Restaurant chain Hooters of America (HOA) has filed for bankruptcy in the US state of Texas, aiming to tackle its $376m debt by selling all its corporate-owned restaurants to a buyer group.
The group consists of two existing Hooters franchisees one of which is Hooters Inc, the founders of the brand. Together, this group owns and operates more than 30% of the domestic franchised Hooters locations, which includes 14 of the top 30 highest volume restaurants.
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The group has committed to taking the brand back to its roots.
Hooters’ decision to file for bankruptcy at the US Bankruptcy Court for the Northern District of Texas comes amid a challenging period for casual dining establishments. The sector has been hit hard by inflation, rising labour and food costs and a decrease in consumer spending, as reported by Reuters.
Restaurant chains TGI Fridays, Red Lobster, Bucca di Beppo and Rubio’s Coastal Grill all filed for bankruptcy in 2024.
Hooters currently directly owns and operates 151 locations, with an additional 154 restaurants run by franchisees, mainly in the US.
Although the purchase price remains undisclosed, the transaction is pending approval from a US bankruptcy judge.
Hooters CEO Neil Kiefer stated: “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.
“As we look toward the future, we are committed to restoring the Hooters brand to its roots and simplifying HOA’s operations by adopting a pure franchise model that will maximise 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 at each and every visit for our customers.”
Hooters anticipates that the sale and bankruptcy process will completed by June/July 2025.
The company is seeking authorisation for $40m of debtor-in-possession (DIP) financing from some of its current lenders, which encompasses $35m in fresh capital. Following the court approval, Hooters expects the DIP financing to provide it with sufficient liquidity to support operations during the chapter 11 process.
Following completion of this, all Hooters locations will become franchisee-owned.
