Dave McMahon Weighs in on TGI Fridays’ Bankruptcy and Pricing Strategy

As TGI Fridays navigates Chapter 11 bankruptcy, questions arise about how the restructuring will impact menu prices. In a recent GoBankingRates article, Dave McMahon, Ph.D., Pepperdine Graziadio faculty member, shared insights on how the casual dining chain might approach pricing amid financial challenges.

McMahon explains that if TGI Fridays aims to regain market share, it may adopt a penetration pricing strategy—lowering prices to attract more customers. However, he notes that this tactic could pose challenges in the long run. 

“The issue with this is whether or not they can maintain this cost structure when they come out of bankruptcy,” McMahon said. “By going with a penetration pricing approach and lower prices, they will reset the internal reference price range of the consumer.”

Beyond potential price adjustments, the company is expected to refine its menu, removing underperforming items and reevaluating portion sizes to control costs. Industry experts suggest that the restaurant may also introduce more combination deals and specials to enhance perceived value while maintaining profitability.

As TGI Fridays restructures, the ultimate question remains whether it can sustain a lower-cost model while ensuring long-term financial stability.

Read the full article here.