Hooters of America (HOA), the operator of the venerable chain of so-called breastaurants, filed for bankruptcy on Monday as part of a process to sell company stores to a pair of its franchisees.
The company said that it has reached an agreement to sell some of its corporate locations to franchisees that currently operate more than 30% of the company’s domestic locations, including 14 of the 30 highest-volume restaurants.
One of those buyers is Hooters Inc., the operation run by the original Hooters founders.
But Hooters, which operates 293 locations, said it is currently evaluating its operational footprint as part of the restructuring process. The company ultimately plans to either sell or close its corporate stores and move forward as a pure franchisor, according to court documents.
Hooters declared Chapter 11 bankruptcy in a U.S. Bankruptcy Court in Texas. The company said in a release that it expects to move through the process in 90 to 120 days. The company is seeking court approval for $40 million in new lending to carry it through bankruptcy.
The company estimated both its assets and liabilities at between $50 million and $100 million, according to court filings.
Hooters in a court filing on Tuesday blamed its financial struggles on “inflationary pressure and industry headwinds.”
But it also acknowledged a substantial amount of debt, most of it from a 2021 whole business securitization financing. In 2024, for instance, the company owed $31 million in debt service payments. “The substantial size of the company’s debt-service obligations has put significant pressure on the business,” according to the filing.
The bankruptcy does not involve the company’s international units, which numbered 67 as of 2023, according to Technomic.
The company operates close to 200 company units in the U.S., while franchisees operated 97 restaurants domestically as of the end of 2023. Hooters has closed 48 restaurants since the beginning of 2024, according to court filings.
Hooters joins a growing list of casual-dining chains that have filed for bankruptcy over the past year, including major names like Red Lobster and TGI Fridays. And like Fridays, Hooters went into the bankruptcy having borrowed funds through a whole business securitization.
The agreement with the two Hooters franchisees is expected to enable the company to remain in operation under new ownership. Hooters has been owned by a pair of private-equity firms: Nord Bay Capital and TriArtisan Capital Partners.
Neil Keifer, CEO of Hooters Inc., said in a statement that the group looking to buy the restaurants “are committed to restoring the Hooters brand back to its roots.”
He said that the company plans to simplify HOA’s operations “by adopting a pure franchise model that will maximize the potential for sustainable, long-term growth.”
UPDATE: This story has been updated to add details from court filings.
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