Hooters, the iconic Clearwater-founded restaurant chain known for its chicken wings and distinctive “Hooters Girls,” has filed for Chapter 11 bankruptcy protection. The filing comes as part of a strategic plan to restructure the company and facilitate a sale to a group of franchisees, including some of the original Clearwater, Florida founders.
Established in 1983 in Clearwater, Florida, by six businessmen—Lynn D. Stewart, Gil DiGiannantonio, Ed Droste, Billy Ranieri, Ken Wimmer, and Dennis Johnson—Hooters quickly became a staple in the casual dining scene. The first restaurant opened its doors on October 4 of that year, featuring a beach-themed atmosphere and a menu centered around chicken wings and seafood. The concept gained rapid popularity, leading to nationwide and international expansion.
Over the years, Hooters expanded to over 420 locations across 42 states and 29 countries, becoming a mix of company owned stored and franchise-operated restaurants. The company owned side of the business has faced financial challenges in recent times, attributed to factors such as rising food and labor costs, changing consumer preferences, and increased competition from other dining establishments.
In June 2024, Hooters closed approximately 40 of their underperforming locations, citing declining sales and escalating operational expenses. The recent bankruptcy filing aims to facilitate the sale of company-owned restaurants to a group of experienced franchisees, which notably includes some of the original founders.
The Plan To Save Hooters
Pending a bankruptcy court approval in Texas, the involvement of original founders in the buyout will reflect a return to the company’s roots and a renewed focus on the core aspects that contributed to Hooters’ initial success. The short of it is that Hooters wants to transition to a fully franchisee-owned business model. CEO Sal Melilli stated that the restructuring process is designed to strengthen the company’s financial foundation while maintaining its commitment to hospitality and food quality. He emphasized that all existing Hooters restaurants will continue to operate as usual during the restructuring period.
The Hooters restructuring plan includes $40 million in debtor-in-possession financing, with the goal of emerging from bankruptcy within 90 to 120 days. This financial strategy is expected to provide the necessary support for the company’s transition and future operations. Despite the financial restructuring, Hooters continues to maintain a presence in various markets, and will continue to seek opportunities for new locations, such as plans to open a new location in Wesley Chapel, Florida.
Branding Challenges
As Hooters navigates this restructuring phase, the company says their emphasis remains on preserving the brand’s identity while adapting to current market dynamics. Companies such as Hooters that offer franchises often face their own unique challenges with branding, such as maintaining menu and food quality integrity. Franchise owners often demand a certain degree of autonomy in their operations, but this can often lead to brand dilution. Hopefully, the renewed involvement of the founding members will keep the company’s now world famous restaurants on the straight and narrow.
Hooters’ journey from its inception in Clearwater to its current restructuring efforts is typical of the challenges and transformations within the casual dining sector. Several other restaurant chains such as Subway, Dunkin’, and Arby’s have a substantial number of franchise locations, with the each of these companies focusing on franchising as a primary growth strategy.
“Re-Hooterization”
According to a recent report in the New York Post, there are some more big changes coming to Hooters. The restaurant chain, long recognized for its casual dining atmosphere and distinctive server attire, is initiating significant changes to rebrand itself as a more family-friendly establishment. This initiative, termed “re-Hooterization” by Neil Kiefer, CEO of parent company HMC Hospitality Group, includes the elimination of “bikini nights” and a shift in the company’s image.
Kiefer highlighted that in certain regions, potential patrons have expressed reluctance to visit Hooters due to its current reputation. He stated, “You go to some parts of the country and people say, ‘Oh, I could never go to Hooters, my wife would kill me.’ That’s depressing to us. We want to change that.”
In addition to modifying event themes and the overall brand image, Hooters plans to enhance its menu by incorporating fresher ingredients and aims to improve service speed. These adjustments are part of a broader strategy to address recent financial challenges, including decreased foot traffic and the closure of multiple locations nationwide.
The company has faced criticism over the years regarding its uniforms, which some have deemed overly sexualized. In response to such feedback, Hooters previously introduced new uniform options and adjusted policies to provide servers with more choices.
