Restaurant chain Hooters of America filed for bankruptcy protection in Texas on Monday, attempting to address its $376 million in debt by selling all the company-owned restaurants to a franchise group that supports the company’s founders.
Hooters, like other casual dining restaurants, have struggled in recent years due to lower spending by cash-bound American consumers, with high labor and food costs. The company currently owns and operates 151 locations directly, with another 154 restaurants run primarily by franchisees in the United States.
The privately owned company that shares its private equity ownership with the recently bankrupt TGI Friday will sell all the company-owned locations to a buyer group consisting of two existing Hooters franchisees that operate 30 high-performance Hooters locations, primarily in the US in Florida and Illinois.
Hooters did not disclose the purchase price for the transaction. This must be approved by a US bankruptcy judge before it becomes final.
Founded in 1983, Hooters became famous for its chicken wings and server uniforms in orange shorts and low-cut tank tops.
The buyer group is supported by some of the original founders of Hooters and has committed to “returning to its roots.”
“With over 30 years of hands-on experience throughout the Hooters ecosystem, we have a deep understanding of our customers and not only meet them, but consistently exceed their expectations,” said Neil Kiefer, a member of the buyer group and current CEO of the original Footers location in Clearwater, Florida.
Hooters said it expects to close the transaction and will emerge from bankruptcy in three to four months. The company raised approximately $35 million in funding from an existing lender group to close the bankruptcy transaction.
The casual dining restaurant has been hit by rising costs in 2024, with well-known chains such as Red Lobster, Baccadi Beppo and Rubio’s Coastal Grill filed for bankruptcy last year on TGI Friday.
According to the Federal Reserve Bank of St. Louis, restaurants have risen by about 30% over the past five years, exceeding consumer prices overall.
