Listen to this articleHooters of America has become the latest casual dining chain to seek Chapter 11 bankruptcy protection.
In a March 31 filing in U.S. Bankruptcy Court for the Northern District of Texas, the Atlanta-based company said its 151 corporate-owned locations will remain open while a court-supervised sale process plays out. To fund its operations without disruption, Hooters is seeking approval for $40 million in debtor-in-possession financing from an existing lender group, including $35 million in new capital.
Additionally, Hooters says it is evaluating the brand’s operational footprint as part of a “financial restructuring process to position itself to invest its resources in its strongest assets moving forward.”
Within New Jersey, the chain currently has three restaurants: Atlantic City, East Brunswick and Somerset.
Hooters intends to sell all company-run sites to a buyer group comprised of two existing franchisees who own 30 high-performing locations in the U.S.
Its 154 franchise restaurants are not impacted by the Chapter 11 process and will continue to be operated by Hooters’ franchise and license partners, according to the company.
Hooters expects to complete the deal and emerge from bankruptcy within 90 to 120 days. It intends to use proceeds from the sale of the restaurants to help pay down nearly $376 million in debt, according to the filing.
Similar struggles
Founded in 1983, Hooters became known for its chicken wings, as well as its server uniforms of orange shorts and low-cut tank tops. At its peak 15 years ago, Hooters had over 430 outposts worldwide. That footprint included a mix of company-owned and franchised restaurants.
Similar to other brands, Hooters has struggled in recent years amid a pullback in consumer spending and rising costs of food and labor. Within the past 12 months, casual dining establishments like TGI Fridays and Red Lobster also filed for bankruptcy.
Since early 2024, Hooters has closed 48 underperforming locations as well as implemented operational improvements in an attempt to improve declining liquidity, Restaurant Dive reported.
The buyer group – backed by some of Hooters’ original founders – pledged to take Hooters “back to its roots.”
Neil Kiefer is a member of the buyer group and CEO of the original Hooters location in Clearwater, Fla. “With over 30 years of hands-on experience across the Hooters ecosystem, we have a profound understanding of our customers and what it takes to not only meet, but consistently exceed their expectations,” he commented.
Looking ahead
“As we look toward the future, we are committed to restoring the Hooters brand back to its roots and simplifying HOA’s operations by adopting a pure franchise model that will maximize the potential for sustainable, long-term growth.
“The foundation we’ve laid ensures the continued success of our brand – one that is driven by a relentless focus on delivering an exceptional experience each and every visit for our customers,” Kiefer said.
Hooters CEO Sal Melilli shared in a statement, “Our renowned Hooters restaurants are here to stay. Today’s announcement marks an important milestone in our efforts to reinforce Hooters’ financial foundation and continue delivering the guest-obsessed hospitality experience and delicious food our customers and communities have come to expect.”
He added, “I’ve seen firsthand the incredible value and opportunities our brand brings to life, and I look forward to continuing that momentum well into the future. I’m incredibly grateful to our valued customers, partners, and employees for their continued support.”
