Hooters has filed for bankruptcy protection under Chapter 11.
The filing was made by HOA Restaurant Group in the North Texas Bankruptcy Court in Dallas, citing financial challenges arising from high food and labor prices, changing customer preferences and increased competition from newer casual chains.
What we’re watching: The bankruptcy plan entails selling 100 company-owned U.S. restaurants to a group of Hooters franchisees, including the founders, who currently operate 14 of the highest-volume Hooters restaurants in the U.S.
- Despite the bankruptcy filing, franchisees and licensing partners will continue to operate all existing locations, including those outside the U.S., where Hooters has over 420 restaurants in 29 countries.
The backstory: Originally founded in 1983 in Clearwater, Florida, by six businessmen without food service experience, Hooters has faced various challenges over the years, including legal issues related to its employment practices and operational changes such as experimenting with non-traditional “Hooters Girl” servers.
- Last year, Hooters settled a race and color discrimination lawsuit, and made headlines when it closed around 40 underperforming U.S. locations. Additionally, the company faced setbacks such as the sale of the Hooters hotel-casino off the Las Vegas Strip and the cancellation of its NASCAR sponsorship due to financial commitments not being met.
What they’re saying: “For many years now, the Hooters brand has been owned by private equity firms and other groups with no history or experience with the Hooters brand,” said Neil Kiefer, CEO of the franchise group Hooters Inc., in a statement. “As a result of these transactions, the Hooters brand will once again be in the hands of highly experienced Hooters franchisees and we will be well-positioned to return this iconic brand to its historic success.”
