The restaurant chain Hooters of America has initiated bankruptcy proceedings in Texas, aiming to tackle its $376 million debt by selling all company-operated restaurants to a franchise group supported by the company’s founders.
Similar to other casual dining establishments, Hooters has faced challenges in recent years stemming from inflation, rising labor and food costs, and decreasing consumer spending among financially strained American households.
The company currently owns and manages 151 locations directly, alongside an additional 154 restaurants operated by franchisees, predominantly in the United States.
This privately-held organization, which has a shared private equity owner with the recently-bankrupt TGI Fridays, plans to sell all corporate-owned sites to a consortium made up of two existing Hooters franchisees who run 30 successful Hooters locations across the US, mainly in Florida and Illinois.
Founded in 1983, Hooters gained notoriety for its chicken wings and the distinctive uniform of its servers, featuring orange shorts and low-cut tank tops.
The buying group is backed by some of Hooters’ original founders and has committed to returning Hooters “back to its roots”.
“With over 30 years of hands-on experience across the Hooters ecosystem, we possess a deep understanding of our customers and what it takes not only to meet but to consistently exceed their expectations,” stated Neil Kiefer, a member of the buyer group and the current CEO of the original Hooters restaurant in Clearwater, Florida.
Hooters anticipates finalizing the deal and emerging from bankruptcy within three to four months. The company has arranged approximately $35 million in financing from its existing lender group to facilitate the bankruptcy process.
Casual dining chains have been severely affected by escalating costs in 2024, with prominent establishments like TGI Fridays, Red Lobster, Bucca di Beppo, and Rubio’s Coastal Grill all filing for bankruptcy last year.
According to the Federal Reserve Bank of St. Louis, restaurant prices in the US have surged about 30% over the past five years, exceeding the overall rise in consumer prices.
