Hooters of America appears to be on the brink of filing for bankruptcy, according to recent reports from Bloomberg. The casual-dining chain, known for its chicken wings and distinctive waitstaff, has engaged law firm Ropes & Gray to oversee potential bankruptcy proceedings. However, these plans are still preliminary, based on insider information.
Financial struggles for Hooters have become increasingly apparent, particularly highlighted by a recent downgrade from credit rating agency KBRA on two tranches of securities tied to the company, which stemmed from declining revenues at its restaurants. Additional analysis from Creditsafe has revealed that in 2024, Hooters took approximately four times longer than the average restaurant to pay its vendors. Furthermore, over 20% of the company’s bills were reportedly over 90 days overdue last year.
The chain has already taken steps to address its difficulties by closing several underperforming locations earlier this year and enlisting restructuring advisors to explore its options. Data from Technomic indicates that from 2018 to 2023, Hooters’ systemwide sales in the U.S. fell nearly 15%, accompanied by a 12% reduction in its domestic restaurant count.
These challenges reflect broader trends affecting the bar and grill sector, which has been grappling with increasing costs and shifting consumer preferences toward quicker dining options and fast-casual experiences. If Hooters proceeds with a bankruptcy filing, it will join other notable restaurant brands like Red Lobster and TGI Fridays that have faced similar circumstances in the past year.
Despite these difficulties, there are opportunities for innovation and repositioning in the casual-dining market. Adaptation to consumer trends and enhanced business strategies could help Hooters regain its footing and possibly emerge stronger if they navigate these financial challenges effectively.