It has now been about six months since Hooters emerged from bankruptcy, and CEO Neil Kiefer is seeing signs of life in the brand.
Sales and net income are up across the 175-unit chain this year, he said, and some locations that had been struggling are showing improvement under his group's ownership. The company is fielding interest from prospective franchisees and merchandisers and is even working on a movie about the brand.
But post-bankruptcy has not been all sunshine and roses for Hooters. When Hooters Inc. took over 110 bankrupt locations from franchisor Hooters of America in November, it flagged about 40 of them as particularly challenged. It gave them some time to turn things around before closing about a dozen in recent months, with another 10 to 12 expected to shut down over the next 30 to 60 days, Kiefer said.
“It was something that we knew would be challenging and we may have to close some, and that in fact happened,” he said. “You never like to do that. But certainly in this environment, we're not the only chain restaurant dealing with those types of issues.”
[Read more: The rise, fall and (possible) rebirth of Hooters]
Kiefer knows what a healthy Hooters looks like. He was the brand’s attorney when it was founded in Clearwater, Florida, in 1983 and became CEO of the original group of restaurants in 1992. At that point, Hooters had split into two branches: the Kiefer-led group, now known as Hooters Inc., and the larger franchise operation, Hooters of America (HOA).
When HOA filed for bankruptcy last March, Hooters Inc. and another franchisee, Hoot Owl Restaurants, swooped in to buy the company, airing plans to “re-Hooterize” the wayward stores.
Over the years, HOA’s performance had declined, while Hooters Inc.’s restaurants, concentrated in Florida and the Chicago area, were more successful. The founding branch stayed true to the brand’s roots as a laid-back beach hangout, Kiefer says. HOA, on the other hand, made waitresses’ uniforms more revealing and cut corners on Hooters’ signature wing sauce.
HOA’s recent financial troubles did not help matters. When Kiefer took over, he said it appeared that the stores had been “unattended and unsupervised” for years.
“We had a lot of work of cleaning up and getting the culture back and getting employee standards back and that type of thing,” he said.
First on the agenda were the uniforms and the food. Within weeks, waitresses were sporting the more modest outfits worn at Hooters Inc., and after 60 days, the former HOA stores were serving the brand’s original sauce, made with butter rather than margarine.
As of now, about half of the 40 HOA stores directly overseen by Hooters Inc. are producing notable improvements in sales.
“We're seeing a response to us getting in there, getting the brand right, getting the concept right, and executing,” Kiefer said.
It follows what was obviously a difficult year for Hooters. Systemwide sales fell 17.6%, to $559 million, per Technomic data, and nearly 40 locations closed through the bankruptcy process. With 175 domestic restaurants today, Hooters is now more than 50% smaller than its peak size of 400 U.S. locations in 2008.
Still, Kiefer has been encouraged by the enthusiasm that still exists for the bawdy sports bar brand.
“I was surprised, shocked, amazed, and I am every day, in the emails or calls I get,” he said. “There's no question there was a segment of society, as soon as they hear bankruptcy, they think [the brand] is gone. But gosh, the fan base we have, it's just been amazing.”
He’s heard from people out West and overseas who are interested in opening a Hooters franchise. The chain recently signed a licensing deal with a golf accessories company and sold $250,000 worth of Hooters-branded golf shirts in 30 days.
And then there’s “Hooters the Movie,” a script penned by Hooters co-founder and marketing guru Ed Droste. It’s a comedy loosely based on the story of the breastaurant chain’s colorful early days and its unlikely rise to fame. The film has a producer and director lined up and is working to finish fundraising. Kiefer said he’s 90% sure it’s going to happen.
“We're pretty encouraged on this stuff,” he said.
He acknowledged the difficulties of running a casual-dining chain these days, with costs rising and many consumers watching their wallets. But he said Hooters is finding its footing after years in the wilderness.
“Our margins are excellent. Our sales are up this year. We're turning those stores around, so they're eking up in their sales,” he said. “I'm cautiously optimistic about the future. But the whole team's hard at work at it, too.”
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