Hooters of America officially announced the Chapter 11 bankruptcy filing in a news release on Monday, Mar. 31. The Atlanta-based company filed for bankruptcy in a Texas federal court as part of a plan to sell off its corporate-owned locations and shift to a franchise-only model.
The company said the move comes with “near unanimous support from key stakeholders” and aims to streamline operations while keeping all restaurants open during the restructuring process.
“Our renowned Hooters restaurants are here to stay,” said Hooters CEO Sal Melilli. “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.
“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.”
The deal hands control of the company-owned locations to two current franchisees, including Hooters Inc. The group is led by the chain’s founders and already operates more than 30% of Hooters’ US franchise locations, including 14 of its 30 busiest restaurants.
All locations, including those outside the US, will remain open during the bankruptcy proceedings. The restaurant’s rewards program, gift cards, and merchandise sales will continue as normal.
Hooters said it expects to wrap up the bankruptcy process within three to four months.
“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,” said Hooters Inc. CEO Neil Kiefer. “As we look toward the future, we are committed to restoring the Hooters brand back to its roots and simplifying [Hooters of America’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.”
Founded in 1983, Hooters became known for its wings and servers’ uniforms with orange shorts and tank tops. The chain operates 151 company-owned and 154 franchised restaurants across 17 countries, along with selling frozen meals in more than 1,200 grocery stores through a food licensing deal.
Hooters’ bankruptcy is the latest in a recent wave of filings across the casual dining sector, including TGI Fridays, Red Lobster, Bucca di Beppo, and Rubio’s Coastal Grill. CNBC reports that restaurant prices have outpaced inflation, climbing nearly 30% over the past five years, according to the Federal Reserve Bank of St. Louis.
As part of the bankruptcy, Hooters is seeking $40 million in financing to continue operations, including $35 million in new capital. Court approval would allow Hooters to keep paying employees, vendors, and partners without interruption.
Hooters has created a dedicated website with information about its Chapter 11 case.
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