Hooters, known for its scantily clad waitresses, is the latest US restaurant chain to face financial trouble.
Bosses at the network are in urgent talks with lenders and advisers as the popular chain attempts to tackle $300 million of debts. Bloomberg reported Wednesday.
Earlier this year, Hooters closed about 40 “underperforming” restaurants, including locations in Florida, Kentucky, Rhode Island, Texas and Virginia, in a bid to cut costs.
But debts are mounting and more drastic measures are needed for the 41-year-old brand.
If Hooters cannot refinance its debt, it would have to consider bankruptcy and further closures.
Like other struggling chains such as Red Lobster, which filed for bankruptcy in the summer, Hooters blames rising rent and food costs as customers eat out less.
The chain is known for its scantily clad waitresses.
Hooters has recently closed about 40 restaurants
Bloomberg said Hooters is seeking guidance from Accordion Partners and law firm Ropes & Gray to overcome its financial challenges and address its mounting debt.
Hooters, which has been privately owned since 2019, has about $300 million in bonds due for repayment, according to data compiled by Bloomberg.
These bonds are backed – a bit like mortgages – by assets it owns, such as its property, brand rights and fees it receives from its franchisees. That means lenders can pressure it to sell them if it fails to repay the debts.
Chapter 11 bankruptcy allows companies to restructure by negotiating leases with landlords and loans with banks.
Red Lobster recently emerged from Chapter 11 after using it to close 100 restaurants and pay off debt.
According to Techonomic, Hooters now has about 300 restaurants worldwide following this year’s closures, up from 333 in 2018.
Rivals Dave & Buster’s, Miller’s Ale House and Twin Peaks have all slightly increased their number of restaurants.
At the time of the summer closures, Hooters was not thought to be in as dire financial straits as Red Lobster, which has now emerged from Chapter 11 bankruptcy.
Indeed, bosses said Hooters “remains very resilient and relevant” and highlighted a new range of Hooters frozen foods being sold in supermarkets across the US.
“Like many restaurants under pressure from current market conditions, Hooters has made the difficult decision to close a select number of underperforming stores,” a spokesperson told DailyMail.com.
“We look forward to continuing to serve our guests at home, on the go and in our restaurants here in the U.S. and around the world.”
DailyMail.com has reached out to Hooters again today but has not received a response. Neither Accordion Partners nor Ropes & Gray responded to Bloomberg when asked for comment.
Hooters, in addition to being known for its scantily clad waitresses, also calls itself “the original American wings joint” and celebrated its 40th anniversary in 2023.
The first Hooters opened in Clearwater, Florida, in 1983. Last May, it opened restaurants: three in Las Vegas and three in Florida.
Across the United States, restaurants have faced increasing hardship this year.
In response to rising costs, menu prices have been raised, but this has led to a drop in customers.
Major chains like Applebee’s, TGI Fridays and Boston Market have all closed restaurants recently.
Red Lobster filed for bankruptcy in May and closed nearly 100 restaurants. It has now emerged from bankruptcy.
The first Hooters opened in Clearwater, Florida, in 1983.
The sports bar-style restaurant is well known for its wings and its scantily clad waitresses, the ‘Hooters Girls.’
Hooters opened six new locations in 2023, three in Las Vegas and three in Florida, where the brand originated.
BurgerFi is the latest company to file for bankruptcy in September, sparking fears of mass closures of its 162 locations.
Chains have been hardest hit in California, where the minimum wage for fast-food restaurants rose to $20 an hour starting April 1.
In early June, Mexican chain Rubio’s closed 48 branches in the state and also filed for bankruptcy.
Across the United States, family-owned businesses have also been closing.
For example, Fargo’s Pit BBQ in Texas closed after more than two decades of serving brisket, ribs and other barbecue classics.