Hooters documents go bankrupt as high costs stop casual diners

(Bloomberg) – Hooters, a casual dining chain known for chicken wings and lightweight server uniforms, has become the latest iconic restaurant brand, fading in the face of stubborn inflation and American interest in dining out.

The Atlanta-based company filed for bankruptcy in Dallas on Monday, saying a “liquidity tightening” prevented it from making necessary investments.

Chapter 11 Apply to follow the documents of the seafood chain red lobster, which went bankrupt last year after the money-making “Endless Shrimp” promotion, and TGI Friday Inc. failed in November after working to turn around its business. These companies are plagued by the pandemic like the entire industry and compete with cheap fast food chains, and traffic for restaurants generally declines as prices jump over Americans.

Hooters listed $376 million in funding debt obligations and is seeking approval for $40 million in debt financing from certain existing lenders, including $35 million in new capital. This will provide the company with adequate liquidity to support operations in the Chapter 11 process, which is expected to continue until August, the statement said.

Neil Kiefer, CEO of the division owned by the founder of HMC Hospitality Group, said the document is part of a plan by the chain’s founders and other stakeholders to root it in its own family-friendly restaurant. As seen by the Florida businessman who founded Hooters in 1983, the decision of the brand’s private equity owners starts with its origins, a beach destination that offers delicious food and excellent service.

“I call it a reconnect,” Kiefer said in an interview with the original location of the chain’s store chain in Clairewater, Florida in March.

A turnaround plan may see HMC, which owns 22 restaurants in Florida and Illinois, while operators of other Hooters franchises take over most of the U.S. locations currently owned and operated by U.S. Hooters, although some may close. Food service consulting firm Technomic said that last year, the U.S. system-wide Hooters closed more than 40 locations in the U.S.

Hooters’ complex debt financing could be one of the wrinkles in the restructuring. Its bonds are packaged as enterprise-wide securitization, through which most of its assets (including concession fees) serve as collateral.

The company listed Barstool Sports Inc. as one of its 30 largest unsecured creditors who are not insiders, with about $1.24 million in unsecured claims. For the past two decades, Barstool has been involved in controversy, including allegations of sexual misconduct against its owner Dave Portnoy and fined for violating advertising rules and gambling restrictions.

Hooters has about 5,957 employees, according to court documents. The document shows that it owns directly and owns 151 restaurants in 22 U.S. states and maintains 154 franchise agreements with restaurants in 19 U.S. states and 19 U.S. states and 17 countries in the Americas, Europe, Asia and Africa.

The bankruptcy case is the U.S. Hooters case in the U.S. Bankruptcy Court 25-80078 in the northern U.S. region.

– Assisted by Jonathan Randles, Luca Casiraghi, Rheaa Rao and Eliza Ronalds-Hannon.

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