Home / Leisure sector under pressure: what you need to know
16th January 2026
Abby Mercer, Solicitor
TGI Fridays, a well-known casual dining high street chain has undergone a major restructure. Sixteen UK sites are closing, and hundreds of jobs have been lost, while the remaining restaurants have been sold to new owners through a process called a pre-pack administration.
While sixteen sites are closing, TGI Fridays has successfully preserved 33 UK restaurants through its pre-pack administration, ensuring continued service for loyal customers. This streamlined approach saves the UK’s TGI’s presence and hundreds of jobs along with it.
The leisure and hospitality sector is facing tough times due in part to rising costs, changing habits, and debt pressure related to the pandemic.
These factors have pushed some operators into financial distress, making insolvency solutions more common.
It’s a way for a struggling business to sell its assets quickly to a new owner. It keeps the brand alive, saves as many jobs as possible, and avoids a drawn-out, and sometimes expensive, insolvency process. Pre-pack administration allows the business to sell its viable parts immediately to a new entity (often management-backed). Though, the sale of the business can only happen simultaneously to the administration – not before. In TGI Fridays’ case, this meant saving 33 restaurants and rehiring staff under new ownership.
Liquidation, on the other hand, would involve winding up the company, selling assets piecemeal to pay creditors. All restaurants would close, staff would be made redundant, and the brand would likely disappear from the UK market. Clients with bookings or contracts would have no continuity and would need to seek refunds through the insolvency process, which can be slow and uncertain.
We are seeing more restructures as businesses fight rising costs and falling demand. As a result, transparency and fairness in similar deals are under scrutiny. Operators need to plan ahead by managing debt early and keeping a close eye on costs.
Unfortunately, the leisure sector is under real pressure. Further alcohol duties are set to rise in line with inflation from February 2026, likely adding around 4pence onto every pint, meaning people will likely feel the rising costs of leisure even more. While there are talks of further reprieves for the leisure sector, in the meantime, quick, strategic action can really make the difference between survival and closure.
Our key takeaways for business that might be struggling are to:
If cash flow is tight, seek advice before insolvency becomes inevitable. As the pre-package administration of TGI Fridays shows, there are various options available to a struggling business which does not always have to mean the loss of the brand.
Our specialised insolvency team will be able to help you decide what your company needs whether this be pre-pack sales, CVAs, or refinancing amongst some of the options.
A pre-pack sale is a pre-arranged sale of a company’s business or assets completed immediately after entering administration, designed to preserve value and continuity as explained above. A CVA (Company Voluntary Arrangement) is a legally binding agreement with creditors to repay debts over time, allowing the company to keep trading under its directors. Or it may be that refinancing, i.e. restructuring or replacing existing debt with new financing arrangements to improve cash flow and financial stability is the most suitable option for you.
Communicate with landlords, suppliers, and staff to avoid disputes.
If you have any questions at all, you can get in touch with our insolvency experts in our dispute resolution team here at Kuits on 0161 912 6121.