Hooters, the popular U.S. restaurant chain recognized for its chicken wings and distinctively dressed waitstaff, has filed for bankruptcy protection. The filing for Chapter 11 bankruptcy was made by the HOA Restaurant Group earlier this week in North Texas Bankruptcy Court located in Dallas.
This development is part of a trend affecting traditional restaurant chains facing financial difficulties due to various factors such as surging food and labor costs, evolving customer preferences, and intensified competition from modern casual eateries such as Shake Shack. Notably, other established chains like Red Lobster, TGI Fridays, and Buca di Beppo sought bankruptcy protection last year, while On the Border followed suit recently.
As part of its bankruptcy strategy, Hooters plans to sell 100 of its company-owned U.S. restaurants to a consortium of franchisees associated with the brand. According to the company, these franchisees, including Hooters’ original founders, already manage 14 of the top 30 highest-revenue locations across the country.
Neil Kiefer, CEO of the franchise group Hooters Inc., pointed out in a statement that the brand has been in the hands of private equity firms lacking substantial experience with Hooters. He expressed optimism that with the brands reverting to seasoned franchisees, the iconic Hooters name could achieve its historic success once more. However, the purchasing group has opted not to disclose financial specifics of the agreement.
Hooters maintained that existing franchisees and licensing partners will continue the operations of restaurants worldwide. As detailed in court documents, the chain currently operates around 305 restaurants spread across 29 states and 17 countries.
Founded by six visionaries without prior food service expertise in Clearwater, Florida, in 1983, Hooters has not been without its challenges. Over time, legal battles emerged, including those concerning employment of exclusively “Hooters Girls” for customer service roles. In an attempt to pivot from its usual approach, Hooters experimented in 2017 with a restaurant format that did not feature servers in tight attire.
The enterprise faced additional legal hurdles last year, agreeing to a $250,000 settlement for a racial discrimination lawsuit by the U.S. Equal Employment Opportunity Commission. The suit argued that a North Carolina Hooters site rehired mainly white staff and Black employees with lighter skin tones after pandemic-related layoffs.
Financial constraints have also led to a reduction in operations, with a significant move including the sale of the Hooters hotel-casino near the Las Vegas Strip in 2019. This property was rebranded as the OYO Hotel and Casino following its purchase by an Indian hotel company. Furthermore, approximately 40 underperforming U.S. locations were shuttered last year.
In addition to these changes, Hooters’ sponsorship of NASCAR’s No. 9 car driven by Chase Elliott ended last year after a long-standing association. Hendrick Motorsports terminated the sponsorship due to unmet financial obligations.