Photo: FREDERIC J. BROWN / AFP / Getty Images
The restaurant chain Hooters has filed for bankruptcy protection to facilitate a buyout led by its original founders. The filing, announced on Monday (March 31), aims to restructure the company's finances and sell its 151 company-owned locations to a franchise group backed by the founders. This move marks the end of private equity ownership by Nord Bay Capital and TriArtisan Capital Advisors, who acquired Hooters in 2019.
The restructuring plan involves selling Hooters' corporate-owned restaurants to franchisees who already operate 30 successful locations in Florida and Illinois. The franchise group has committed to taking Hooters "back to its roots," indicating a potential shift in brand strategy post-bankruptcy. Hooters has secured $35 million in debtor-in-possession financing to support the transition, expecting to emerge from bankruptcy within three to four months.
The bankruptcy filing comes amid challenging times for the casual dining sector, with rising labor and food costs impacting profitability. Hooters, known for its distinctive orange-clad wait staff and chicken wings, has faced financial pressures similar to other chains like Red Lobster and TGI Fridays, which have also filed for bankruptcy.
Despite these challenges, Hooters CEO Sal Melilli expressed optimism about the company's future, stating that the restructuring will reinforce Hooters' financial foundation while maintaining its commitment to customer service and quality food. Neil Kiefer, CEO of franchisee group Hooters Inc., emphasized the importance of returning the brand to its original vision and making it more family-friendly.
Hooters plans to continue operating its business as usual during the process, although some locations may close as part of the operational evaluation.