Hooters Seeks Fresh Start: Exploring New Strategy After Bankruptcy Filing

Hooters files for Chapter 11 bankruptcy while ensuring restaurants remain open, as the iconic chain transitions to a franchising-only model under new ownership.

Quick Takes

Hooters will continue operating during the bankruptcy restructuring process with no planned changes to menu or rewards program.
The company is selling restaurants to a group of current franchisees, including the chain’s cofounders, who own nearly one-third of domestic franchised locations.
Hooters is transitioning from a hybrid model to a solely franchising model to enhance growth and simplify operations.
The restructuring follows closures of underperforming restaurants and a recent $900,000 settlement with Hendrick Motorsports.
Global franchise operations will not be affected by the Chapter 11 filing, which the company aims to exit in the coming months.

Restructuring While Keeping Doors Open

Hooters of America has officially filed for Chapter 11 bankruptcy protection as part of a strategic restructuring plan that will allow the restaurant chain to continue normal operations throughout the process. The company has entered into a Restructuring Support Agreement (RSA) designed to facilitate the sale of certain restaurants to a group of current franchisees that includes the chain’s cofounders. This buyer group owns nearly one-third of all domestic franchised Hooters locations, including 14 of the top 30 highest-volume restaurants in the system, positioning them well to guide the brand forward.

To fund operations during the bankruptcy process, Hooters is seeking $40 million in debtor-in-possession financing, which includes $35 million in new capital. The company has made it clear that customers will experience no interruptions in service or changes to the menu, rewards program, or other offerings that patrons have come to expect. The restructuring follows the closure of several underperforming restaurants as the company evaluates its operational footprint to concentrate on its strongest assets.

5. Hooters files for bankruptcy as brand eyes turnaround plan #hooterscto

Hooters has filed bankruptcy as the casual-dining brand known for its chicken wings and skimpy server uniforms struggles to lure customers. pic.twitter.com/7epX3AV3cw

— Stock Jabber (@Stock_Jabber) April 1, 2025

Transition to Franchise-Only Model

A key component of Hooters’ restructuring plan involves transitioning from its current hybrid franchise and company-owned model to a solely franchising model. This strategic shift is intended to enhance growth opportunities and simplify operations across the brand. The buyer group, composed of experienced Hooters franchisees, brings decades of operational knowledge to the table. The change in business model comes at a critical time for the company, which has faced challenges including debt, liquidity issues, and declining customer numbers in recent years.

The company’s global franchise operations will remain unaffected by the Chapter 11 filing. Hooters has already been working to evaluate its operational footprint, closing underperforming locations while maintaining focus on its strongest assets. The restructuring also follows a recent $900,000 settlement with Hendrick Motorsports over unpaid sponsorship money, highlighting some of the financial challenges the company has faced in recent times.

Future Outlook and Leadership Confidence

Hooters aims to complete the reorganization process swiftly, with plans to emerge from bankruptcy in the coming months. The leadership team has expressed confidence in the brand’s future, emphasizing their commitment to maintaining the same level of service and quality that has defined Hooters for decades.

By focusing on franchise operations and leveraging the expertise of longtime franchisees, Hooters is positioning itself to address the challenges that led to its financial difficulties while maintaining its distinctive brand identity. For loyal customers concerned about the future of their local Hooters restaurants, the company’s message is clear: Hooters restaurants will remain open, serving the same menu and atmosphere that has made the chain an American dining institution for nearly four decades.