For decades, Hooters has been synonymous with wings, casual dining, and a distinct brand image. Now, that iconic identity faces an uncertain future as the restaurant chain reportedly prepares to file for bankruptcy. Keep reading to learn more about Hooters’ financial troubles and what led the popular chain to this critical moment.
Hooters weighs legal options as it faces financial uncertainty
Hooters is reportedly developing a bankruptcy strategy aimed at restructuring its operations and managing its financial obligations.
According to sources cited by Bloomberg News on February 21st, Hooters’ parent company, Hooters of America, has consulted with the law firm Ropes & Gray to explore potential legal proceedings in the coming months. This move could provide the company with the necessary time to reorganize its business. However, Bloomberg notes that no final decision has been made regarding the filing.
Hooters’ potential bankruptcy filing could result in more location closures
Hooters closed approximately 40 underperforming restaurants in June, including locations in Florida, Kentucky, Rhode Island, Texas, and Virginia, as part of cost-cutting efforts. Following these closures, the chain now operates around 300 restaurants worldwide, down from 333 in 2018, according to Technomic.
A spokesperson told DailyMail.com at the time, “Like many restaurants facing challenges in the current market, Hooters has made the difficult decision to close a select number of underperforming locations. We remain committed to serving our guests—whether at home, on the go, or in our restaurants across the U.S. and around the world.”
In addition to these closures, Hooters recently shut down one of its family-friendly Hoots Wings by Hooters locations, leaving only three remaining. Launched in 2017 in Chicago, the counter-service concept differs from the traditional Hooters experience by featuring male and female staff in standard, non-revealing uniforms.
If Hooters proceeds with its bankruptcy filing, further closures among its 300 remaining locations are likely.
What led to Hooters’ potential bankruptcy filing?
Hooters, which has been under private equity ownership since 2019, is facing financial pressure with approximately $300 million in outstanding bonds, according to data compiled by Bloomberg. These bonds are secured by the company’s assets—including property, brand rights, and franchise fees—meaning lenders could push for asset sales if debts remain unpaid.
A potential Chapter 11 bankruptcy filing would allow Hooters to restructure its operations, renegotiate leases with landlords, and modify loan agreements with banks.
When Hooters closed dozens of underperforming locations last summer, its financial position was not believed to be as precarious as Red Lobster’s, which has since emerged from Chapter 11 bankruptcy. At the time, Hooters executives emphasized the company’s resilience, pointing to expansion efforts and the launch of a new line of Hooters-branded frozen foods now available in grocery stores nationwide.
“With new Hooters restaurants opening domestically and internationally, new Hooters frozen products launching at grocery stores, and the Hooters footprint expanding into new markets with both company-owned and franchise locations, this brand of 41 years remains highly resilient and relevant,” the company told Nation’s Restaurant News in June.
However, like many in the restaurant industry, Hooters has struggled with declining foot traffic, inflation, and the lingering economic effects of the COVID-19 pandemic.
Sources: Bloomberg News, Nation’s Restaurant News