Hooters was not initially expected to succeed.
The restaurant chain known for chicken wings and female breasts was officially incorporated on April Fool’s Day in 1983, a sort of inside joke among its founders. The group of six Florida businessmen included a painter, a brick mason and a liquor salesman, but no one with restaurant experience. Their entry into the industry is remembered more as a whim than a serious business endeavor.
They wanted to recreate the neighborhood bars they missed from living in the Midwest, replete with wood paneling, homey decor and a jukebox stocked with oldies. But they added a novel twist: beautiful waitresses clad in tank tops and short shorts.
They opened the first Hooters in a former dive in Clearwater that was known locally as a dead end. According to company lore, the founders erected a small graveyard out front to commemorate all the businesses that had gone before them at 2800 Gulf-to-Bay Boulevard.
Forty-two years later, that restaurant is still there. But Hooters, now a 300-plus-unit chain with locations in 18 countries, has had a different sort of fate. Last month—on April Fool’s Eve, in fact—it became the latest casual-dining chain to file for Chapter 11 bankruptcy, joining other onetime giants of the segment like Red Lobster and TGI Fridays to have done so over the past 12 months.
To be clear, Hooters is not dead. The bankruptcy process will allow the brand’s parent company, Atlanta-based Hooters of America (HOA), to restructure its debt, close some unprofitable restaurants and get a fresh start under a new owner.
That owner is HMC Hospitality Group, an independent company that operates the original Hooters location along with 21 others in the Tampa Bay and Chicago areas. HMC is owned by the brand’s founders, and its restaurants have outperformed the rest of the chain in recent years. As far as bankruptcies go, it’s a best-case scenario.
At the same time, Hooters has fallen far from its peak in 2009, when it was one of the largest casual-dining chains in the country. It was battered by the financial crisis, the pandemic and the challenges that followed. It has also struggled under private-equity owners that took on considerable debt, cut costs and made other decisions that hurt the brand.
This is the story of how an iconic American restaurant chain rose and fell over the course of four decades, and how it just might get a second chance under the very people who invented it.
The original Hooters in Clearwater, pictured in 2013. | Photo: Shutterstock
The birth of a brand
Hooters did not get off to a good start. One of the founders, Ed Droste, recalled to the Tampa Bay Times that he was sure the business was doomed. But some free publicity helped turn things around early on. During the 1984 Super Bowl in Tampa, Washington Redskins star John Riggins visited the restaurant, then returned with limos full of teammates. It put Hooters on the map.
By the end of 1984, customers were waiting up to three hours for a table. And Hooters had caught the attention of restaurateur Hugh Connerty, who stopped in while scouting locations for his own restaurant, Colorado Joe’s. Connerty would go on to strike a deal with the founders that gave them the right to continue opening restaurants in the Tampa area and Chicagoland, while Connerty could take it everywhere else in exchange for a 3% royalty.
Hooters’ waitresses certainly had something to do with the concept’s popularity, especially among men. But it was also part of an emerging crop of laid-back sit-down restaurants, such as Applebee’s and Chili’s, that were gaining favor with America’s growing middle class. Hooters’ tagline summed up its ethos well: "Delightfully tacky, yet unrefined.”
“It was a beach place. It was a hangout,” said HMC CEO Neil Kiefer, who has been involved with the brand since the beginning. “Good food, good atmosphere, a place to hang, a place to watch the game, a place to meet somebody for lunch. … We’ve never really had a problem attracting a really diverse crowd in all respects.”
With tongue firmly planted in cheek, the company’s official history repeatedly notes that Hooters was successful because it served good food. But what really set it apart were its waitresses, aka Hooters Girls.
“A lot of places serve good burgers,” said Mike McNiel, a VP at Hooters of America, according to a 1995 New York Times story. “The Hooters Girls, with their charm and All-American sex appeal, are what our customers come for.”
Beyond being central to the dining experience, they were key to the chain’s marketing, which helped build it into a brand that transcended its restaurants. The girls showed up in the chain’s annual calendar, on late-night TV as hosts of “Nite Owl Theater,” at NASCAR races and even on Hooters’ short-lived airline.
They also established Hooters as the first “breastaurant” chain, though Hooters’ founders reportedly disliked the term. The idea spawned an army of copycats, many of which were far more explicit in their theming. But Hooters’ founders were careful not to push the envelope too far, lest the brand lose its broad appeal. It even offered a kids menu and sponsored local little league teams.
Over the next few years, Connerty opened more Hooters in Florida and Atlanta. And when he needed more financing to continue expanding, he turned to his friend Robert Brooks, the founder of Naturally Fresh Foods, an Atlanta-based salad dressing and sauce manufacturer. Brooks called the loan in 1988 and took over the company, then known as Hooters of America.
Brooks was a devout Methodist who claimed not to have known the meaning of Hooters’ name and logo when he first invested. Ironically, it was under his leadership that the bawdy brand really took off.
Under his leadership, the chain grew to 46 states and 20 countries. He is credited with expanding the concept from a bar that served finger foods to a proper full-service restaurant. And he helped introduce the brand to the masses with marketing feats that included a Las Vegas casino, a credit card and Hooters Air.
The Hooters Casino Hotel was rebranded in 2019. | Photo: Shutterstock
Brooks also clashed frequently with Hooters’ founders in Clearwater over key elements of the brand. He wanted the restaurants to use sauce from Naturally Fresh, for instance, rather than Hooters’ prized original recipe. And he pushed for uniform tops that were made from form-fitting Lycra rather than cotton, which drew backlash from Hooters Inc.
“When the shirt gets too tight and the boobs are hanging out, mama and the kids aren't coming in,” then-president Kiefer told Fortune Magazine in 2003. It was emblematic of a difference in philosophy between the two branches that persists to this day.
Despite those tensions, Hooters grew steadily for years. It hit on a number of trends that were popular at the time—sports bars, chicken wings, casual dining—but catered to a more adult audience.
“A lot of the ‘sea of sameness’ happened as all of these casual-dining chains pivoted to capture the family-dining occasion,” said David Henkes, senior principal with industry researcher Technomic. “Hooters didn’t pivot as hard, so it still had its point of differentiation. … It pushed the boundaries, but was still within the boundaries of what might be considered traditional family dining.”
Though Brooks told Fortune he believed there was room for 1,000 Hooters in the U.S., the chain would ultimately top out with 400 in 2008, when it did more than $1 billion in sales.
Then the Great Recession hit. Consumer spending fell off a cliff, sending shockwaves across the industry. It was one of the few periods in restaurant history where the business actually shrunk, Henkes said.
The crisis also gave rise to a new kind of restaurant—the fast casual—that catered to consumers’ price-consciousness as well as their growing demand for convenience.
“The value, the food quality, all of the things that differentiate fast casual, really eroded the share of casual dining, much more so than any other segment,” Henkes said. “Obviously Hooters suffered just as much as any of the other players.”
The PE era
Brooks’ death in 2006 set off years of legal wrangling over what would become of Hooters of America. It was ultimately sold in 2011 to South Africa-based franchisee Chanticleer Holdings, with backing from private-equity firms H.I.G. Capital and KarpReilly.
Thus began Hooters’ new life under private equity.
PE had been moving into the restaurant sector for years following successful deals by firms like Bain Capital, which netted enormous profits on investments in Domino’s and Burger King. But for Hooters, the 2010s were marked by stagnation. Casual-dining chains continued to lose share to fast casuals like Chipotle and Panera, and Hooters began to feel pressure from breastaurant upstarts like Twin Peaks.
From 2011 to 2018, Hooters’ U.S. sales fell 5%, and unit count shrunk nearly 9%, to 333 locations, according to Technomic.
In 2017, in a nod to consumers’ shifting habits, Hooters launched a fast casual of its own, called Hoots. It served a limited menu of wings and sandwiches and was staffed by male and female servers in modest dress. It has three locations today in Chicago and California.
The next year, HOA was on the block again. The buyers were Nord Bay Capital, a Tampa-based family office, and TriArtisan Capital Advisors, which had recently invested in TGI Fridays and P.F. Chang’s. The new owners signaled that it would be business as usual for Hooters.
“We’re not replacing the place you go watch sports, the all-American beach icon, the share leader, the Hooters waitress, which is part of American folklore and has 100% name recognition,” Nord Bay CEO Joakim Bergander told the Tampa Bay Business Journal in 2019.
To finance the deal, the owners saddled the company with debt, including a $315 million whole business securitization in 2021. Whole business securitizations are bonds that are backed by the issuer’s revenue-generating assets. In this case, that included Hooters’ royalties, franchise fees and operating profits.
Whole business securitizations have become a popular funding mechanism in the restaurant industry, largely because they are highly rated and therefore carry a lower interest rate. But they also come with a rigid payment structure, which makes them attractive for investors.
“What you're essentially doing is, if you're investing in that structure, you're as close as possible to the asset,” said Ed Cerullo, a credit analyst with Octus, during an episode of Restaurant Business’ A Deeper Dive podcast this month. “In its most simplistic state, any dollar that goes in there goes to service the debt.”
TGI Fridays’ bankruptcy last year also involved a whole business securitization.
For Hooters of America, those weighty financial obligations arrived amid a swirl of other challenges. Costs for food and labor were skyrocketing in the wake of the COVID-19 pandemic, and consumers were beginning to pull back on their restaurant visits as inflation hit their wallets.
To keep up, HOA began to change how it operated its restaurants. It cut costs and put off needed repairs and maintenance. It also raised prices to a degree that alarmed some within the company.
“You used to be able to count on wings being about a buck a wing,” said one former executive who asked to remain anonymous. “Today, they're at like a $17.99 price point for 10 wings. The internal narrative was, ‘This is too much, too fast.’”
Customers responded by visiting Hooters less often.
“Short-term, profits went up, but traffic count went down dramatically,” said another former official who requested anonymity. From 2021 to 2023, Hooters U.S. sales declined 3.8%, according to Technomic.
During this period, ownership also led a charge to make waitresses’ uniforms more revealing, introducing a skimpier short that exposed more of the wearer’s butt and upper leg. The move angered franchisees and some employees, and the company later said the new look was optional. But there was a sense among insiders that the owners were taking the brand over the line.
“That's just so counter to what a lot of us really knew the brand to be, and it had the impact that we expected it would,” one former executive said. “It alienated customers, especially female customers and family customers, which we had tried for several years to attract.”
Nord Bay could not be reached for comment. TriArtisan and HOA did not respond to requests for comment.
Hooters Girls on a billboard. | Photo: Shutterstock
As problems mounted, in June of 2024, Hooters of America closed dozens of unprofitable restaurants across the country. According to a source familiar with the matter, the closures included a “considerable number” of the locations that had been opened under prior ownership in 2018 and 2019.
All told, 25% of HOA’s company-operated units were shut down. At the end of last year, it had 251 U.S. locations, 40 fewer than the year before, according to Technomic.
The closures were a clear sign of trouble at the chain and foreshadowed HOA’s eventual bankruptcy filing.
In bankruptcy documents, the company said that rising costs and declining foot traffic sapped its liquidity, leaving it unable to invest in its restaurants or service its debt, which totaled $376 million. Last year, HOA owed more than $30.9 million in payments on that debt and will owe about $19 million in 2025 under its current capital structure.
“That’s a lot of debt,” said Sarah Foss, global head of legal with financial consultant Debtwire. “I could absolutely see how that could lead you into bankruptcy, on top of all these other things.”
But the bankruptcy is unusual in that HOA entered with a clear plan for how it will exit. The company expects to turn over about 100 of its company-operated restaurants to HMC and another franchisee, Hoot Owl Restaurants, transitioning to a 100% franchised model led by two of its strongest operators.
“[It’s] a little bit more promising in terms of restructuring, coming to bankruptcy with a deal like this,” Foss said. “When you have a third party that believes in the company outside of your lenders, that’s pretty remarkable, and it’s hard to find these days.”
Back where it all began
While HOA was spiraling into bankruptcy, the restaurants operated by HMC were putting up the best sales year in company history. The group has a pipeline of new restaurants and plans to enter the Las Vegas market soon. It has little to no debt and “wonderful” cash flow, according to Kiefer. Average unit volumes are around $4.7 million, compared to about $2.3 million at HOA-operated locations.
Some of that gap could be a matter of geography. While HOA has outlets nationwide, many of HMC’s locations are in Florida, where looser pandemic restrictions allowed restaurants to bounce back more quickly.
But HMC believes it has been more successful because it has operated better, invested in its restaurants and kept the brand true to its roots.
“It’s hard to describe the secret sauce,” Kiefer said. “It’s instincts and years of running it. Frankly, [it’s] how you treat other people.”
The performance stood out in what was otherwise a bad year for breastaurants. In 2024, sales in that segment fell by an average of 5%, according to Technomic data.
It’s enough to suggest that breastaurants may be a thing of the past. But HMC’s results indicate that Hooters, at least, can still work under the right conditions.
“The franchisees who didn’t have the debt, they’ve continued to invest and innovate, and the service levels have remained much more consistent,” Henkes said. “They’ve shown that it is at least a viable concept.”
Now HMC wants to bring its playbook to the rest of the system once the bankruptcy process concludes later this year. One of the first items on the agenda: lengthening waitresses’ shorts.
“That's one of the mistakes I think the current owners have basically made,” Kiefer said. “They took that short and made it way, way too skimpy for the restaurant.”
Other plans include reinstating Hooters’ original sauce recipe chainwide. The sauce, which is made with butter instead of the margarine used by HOA, has been a “key ingredient” of Hooters’ success, Kiefer said.
The company will also spend the next couple of years updating and repairing the incoming fleet of restaurants. It also wants to boost Hooters’ community engagement through donations and sponsorships, which have long been a hallmark of the brand.
It will require a big investment, and it will take time. And the operating environment is not especially favorable for casual-dining chains right now.
But Hooters knows a thing or two about taking a dead-end restaurant and turning it into something special.
“We have to work to resurrect it in those locations where it’s gone bad,” Kiefer said. “And that’s an entrepreneurial challenge that we’re up to attack.”