Hooters of America, LLC, the Atlanta-based restaurant chain renowned for its chicken wings and distinctive dining experience, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas. The move aims to address the company’s $376 million debt and facilitate the sale of its 151 company-owned locations to a group of existing franchisees backed by the original founders.
To ensure uninterrupted operations during the restructuring, Hooters is seeking court approval for $40 million in debtor-in-possession (DIP) financing from its existing lenders, which includes $35 million of new capital. Upon approval, this financing is expected to provide ample liquidity to support the company’s operations throughout the Chapter 11 process.
The buyer group comprises two seasoned franchisees who collectively operate over 30% of Hooters’ domestic franchised locations, including 14 of the 30 highest-volume restaurants. This transition to a pure franchise model is intended to simplify operations and position the brand for sustainable, long-term growth.
Despite the bankruptcy filing, Hooters’ restaurants will remain open and continue to operate as usual during the restructuring. The company’s current franchise operations, including international locations, are not impacted by the Chapter 11 process and will continue under existing franchise and license partners.
The company anticipates emerging from Chapter 11 within 90 to 120 days. This strategic move follows industry challenges such as inflation, rising labor and food costs, and declining consumer spending, which have similarly affected other casual dining establishments like TGI Fridays and Red Lobster.
For more information on the restructuring process, stakeholders can visit Kroll’s website dedicated to the Hooters’ bankruptcy.
