Turnaround Management Association, says the TGI Fridays bankruptcy is both predictable and complex.

“Although a popular brand and one that likely still has some cash, what will be most telling in this restructuring is the approach on re-capitalization, a potential sale and what they do to make changes to counter the issues they claim were the cause of this decision, primarily capital structure, and post-pandemic stress and inflation,” he told us.

If those were the drivers of the bankruptcy, Stuart says the business fundamentals need to be carefully reviewed.

Zach Goldstein, CEO of Thanx, a brand loyalty software company, says 2024 has been a wake-up call for much of the restaurant industry. 

“Many restaurants are over-investing in third-party delivery and rote discount programs,” he told us. “Our data shows this actually reduces customer lifetime value. The most successful brands are focusing on first-party digital channels and building genuine loyalty through personalization and exceptional experiences.”

‘Longstanding structural issues’

“Chains like TGI Fridays and Red Lobster have had longstanding structural issues that recent economic shifts have only exacerbated,” Bob Vergidis, founder of pointofsale.cloud, said. “These brands have struggled to adapt to changing consumer preferences and are now feeling the impact of years of underinvestment in innovation.

Goldberg agrees, suggesting that TGI Fridays, which was established in the 1960s for young baby boomers, faces an economic problem caused by changing demographics.

“Younger people are looking for a different kind of experience,” he said. “They want the ‘discovery’ and to be able to ‘introduce’ a new concept, item, or venue to their social media audience. Few people have ever impressed anyone on social media by posting from a chain.”

Vergidis adds that large restaurant chains have often responded slowly to evolving customer needs, relying on outdated business models. This lag, he says, has created vulnerabilities that are more pronounced in today’s fast-changing landscape.

“Gen Alpha and Gen Z are transforming the dining scene with a preference for tech-driven, unique experiences,” Vergidis said. “Brands that fail to appeal to these new generations risk falling out of favor quickly.”

DoorDash and Lyft have announced a new partnership that will help consumers score discounts and benefits from both companies. 

The one catch: consumers must be signed up to DoorDash’s membership program, DashPass, and link their DoorDash and Lyft accounts to receive the perks. 

"Since the launch of DashPass, we’ve been focused on building a membership program that provides tremendous value by helping people save on everything from restaurant meals to groceries to entertainment,” said Prabir Adarkar, president and COO at DoorDash. 

"Members enjoy $0 delivery fees, and get streaming with Max included at no additional cost with the DashPass Annual Plan. Our partnership with Lyft, a leader in the transportation space, gives DashPass members yet another way to save on the things that matter most to them."

What are the perks?

Each month, DashPass members who link their Lyft accounts to their DoorDash accounts will be able to get member benefits from both companies. 

These include: 

• 5% on-demand Lyft rides and 10% off scheduled airport rides – up to four per month combined

• Two free Priority Pickup upgrades from DoorDash per month 

• A three-month free trial of a DashPass membership for new members

In addition, DashPass members who link their accounts before the end of the year will receive a special bonus: 

• 50% off up to four scheduled airport rides (up to $25 per ride) through the end of the year

• 50% off one DoorDash order (up to $10)

What are the DashPass benefits?

If you’ve been considering a DashPass membership, but you’re not sure if it’s right for you, here is a breakdown of what you’ll receive: 

• $0 delivery fees on all eligible orders – including food, groceries, convenience, alcohol, and more

• Members-only discount offers throughout the year 

• Reduced service fees on eligible orders

• 5% back in DoorDash credits on eligible pickup orders

• Discounts on Max subscriptions 

DashPass will cost you $8/month or $96/year, though there are some discounts to be found here, too. While this new partnership with Lyft will give consumers their first three months free, those who have certain Chase credit cards can get a membership for free. 

Students can also get a discounted rate for their DashPass membership, as the delivery company offers a $4.99/month student plan. Additionally, students who subscribe to Chegg Study Pack or Chegg Study get free DashPass memberships. 

Berry-flavored vapes can weaken the lungs' natural defenses and make it harder to fight infections, according to new research. The study compared the effects of flavored and unflavored e-cigarettes.

While all vaping can be harmful, the researchers found that added flavors can make it even worse.

McGill Assistant Professor Ajitha Thanabalasuriar and Erika Penz from the University of Saskatchewan exposed mice to e-cigarette vapor and used live imaging to study their lung immune cells. The study, published in PNAS, showed that chemicals in berry vapes paralyze these immune cells, making the lungs more prone to infections. Unflavored vapes did not have the same effect.

“We need to be careful about the types of flavors that we're including in these products," Thanabalasuriar said. "They can have detrimental effects. I think that's really the take-home message, especially some of these vaping products that are marketed for kids — the way they're sold, the type of containers they are sold in — it's very colorful, it's really attractive to children, and this can be a really bad thing for our future,” she said.

More studies are needed to identify the exact compounds causing these effects and to see if the same results apply to humans.

The study was funded by the Canadian Institute of Health Research and other organizations.

Flavored vapes more appealing

The wide range of appealing flavors, such as berry, candy, and dessert-inspired options, combined with vibrant, eye-catching packaging, makes vaping products more enticing to younger audiences.

This marketing strategy often targets the youth demographic by using bright colors and appealing designs that resemble candy or toys, making them more likely to try vaping.

Research has shown that these flavors and visual appeals contribute to the initiation and continued use of vaping among young people.

The combination of sweet or fruity flavors and attractive packaging can create a perception that vaping is less harmful than smoking traditional cigarettes, encouraging younger individuals to start and maintain the habit.

Maybe you haven’t heard of Franchise Group Inc. (FRG), but it owns the Vitamin Shoppe and a couple of other retailers. The company has just declared bankruptcy amid heavy losses and rising debt levels.

The company has announced a plan to restructure its finances by working with holders of about 80% of its major debt. This plan aims to strengthen the company's financial situation and help its main brands—Pet Supplies Plus, The Vitamin Shoppe, and Buddy's Home Furnishings, overcome their financial headwinds and grow. 

The restructuring plan involves converting the company's debt into ownership shares, which will significantly reduce its debt and improve its financial health. This change is intended to benefit the brands as well as their stakeholders.

To carry out this plan, FRG and its businesses have started voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court in Delaware. However, the franchised locations of FRG's brands are not included in this process.

$250 million in financing

As part of the restructuring, the company has secured $250 million in financing to maintain operations and meet commitments to employees, customers, vendors, and franchise partners. This financing is subject to court approval.

Andrew Laurence, FRG's President and CEO, said the move is crucial for the growth of the businesses, which will continue normal operations during the bankruptcy process. 

FRG has also announced it will shutter American Freight due to ongoing economic challenges. Store closing sales will start on November 5, both in stores and online.

The company is filing motions with the court to ensure normal business operations continue for Pet Supplies Plus, The Vitamin Shoppe, Buddy's Home Furnishings, and FRG. These motions include requests to keep paying employees and maintaining customer programs, the company said.