Multiple reports suggest that Atlanta-based casual dining chain Hooters may soon file for Chapter 11 bankruptcy protection.
Hints of trouble began to surface last year when Hooters shut down around 40 underperforming locations nationwide, including several in Florida. The closures raised eyebrows in a state that has historically been central to the chain’s identity—Hooters opened its original restaurant in Clearwater, Florida, in 1983.
Bloomberg reported that Hooters has enlisted the help of law firm Ropes & Gray to explore potential bankruptcy proceedings, with a filing that could happen within two months if no other solutions arise. Turnaround consultants from Accordion Partners have also been tapped to sort through the company’s mounting debt, and some of Hooters’ creditors have turned to Houlihan Lokey for financial guidance.
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“While no final decision for seeking Chapter 11 protection has been made, a filing could take place within the next two months,” the report said.
In recent years, the chain’s revenue has declined, and its domestic footprint has shrunk. Hooters raised roughly $300 million in 2021 through asset-backed bonds to fund its operations. Yet those debts have loomed large, and credit rating agency KBRA downgraded portions of Hooters’ securitized debt last September.
Supplier payment issues further underscored the restaurant’s struggles: data from credit report company Creditsafe indicated that, last year, Hooters took four times longer than the average restaurant chain to pay vendors, with more than 20% of its bills overdue by more than 90 days.
The chain’s predicament mirrors broader troubles in casual dining. Industry mainstays such as TGI Fridays and Red Lobster have faced debt woes and even bankruptcies. Within the past year, several restaurant companies have sought Chapter 11 protection as they cope with a tougher economic climate, higher food costs, and shifts in consumer preferences that increasingly favor quick-service and fast-casual options.
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