Hooters bankruptcy: Brand files for Chapter 11, but won’t close restaurants yet

Hooters of America, LLC, owner of the Hooters restaurant chain, has announced that it has filed for Chapter 11 bankruptcy protection. The bankruptcy filing is aimed at helping the company restructure itself so it can transition from a company-owned restaurant chain to a franchisee-owned chain.

Here’s what you need to know about Hooter’s bankruptcy and whether any locations will close.

Hooters to transition to franchisee-owned model

Most people think of Hooters as just one company, but the restaurant chain currently operates under a hybrid model. Hooters of America, LLC, owns the restaurant’s brand intellectual property and currently operates numerous Hooters locations in the United States and across the world. The company says it franchises and operates 410 Hooters restaurants in 38 states and 24 countries.

However, Hooters of America, LLC, also licenses out its restaurants to franchisees, allowing individuals and companies to operate Hooters stores. One of the largest Hooters franchisees is Hooters Inc., the company owned by the original Hooters cofounders. Hooters Inc. owns and operates over 20 restaurants in America.

Like many restaurant chains, Hooters has been struggling financially in recent years, and now the company’s owner, Hooters of America, LLC, has decided that the best way forward for the brand is to restructure its business model. That restructuring will see Hooters move from a primarily company-owned model to an entirely franchisee-owned model.

Hooters of America, LLC, says that the restructuring will see a group of current franchisees acquire and operate the current company-owned locations. Among those franchisees is Hooters Inc.

It should be noted that the bankruptcy filing and the restructuring of the company only affect Hooters locations in America. Its worldwide locations are unaffected by the changes.

Are any Hooters locations closing?

If you’re a fan of Hooters, then there is some good news. The company says that it currently has no definite plans to close any Hooters locations. In a press release announcing the bankruptcy filing, Hooters of America CEO Sal Melilli said, “Our renowned Hooters restaurants are here to stay.”

However, the announcement went on to leave open the possibility that some locations could close. “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,” the statement read.

What this means is that it’s possible Hooters could decide to close some locations as the bankruptcy process continues.

So, is Hooters going out of business?

The company has no plans to. Indeed, it filed for Chapter 11 bankruptcy protection, so it can keep its business going and locations open, albeit under a new franchisee-owned model.

In a dedicated website for customers who have questions about Hooter’s bankruptcy, the company says, “Hooters is here to stay, and with a stronger financial foundation and streamlined operations on the other side of this process, we will be well-positioned to continue delivering the guest-obsessed hospitality experience and delicious food our valued customers and communities have come to expect well into the future.”

How long will Hooters’ restructuring take?

Hooters of America, LLC, says it expects to move through the bankruptcy process “swiftly.” The company defines this as having the goal of emerging from Chapter 11 in about 90 to 120 days.

Restaurant chains have had a rough year

Hooters of America, LLC isn’t the only restaurant company that has filed for Chapter 11 bankruptcy lately. In the past year, numerous other popular restaurant chains have as well, including Red Lobster, Tijuana Flats, Buca di Beppo, and Roti.

While the specifics of each bankruptcy will vary, many restaurants have faced the same problems in recent years. This includes diminishing foot traffic, higher costs, and diners who are cutting back on discretionary spending due to price rises fueled by inflation.

View the full article