Hooters — famous for dressing its waitresses in tight-fitting T-shirts to sling wings and beer — could be going belly-up.
The casual dining chain is preparing for a potential bankruptcy filing as it works with creditors on a plan to restructure its operations, according to Bloomberg News.
The company has engaged the law firm Ropes & Gray to assist with the process, individuals familiar with the discussions told the outlet.
While no final decision for seeking Chapter 11 protection has been made, a filing could take place within the next two months, the sources said.
Hooters — which has about 300 locations nationwide — has faced increasing financial strain as traffic declines at its kitschy restaurants, leading to the closure of several outposts.
The Atlanta-based company has been working alongside turnaround consultants from Accordion Partners to address its financial difficulties, particularly its debt burden.
Several of its creditors have also sought guidance from investment bank Houlihan Lokey, Bloomberg reported.
The Post has sought comment from Hooters, Accordion Partners, Ropes & Gray and Houlihan Lokey.
The company had previously raised approximately $300 million through asset-backed bonds in 2021, a financing structure that allows businesses to use franchise fees and other assets as collateral.
This form of structured debt, known as whole-business securitization, is commonly used by restaurant chains, fitness centers and other franchise-heavy enterprises.
The restaurant industry has seen similar financial distress among other major brands.
TGI Friday’s recently had to cede control of some assets after failing to meet debt obligations. Red Lobster filed for bankruptcy in May.
Hooters’ struggles reflect broader challenges facing casual dining establishments, particularly as economic conditions shift and consumer preferences evolve.
Since being acquired by Nord Bay Capital and TriArtisan Capital Advisors in 2019, Hooters has navigated ongoing market pressures.
The company recently closed multiple locations it deemed underperforming, citing adverse market conditions. Despite these closures, Hooters is keen on expanding as the company has plans to open new restaurants both domestically and internationally.
Financial analysts have noted that Hooters’ bond performance has weakened in recent months.
The Kroll Bond Rating Agency downgraded the company’s securitized debt due to revenue declines affecting its ability to meet repayment obligations.
Similar asset-backed debt structures have been used by other companies facing financial strain, with some opting for restructuring or refinancing to stabilize operations.
Coinstar, a kiosk operator, restructured roughly $1 billion in asset-backed debt after facing liquidity issues, while marine services provider Centerline Logistics refinanced $400 million in similar securities last year.
As Hooters navigates its financial troubles, industry experts anticipate that it may attempt to negotiate a deal with creditors to restructure its obligations and potentially emerge from bankruptcy with a leaner, more financially sustainable model.
The coming months will be critical in determining whether the company can stabilize its operations and continue its long-standing presence in the restaurant industry, the experts said.
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