Restaurant chain Hooters goes bust and files for bankruptcy protection
Hooters is going bust.
The U.S. restaurant chain, known for chicken wings and its skimpy “Hooters Girls” wait-staff outfits, has filed for bankruptcy protection. HOA Restaurant Group filed the motion for Chapter 11 protection Monday in the North Texas Bankruptcy Court in Dallas.
It's the latest legacy restaurant chain to run into financial trouble amid high food and labor prices, changing customer tastes and growing competition from newer casual chains like Shake Shack.
Red Lobster, TGI Fridays and Buca di Beppo all filed for bankruptcy protection last year, while the Tex-Mex chain On the Border filed for bankruptcy protection last month.
Under the Hooters bankruptcy plan, 100 company-owned U.S. restaurants would get sold to a group of Hooters franchisees. The franchisees, who include Hooters' founders, currently operate 14 of the 30 highest-volume Hooters restaurants in the U.S., the company said.
“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,” Neil Kiefer, CEO of the franchise group Hooters Inc., said 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."
Hooters said franchisees or licensing partners would continue to operate all existing locations, including those outside the U.S. There are more than 420 Hooters restaurants in 29 countries.
Hooters, based in Atlanta, Georgia, was founded in Clearwater, Florida, in 1983 by six businessmen with no food service experience who claimed they wanted to run a restaurant they couldn't get kicked out of.
But its business strategy has faced challenges over the years, including lawsuits over hiring only “Hooters Girls” to serve customers. In 2017, the company tried opening a restaurant that didn’t feature servers in tight tops as a test of a different approach to its original concept.
Last year, Hooters agreed to pay $250,000 to settle a race and color discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission. According to the lawsuit, a Hooters in North Carolina laid off 43 employees during the COVID pandemic, but recalled primarily white employees and Black employees with lighter skin tones once it began rehiring workers.
The company has also been forced to scale back as its financial woes mounted. In 2019, the Hooters hotel-casino off the Las Vegas Strip was sold to an Indian hotel company and rebranded as the OYO Hotel and Casino. Last year, the company closed around 40 underperforming U.S. locations.
Hooters had sponsored the No. 9 NASCAR car driven by Chase Elliott since 2017, but last year, Hendrick Motorsports ended its ties to the longtime sponsor because it was not meeting its financial commitments.
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Kurtenbach reported from Bangkok. Durbin reported from Detroit.