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Hooters Files for Bankruptcy, Aims to Return to Roots
The iconic restaurant chain Hooters of America filed for Chapter 11 bankruptcy protection in Texas on Monday. Facing a hefty $376 million debt, the company plans to sell all of its corporate-owned restaurants to a franchise group with ties to the company’s founders.
Like other casual dining establishments, Hooters has been struggling with rising inflation, increasing labor and food costs, and decreased consumer spending. The company currently owns and operates 151 locations, with an additional 154 franchise-operated restaurants, primarily in the US.
The sale involves transferring all corporate-owned Hooters locations to a buyer group comprised of two existing franchisees who currently operate 30 successful Hooters restaurants, mostly in Florida and Illinois. The purchase price was not disclosed, and the transaction requires approval from a bankruptcy judge.
Founded in 1983, Hooters is known for its chicken wings and distinctive server uniforms. The buyer group, backed by some of the original founders, has pledged to return Hooters to its roots. Neil Kiefer, a member of the buyer group and CEO of the original Clearwater, Florida, Hooters, expressed confidence in their understanding of the customer base and their ability to exceed expectations.
Hooters anticipates the deal will be finalized, and they will emerge from bankruptcy within three to four months. They have secured approximately $35 million in financing to facilitate the bankruptcy proceedings.
The casual dining sector has faced significant challenges in 2024, with several well-known chains, including TGI Fridays, Red Lobster, Bucca di Beppo, and Rubio’s Coastal Grill, filing for bankruptcy last year. Data from the Federal Reserve Bank of St. Louis reveals restaurant prices have increased by about 30% over the past five years, surpassing overall consumer price increases.