Hooters sparks fears of mass closures as chain takes drastic action over huge debts

Hooters, known for its scantily clad waitresses, is the latest American restaurant chain to find itself in financial trouble.

The chain’s bosses are in urgent talks with lenders and advisers as the popular chain tries to tackle $300 million in debt, Bloomberg reported Wednesday.

Earlier this year, Hooters closed about 40 “underperforming” restaurants, including locations in Florida, Kentucky, Rhode Island, Texas and Virginia, in an effort to cut costs.

But debts are mounting and more drastic measures are needed for the 41-year-old brand.

If Hooters cannot refinance its debt, it will have to consider bankruptcy and more closures.

Like other struggling chains such as Red Lobster — which filed for bankruptcy over the summer — Hooters blames rising rent and food costs for customers dining out less often.

Hooters recently closed about 40 restaurants

Bloomberg said Hooters is seeking advice from Accordion Partners and law firm Ropes & Gray to address its financial challenges and mounting debt.

Hooters, which has been privately owned since 2019, has about $300 million in bonds that need to be repaid, according to data compiled by Bloomberg.

These bonds are backed — a bit like mortgages — by the assets it owns, such as its property, brand rights and fees it receives from its franchisees. That means lenders can pressure the company to sell them if debts aren’t repaid.

Chapter 11 bankruptcy allows companies to restructure by negotiating leases with landlords and loans with banks.

Red Lobster recently emerged from Chapter 11 after closing 100 restaurants and paying down debt.

Hooters now has about 300 restaurants worldwide after closing this year, down from 333 in 2018, according to Techonomic.

Competitors Dave & Buster’s, Miller’s Ale House and Twin Peaks have all expanded their restaurant counts slightly.

When Hooters closed over the summer, it was thought that the club’s financial situation was not as bad as that of Red Lobster, which has since emerged from bankruptcy.

In fact, bosses said Hooters “remains highly resilient and relevant” and highlighted a new range of Hooters frozen foods being sold in supermarkets across America.

“Like many other restaurants under pressure from current market conditions, Hooters has made the difficult decision to close a number of underperforming locations,” a spokesperson told DailyMail.com.

“We look forward to continuing to serve our guests at home, on the go, and in our restaurants in the U.S. and around the world.”

DailyMail.com reached out to Hooters again today but has not yet responded. Neither Accordion Partners nor Ropes & Gray responded to Bloomberg when asked for comment.

Not only is Hooters known for its scantily clad waitresses, it also calls itself “the original American wing joint” and celebrated its 40th anniversary in 2023.

The first Hooters opened in Clearwater, Florida in 1983. It wasn’t until May of last year that restaurants opened: three in Las Vegas and three in Florida.

Across America, restaurants are having an increasingly difficult time this year.

As costs have risen, they have raised the prices on their menu, but this has led to a decline in the number of guests.

Major chains like Applebee’s, TGI Fridays and Boston Market have all recently closed their restaurants.

Red Lobster filed for bankruptcy in May and closed nearly 100 restaurants. It has now emerged from bankruptcy.

The first Hooters opened in Clearwater, Florida in 1983

The sports bar-style restaurant is known for its wings and scantily clad waitresses, “Hooters Girls”

Hooters opened six new locations in 2023. Three in Las Vegas and three in Florida, where the brand was founded

BurgerFi became the latest to file for bankruptcy in September, sparking fears of mass closures of its 162 locations.

Chains have been hit hardest in California, where the minimum wage for fast-food restaurants increased to $20 an hour effective April 1.

In early June, Mexican chain Rubio’s closed 48 locations in the state and also filed for bankruptcy.

Small family businesses have also closed in America.

For example, Fargo’s Pit BBQ in Texas has closed after serving brisket, ribs and other barbecue classics for more than two decades.