Hooters of America is reportedly preparing to file for bankruptcy within the next two months due to declining foot traffic and financial strain. The company is collaborating with law firm Ropes & Gray and turnaround consultants Accordion Partners to restructure its operations and address its debt burden. Several creditors have also sought advice from investment bank Houlihan Lokey. While no final decision has been made, a Chapter 11 filing could occur soon.
In 2021, Hooters raised approximately $300 million through asset-backed bonds, a financing structure that uses franchise fees and other assets as collateral. Despite these efforts, the company has faced ongoing challenges, leading to the closure of multiple underperforming locations. As part of its restructuring efforts, Hooters has also announced plans to open new restaurants both domestically and internationally.
The restaurant industry has seen similar financial distress among other major brands. TGI Friday’s recently had to cede control of some assets after failing to meet debt obligations, and Red Lobster filed for bankruptcy in May. Inflation, changing consumer habits, and increasing operational costs have put pressure on casual dining chains across the country.
Hooters’ struggles reflect broader challenges facing the casual dining industry. Since being acquired by Nord Bay Capital and TriArtisan Capital Advisors in 2019, the company has worked to modernize its brand. However, financial analysts note that its core business model has faced revenue declines, impacting its ability to remain competitive.
As Hooters navigates potential bankruptcy proceedings, the coming months will be critical for determining whether restructuring efforts can keep the business afloat.
