Global chain Hooters files for bankruptcy

Global restaurant chain Hooters has filed for bankruptcy protection as it moves to address US$376 million (A$602m) in debt through a restructuring plan that includes selling all 100 of its company-owned US restaurants.

The hospitality group, founded in 1983, expects to exit bankruptcy within three to four months while maintaining operations at its affected locations during the transition, according to a company statement released on Tuesday.

Hooters of America CEO Sal Melilli said the chapter 11 bankruptcy protection filing represents a strategic financial restructuring rather than closure of the brand.

"Today's announcement marks an important milestone in our efforts to reinforce Hooters' financial foundation and continue delivering the guest-obsessed hospitality experience our customers have come to expect," Melilli said.

The company plans to sell its corporate-owned restaurants to a buyer group comprising two existing Hooters franchisees that operate locations in Tampa and Chicago. The buyer group owns and operates almost a third of chain's US locations and includes Hooters' original founders.

The CEO of the buyer group, Neil Kiefer, said the acquisition would usher in operational changes.

"We are committed to restoring the Hooters brand [and] simplifying operations by adopting a pure franchise model that will maximise the potential for sustainable growth," Kiefer said.

Industry reports suggest the restructuring may include repositioning the brand as more family-friendly. The bankruptcy filing follows last year's closure of approximately 13 per cent of US locations due to underperformance, continuing a trend that has seen the chain's footprint shrink from over 400 global locations at its peak.

Australian presence reduced to single location

The impact on Hooters' lone remaining Australian restaurant in Parramatta remains unclear. The chain once maintained multiple locations across Sydney, the Gold Coast and Townsville before the US parent company sold its Australian branches in 2018. Only the Parramatta outlet has continued operations.

Hooters joins several other casual dining chains, including Red Lobster and BurgerFi, that have filed for bankruptcy protection in recent years amid challenging industry conditions including rising food costs, labour challenges and changing consumer preferences.

The company, known for its distinctive orange-uniformed waitstaff and chicken wings, said all corporate restaurants will remain open during the bankruptcy process while it evaluates its "operational footprint", suggesting possible closures of underperforming locations may still occur.

Private equity firms Nord Bay Capital and TriArtisan Capital Advisors, which acquired Hooters in 2019, will relinquish control to the franchisee-led buyer group as part of the restructuring.