Hooters of America, the struggling Hooters franchisor that could be headed for bankruptcy, may have a savior in the brand’s original founders.
HMC Hospitality Group, the restaurant group owned by the six men who opened the first Hooters in 1983, has a plan to take control of Hooters of America (HOA) following a bankruptcy filing, Bloomberg reported on Thursday.
Clearwater, Florida-based HMC operates 22 Original Hooters locations in Florida and the Chicago area. It has been its own entity since 2002, when the founders sold the Hooters trademark to Atlanta-based franchisor HOA, but maintained control over the restaurants they owned.
HMC’s and HOA’s restaurants share the Hooters branding and business model, which focuses on chicken wings, scantily clad waitresses and televised sports. But their performance has diverged over the years. While HOA has struggled with sales declines and unit closures, HMC says its restaurants are thriving. The group reported record sales last year and has multiple new restaurants under construction as well as plans to enter the Las Vegas market, according to a February press release.
Now it wants to bring what has worked at those restaurants to the more than 200 Hooters that are owned or franchised by HOA in the U.S., with HMC and other franchisees stepping in at those locations, according to Bloomberg.
The plan entails a bankruptcy filing under which some of HOA's creditors would work with HMC to transfer control, with the creditors agreeing to restructure HOA's debt, Bloomberg reported, citing people familiar with the situation.
Neither HOA or HMC responded to a request for comment Thursday.
HOA is owned by private-equity firms Nord Bay Capital and TriArtisan Capital Partners, which acquired the chain in 2019.
Between then and 2023, HOA’s U.S. systemwide sales declined more than 18%, and its domestic footprint shrank by 10%, according to the most recently available Technomic data. It closed dozens of additional locations last summer.
The company also took on debt, including a $315 million whole business securitization in 2021. In September, credit rating agency KBRA downgraded that debt, citing revenue declines at Hooters’ restaurants.
It has also struggled to pay vendors on time, according to data from credit report company Creditsafe, and last year stopped making payments on a high-profile sponsorship with NASCAR driver Chase Elliott that it had held since 2017. HOA agreed to pay $900,000 to settle a lawsuit over that sponsorship last week.
All of that led up to a report last month that HOA had hired a law firm to prepare a bankruptcy filing, though the plans had not been finalized.
If Hooters does indeed file for bankruptcy, it would be the sixth casual-dining chain to do so over the past year, joining Red Lobster, TGI Fridays, Buca di Beppo, On the Border and Bar Louie.
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