Hooters of America, the well-known restaurant chain famous for its chicken wings and serving staff known as “Hooters Girls,” has filed for bankruptcy in Texas. The company, which is still the largest owner/operator of the brand, directly operating 151 restaurants today, is sinking under $376 million in debt. In order to address its impending bankruptcy, Hooters is divesting all of their company-owned locations. A coalition supported by the restaurant’s founders will reoccupy these spaces.
The company owns another 154 restaurants run by franchisees, again mostly in the U.S. You thought Hooters was done because they filed for bankruptcy this past spring? The company assures customers that all restaurants will continue to function normally while this transition takes place.
Sal Melilli, the chief executive of Hooters of America, emphasized the commitment to the brand and its operations, stating, “Our renowned Hooters restaurants are here to stay.”
Hooters’ recent financial struggles can be attributed to the perfect storm of increasing costs and wages, a trend that has taken its toll on profitability. Couple that with a drop in consumer spending and that’s put even greater stress on the business. In a changing, more competitive dining atmosphere, Hooters has tried and failed to keep pace — even with its own franchise-harming expansion plans.
The collective purchasing Hooters second-largest operator and franchiser has already purchased 14 of the chain’s most profitable locations. This cohort has made their mark in specific neighborhoods across the Tampa Bay region, Florida and Chicago, Illinois. No doubt both cities have powerful customer bases.
Established in 1983, Hooters has developed a powerful brand image focused around its casual dining experience and one-of-a-kind ambience. The chain’s success can be attributed to its hybrid service model and menu. That unique strategy has made it a success and allowed it to thrive in the bustling restaurant corridor. Recent challenges highlight the need for adaptability and strategic changes to meet evolving market conditions.
Through this bankruptcy process, Hooters hopes to find a way to keep its doors open while weathering the storm surrounding their brand’s appeal. The company has announced plans to divest its company-operated restaurants to reduce financial burdens. This maneuver will enable the chain to keep a foothold in several contested markets.