Hooters of America announced Monday that it declared bankruptcy.
As part of court proceedings, the company entered an agreement to sell all of the roughly 100 company-owned stores to two of its franchisees, one of which is operated by the original founders.
The two operators—Hoots Inc. (owned by the founders) and Hoot Owl Restaurants—collectively own more than 30 percent of U.S. Hooters locations, including 14 of the 30 highest volume restaurants, and have been in the Hooters system for more than 30 years. Additionally, in 2024, these franchisees realized average restaurant revenue that was over double those of company-owned restaurants.
“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,” Hooters Inc. CEO Nick Kiefer 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. On behalf of all Hooters employees, customers and franchisees, the Buyer Group is excited and optimistic about our future plans for the Hooters brand.”
Upon completion of these transactions, the two buying franchisees will own and operate approximately 70 percent of Hooters’ domestic locations. The remaining will be overseen by other operators throughout the country, meaning Hooters will become a 100 percent franchised organization.
Hooters has approximately 240 U.S. restaurants in 35 states, according to its website. But some of the corporate locations could close during bankruptcy.
“As part of the Company’s broader business transformation and planning, Hooters is evaluating the Company’s operational footprint as part of its financial restructuring process to position itself to invest its resources in its strongest assets moving forward,” Hooters said in a news release.
READ MORE: Report: Hooters Founders Want to Take Control of the Chain
It expects to emerge from court proceedings in 90 to 120 days. No franchised locations, including those outside of the U.S., are impacted by the bankruptcy.
Hooters is asking for $40 million in debtor-in-possession financing—including $35 million in new capital—from its lenders to fund continued business operations.
“Our renowned Hooters restaurants are here to stay. Today’s announcement marks an important milestone in our efforts to reinforce Hooters’ financial foundation and continue delivering the guest-obsessed hospitality experience and delicious food our customers and communities have come to expect,” Hooters of America CEO Sal Melilli said in a statement. “I’ve seen firsthand the incredible value and opportunities our brand brings to life, and I look forward to continuing that momentum well into the future. I’m incredibly grateful to our valued customers, partners, and employees for their continued support.”
Hooters Brand Management, LLC, an entity owned by the buying franchisees, is taking over key franchise support functions for Hooters of America, including the national advertising fund, central purchasing organization, and franchise development and support.
The ultimate goal is to simplify Hooters of America’s business and return operational control into the hands of franchisees.
Bloomberg reported last week that the original Hooters founders were interested in taking over the chain. Their company Hooters Inc. (also called HMC Hospitality Group) owns 22 outlets in Tampa Bay and Chicagoland and two Hoots stores (fast-casual spinoff) in Chicagoland.
These locations operate separately from corporate Hooters. Years ago, the original owners sold the trademark and brand rights to outside investors, which led to the creation of Hooters of America, the parent company overseeing stores nationwide. The founders retained ownership of their own contingent and follow the original vision of Hooters—a casual, family-friendly beach-themed restaurant focused on quality food and service, according to Bloomberg.
Hooters Inc. CEO Neil Kiefer told Bloomberg that his company wants to ignite a “re-Hooterization.” This means fresher ingredients, improved service training, reinvesting in restaurant upkeep, and attracting families by sponsoring local events, donating to charities, and encouraging volunteer work.
“With over 30 years of hands-on experience across the Hooters ecosystem, we have a profound understanding of our customers and what it takes to not only meet, but consistently exceed their expectations,” Kiefer said. “As we look toward the future, we are committed to restoring the Hooters brand back to its roots and simplifying HOA’s operations by adopting a pure franchise model that will maximize the potential for sustainable, long-term growth. The foundation we’ve laid ensures the continued success of our brand—one that is driven by a relentless focus on delivering an exceptional experience each and every visit for our customers.”
The brand has seen declining sales and traffic. Hooters confirmed in June 2024 that it shuttered around 40 underperforming stores because of marketing conditions. And it wasn’t one geography either; locations shuttered in places like Florida, Texas, Indiana, Maryland, Kentucky, Virginia, and Rhode Island.
Bloomberg said Hooters is saddled with $350 million in debt. This includes $300 million in asset-backed bonds issued in 2014 and later refinanced in 2021, along with an additional $50 million in subordinated debt added in 2022.
Hooters struggled with paying its bills on time throughout 2024, as indicated by its consistently high Days Beyond Terms (DBT), a measure of how many days late a company pays its invoices on average. According to data from Creditsafe, Hooters’ DBT started at 20 days in February 2024 and steadily increased over the year. A significant spike occurred from August to November 2024, with DBT rising from 27 in August to 38 in September, then jumping to 48 in October, and peaking at 54 in November. This is a stark contrast to the restaurant industry average, which remained between 10 and 13 days. Essentially, Hooters was taking about four times longer than other restaurant chains to pay its suppliers.
A concerning number of Hooters’ bills were over 91 days past due. In August 2024, 20.32 percent of its outstanding bills were in this severely overdue category. This percentage climbed sharply in the following months—30.28 percent in September, a drastic jump to 49.72 percent in October, and an even higher 52.25 percent in November. This pattern aligns closely with Hooters’ rising DBT over the same period, suggesting that the company was experiencing significant financial difficulties or cash flow disruptions that made it harder to meet its payment obligations.
The sports bar, founded in 1983 in Clearwater, Florida, was bought by Nord Bay Capital and TriArtisan Capital Advisors in 2019. During this transaction, Hooters had more than 430 restaurants.
In 2017, the chain launched quick-service spinoff Hoots Wings, announcing several franchise agreements in the following years. However, the brand is down to three locations—two in Illinois and one in California.
