Founders Will Buy Restaurants Owned by Private Equity Firm
Hooters restaurants, best known for its female servers wearing revealing outfits, has filed for bankruptcy in Dallas. The bankruptcy agreement states that a group — including the brand’s founders, who already operate about one-third of Hooters’ franchised restaurants in the U.S. — will purchase the 100 company-owned locations from the current private-equity owners. The brand seeks $40 million in financing during the bankruptcy process, which is expected to conclude by August, according to Bloomberg News.
Hooters has 400-plus restaurants in 42 states and 29 countries. Last summer, it closed 40 underperforming locations. U.S. franchises and the international locations owned by franchisees will not be affected by the bankruptcy process, the company said in a news release. The New York Times reported that once the deal is completed, all Hooters locations will be franchises.
The Associated Press said that owners within the buying group currently operate 14 of the 30 highest-volume Hooters franchises in the U.S. Those restaurants are in the Tampa and Chicago areas, CNN said in an article about the bankruptcy.
Hooters Rebrand
The complex bankruptcy deal keeps the restaurants up and running, and the news release said that “our renowned Hooters restaurants are here to stay.” Proud of its spicy Buffalo chicken wings and “delightfully tacky, yet unrefined” slogan, Hooters is nonetheless more famous for its waitresses’ orange short-shorts and low-cut tops, hence the “breastaurant” label in some media coverage.
Rumors of a Hooters bankruptcy have circulated for weeks and first appeared in Bloomberg News. This week, Neil Kiefer, CEO of a company that operates several original Hooters sites and is part of the purchasing group, told Bloomberg he was planning a “re-Hooterization,” or rebrand, that would end the chain’s “bikini nights.” He told Bloomberg that the Hooters rebrand would make the restaurant more family-friendly. (About four years ago, it received considerable negative publicity for new shorts that were so skimpy they resembled panties. Hooters pivoted swiftly, allowing servers to choose which shorts to wear when serving customers.)
‘Back to Its Roots’
“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,” Keifer said in the news release about the bankruptcy. “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. We are committed to restoring the Hooters brand back to its roots.” The Hooters website says it launched in Clearwater, Fla., in October 1983 when “six businessmen with absolutely no previous restaurant experience got together and decided to open a place they couldn’t get kicked out of.”
The chain’s wide-eyed owl logo developed into a cultural icon as Hooters boomed in popularity. Its branding was all over the map: an arena football team, a pro golf tour and even Hooters Air, an airline that operated from 2003 to 2006. Hooters had sponsored the No. 9 NASCAR car driven by Chase Elliott since 2017, the Associated Press said, but last year Hendrick Motorsports ended the arrangement because Hooters had failed to live up to its financial commitments.
Why Hooters Filed for Bankruptcy
In a Monday article, The Wall Street Journal said the private-equity firms Nord Bay Capital and TriArtisan Capital Advisors bought Hooters in 2019. The chain has sought to expand and rebound by testing smaller-format spinoffs. In 2020, for instance, it sought to expand Hoots Wings through franchising.
Citing market research firm Technomic, The Journal reported that the chain couldn’t stick the landing. Its domestic sales total of $867 million in 2023 was a mere 1% more than the previous year. And Hooters’ footprint was shrinking: It had around 290 U.S. stores in 2023, down from 340 in 2019, Technomic said.
The Journal attributed Hooters’ insolvency to “changing consumer preferences.” That’s backed up by 2024 TouchBistro statistics (cited by Menu Tiger) that menu price increases influence the buying decisions of 45% of Americans, 47% of Canadians and 35% of baby boomers. And since the pandemic, Hooters locations — like all restaurants — have experienced rising labor and ingredient costs that have led to higher menu prices. Consumers resisted, turning to less-expensive restaurant food or staying home.
Hooters, now based in Atlanta, is one of several major brands that suffered as a result and closed significant locations. The Associated Press report listed Buca di Beppo, On the Border, Red Lobster and TGI Friday’s as other high-profile chains that have filed for bankruptcy within recent months. CNN adds BurgerFi to that list of troubled restaurant brands; it filed for bankruptcy late last summer.
