Hooters of America, a popular restaurant chain known for its chicken wings and servers in orange shorts and low-cut tank tops, filed for bankruptcy in Texas due to its $376 million debt. The company plans to sell all of its corporate-owned restaurants to a franchise group backed by the company’s founders in order to address financial struggles caused by inflation, high labor and food costs, and decreased consumer spending.
The buyer group, comprised of existing Hooters franchisees, plans to take the company “back to its roots” and has promised to maintain the brand’s standards and exceed customer expectations. The transaction must be approved by a U.S. bankruptcy judge before it becomes final, but Hooters expects to emerge from bankruptcy in three to four months with the help of $35 million in financing from its existing lender group.
Other casual dining restaurants, like TGI Fridays, Red Lobster, Bucca di Beppo, and Rubio’s Coastal Grill, have also faced challenges and filed for bankruptcy in recent years due to rising costs. The Federal Reserve Bank of St. Louis has reported a 30% increase in restaurant prices over the last five years, outpacing consumer prices overall.
Despite its financial struggles, Hooters remains a well-known brand and the buyer group’s experience with the Hooters ecosystem gives hope for a successful turnaround for the company.
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