Hooters Restaurant Chain files for Chapter 11 bankruptcy as part of a strategic plan to restructure its operations while assuring customers that their famous wings will remain on the menu.
Key Takeaways
- Hooters of America has filed for Chapter 11 bankruptcy but will continue operating throughout the restructuring process.
- The company plans to sell some restaurants to current franchisees, including the chain’s cofounders, who operate many of the highest-volume locations.
- Hooters is transitioning from a hybrid ownership model to a solely franchising model to enhance growth and simplify operations.
- The filing follows closure of underperforming restaurants and a recent $900,000 settlement with Hendrick Motorsports over unpaid sponsorships.
- Global franchise operations will not be affected by the restructuring, and no changes to menus or rewards programs are planned.
Restructuring While Maintaining Operations
Hooters of America has officially filed for Chapter 11 bankruptcy protection as part of a strategic financial restructuring plan. Despite the filing, the well-known restaurant chain, famous for its chicken wings and uniformed waitresses, has emphasized that locations will remain open during the process. The move comes as the company confronts declining customer numbers and ongoing liquidity challenges that have been building in recent years. Company leadership has presented the bankruptcy as a proactive step rather than a sign of imminent closure.
The company has entered into a Restructuring Support Agreement (RSA) that will facilitate the sale of certain restaurants to a buyer group composed of current successful franchisees, including the chain’s cofounders. This buyer group already owns nearly one-third of all domestic franchised Hooters locations, including 14 of the top 30 highest-volume restaurants in the system. This strategic alliance with experienced operators suggests a commitment to preserving the brand’s strongest performers.
5. Hooters files for bankruptcy as brand eyes turnaround plan #hooterscto
Hooters has filed bankruptcy as the casual-dining brand known for its chicken wings and skimpy server uniforms struggles to lure customers. pic.twitter.com/7epX3AV3cw
— Stock Jabber (@Stock_Jabber) April 1, 2025
Transition to Franchise-Only Model
A key element of the restructuring plan involves Hooters transitioning away from its current hybrid business model that includes both company-owned and franchised locations. The new strategy will establish Hooters as a purely franchising operation, which company executives believe will enhance growth opportunities while significantly simplifying operations. This approach has become increasingly common among restaurant chains seeking to reduce overhead costs while maintaining brand presence and quality control through franchise agreements.
The bankruptcy filing comes after Hooters has already closed several underperforming restaurants across the country as part of preliminary efforts to improve its financial standing. Additionally, the company recently reached a $900,000 settlement with Hendrick Motorsports over unpaid sponsorship money, further indicating the financial pressures that led to the Chapter 11 filing. The company is now seeking $40 million in debtor-in-possession financing to fund operations during the restructuring process.
Preserving Brand Identity While Restructuring Finances
Customers concerned about changes to their favorite Hooters experience can rest assured that the company has explicitly stated there are no planned changes to its menu, rewards program, or other offerings during the restructuring process. The focus appears to be entirely on the financial and operational structure behind the scenes rather than customer-facing elements of the business. This approach aims to maintain the loyalty of the chain’s established customer base during the transition period.
While the domestic operations undergo this significant restructuring, Hooters’ international franchise operations will remain completely unaffected by the Chapter 11 proceedings. This separation of the global business from the domestic restructuring provides additional stability for the brand worldwide. CEO Sal Melilli has expressed confidence that the company will emerge from bankruptcy stronger, with plans to complete the reorganization process within the coming months.
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Hooters files for Chapter 11 as franchisees step in to buy locations
Hooters files for Chapter 11 bankruptcy
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