Struggling Hooters Faces Potential Bankruptcy, Despite Selling Vegas Casino and Closing 40 Eateries Nationwide
Hooters of America Braces for Financial Reboot
It's no secret that Hooters of America is facing some turbulent times. The much-loved restaurant chain might be filing for Chapter 11 bankruptcy as soon as this week, struggling to keep up with steep financial obligations.
Even after selling its Las Vegas casino for $135 million back in 2019 and shuttering about 40 underperforming locations last year, the company has found it challenging to meet the $300 million debt it owes. Rumors circulating suggest that Hooters might be seeking the help of a law firm to prepare its Chapter 11 filing, but no official announcements have been made yet.
The Hooters Casino Hotel was a hotspot for visitors, located just a stone's throw away from the Las Vegas Strip and behind the MGM Grand, offering a popular $1 blackjack table. Now known as the Oyo Hotel & Casino Las Vegas, it continues to draw crowds.
Looking at the bigger picture, Hooters' Chapter 11 filing is part of a strategic overhaul, not a shutdown. The company aims to sell off its owned locations to a group of existing franchisees, including the original founders of Hooters Incorporated. This move is expected to transition the company into a fully-franchised business model.
The financial headwinds pushing Hooters towards bankruptcy are no different from what several national chains, like Red Lobster and TGI Fridays, have faced. The brand has also suffered criticism from consumers over its "breastaurant" concept, which has impacted its appeal and revenue.
As part of the restructuring, Hooters vows to keep its restaurants open and running business-as-usual. U.S. franchises should also expect to stay unaffected. The company is requesting court approval for a $40 million loan to shore up its operations while it reorganizes.
While Hooters is in the thick of things, it is not all doom and gloom. The company has big plans for the future, with expansion on the cards. New restaurants are set to open in Florida, and there's talk of spreading the wings in the U.K. despite previous failed attempts.
In essence, Hooters of America is in the midst of a financial storm, seeking Chapter 11 bankruptcy protection to restructure its debt and make the shift to a franchise-only operation. This move is expected to fortify the brand, sustain operations, and position the company for future success.
Despite the potential Chapter 11 bankruptcy filing, Hooters of America is aiming to sell its owned locations to franchisees, including original founders, transforming into a fully-franchised business model. It's worth noting that the Oyo Hotel & Casino Las Vegas, previously owned by Hooters, operates independently after its sale in 2019. The financial struggles faced by Hooters mirror those of other established restaurant chains, such as Red Lobster and TGI Fridays.
