Hooters – known for its scantily-clad waitresses – is preparing to file for bankruptcy, becoming the latest American restaurant chain facing financial problems.
The US arm of the chain is preparing to restructure through Chapter 11 in the coming months, sources familiar with the matter told Bloomberg News this morning.
Hooters has enlisted law firm Ropes & Gray to assist with the filing, expected within two months, the sources said.
Like other struggling chains such as Red Lobster – which filed for bankruptcy in the summer – Hooters is blaming the rising cost of rent and food and customers eating out less.
In the fall it emerged that bosses at the 42-year-old chain were in urgent talks with lenders and advisers as the popular chain tried to address $300 million of debts.
Hooters shuttered around 40 ‘underperforming’ restaurants in June, including locations Florida, Kentucky, Rhode Island, Texas and Virginia as it bid to cut costs. A bankruptcy would likely lead to more closures of the 300 remaining locations.
And only this week the chain shuttered one of its family-friendly Hoots Wings by Hooters spin-off restaurants, leaving just three. The concept launched in 2017 in Chicago sees diners order at a counter rather than at their tables.
But Hoot Wings’ biggest difference is its staff – both male and female servers wear regular, non-revealing outfits at the counter-service restaurant.
The chain is known for its scantily-clad waitresses
Hooters has recently shut around 40 restaurants
Hooters, owned by private equity since 2019, has about $300million in bonds that need to be repaid, according to data compiled by Bloomberg.
These bonds are backed – a bit like mortgages – to the assets it owns, such as its property, brand rights and fees it gets from its franchisees. That means lenders can put pressure on it to sell them if debts are not repaid.
Chapter 11 bankruptcy allows companies to restructure – by negotiating leases with landlords and loans with banks.
Red Lobster recently emerged from Chapter 11 after using it to close 100 restaurants and clear debts.
Hooters now has about 300 restaurants globally after the closures this year. That is down from 333 in 2018, according to Techonomic.
Rivals Dave & Buster’s, Miller’s Ale House and Twin Peaks have all slightly upped their restaurant count.
At the time of the closures in the summer, Hooters was not thought to be in as dire financial situation as Red Lobster, which has now emerged from Chapter 11 bankruptcy.
In fact, bosses said Hooters ‘remains highly resilient and relevant,’ and highlighted a new range of Hooters frozen food which is being sold in supermarkets across America.
The first Hooters opened in Clearwater, Florida in 1983
The sports bar-style restaurant is well known for its wings and its scantily clad waitresses, ‘Hooters Girls’
Hooters,opened six new locations in 2023. Three in Las Vegas, and three in Florida, where the brand originated
‘Like many restaurants under pressure from current market conditions, Hooters has made the difficult decision to close a select number of underperforming stores,’ a spokesperson told DailyMail.com.
‘We look forward to continuing to serve our guests at home, on the go and at our restaurants here in the US and around the globe.’
DailyMail.com has reached out to Hooters again today.
Hooters, as well as being known for scantily clad waitresses, also calls itself ‘the original American wing joint’, and celebrated its 40th birthday in 2023.
The first Hooters opened in Clearwater, Florida in 1983. Only last May, it was opening restaurants – three in Las Vegas and three in Florida.
Across America, restaurants have increasingly been struggling this year.
Faced with higher costs, they have put up menu prices – but that has led to a fall in customers.
Big name chains like Applebee’s, TGI Fridays and Boston Market have have all recently shuttered restaurants.
BurgerFi is the latest for file for bankruptcy in September – sparking sparks fears of mass closures of its 162 locations.
Chains have been worst hit in California where the minimum wage for fast food restaurants jumped to $20-an-hour from April 1.
In early June, Mexican chain Rubio’s shut 48 locations in the state and also filed for bankruptcy.
Across America, mom-and-pop operations have also been shutting.
For example, Fargo’s Pit BBQ in Texas closed after more than two decades of serving brisket, ribs and other barbecue classics.
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