Hooters — known for its waitresses in tight shirts serving wings and beer — might be in trouble.
The chain is working on a plan with creditors to restructure its business. A bankruptcy filing could be coming, according to Bloomberg News.
Law firm Ropes & Gray is helping with the process. People familiar with the talks say no final decision has been made.
But if it happens, the filing could come within two months. Hooters of America is preparing for a possible bankruptcy, sources said.
The restaurant has around 300 locations across the U.S. But financial struggles have hit hard, forcing some stores to close.
Atlanta-based Hooters brought in consultants from Accordion Partners to help. They’re working to manage debt and keep the business afloat.
At the same time, creditors have turned to investment bank Houlihan Lokey for advice, Bloomberg reported.
In 2021, Hooters raised $300 million through asset-backed bonds. This type of financing lets businesses use franchise fees and other assets as collateral.
Whole-business securitization is common for restaurant chains and fitness centers. It allows them to borrow against their brand.
The restaurant industry is seeing similar struggles. TGI Friday’s lost control of some assets after failing to pay debts. Red Lobster filed for bankruptcy in May.
Hooters has faced these challenges since being acquired by Nord Bay Capital and TriArtisan Capital Advisors in 2019.
Recently, the company shut down underperforming locations. But despite setbacks, it still plans to expand, opening new restaurants in the U.S. and overseas.
Financial analysts say Hooters’ bonds have weakened. The Kroll Bond Rating Agency downgraded its debt due to declining revenue.
Other companies have faced similar issues. Some chose to restructure their debt to avoid financial collapse.
Coinstar restructured $1 billion in asset-backed debt to improve liquidity. Centerline Logistics refinanced $400 million last year.
Experts say Hooters will likely try to cut a deal with creditors. The goal would be to emerge from bankruptcy with a stronger, leaner business.
The next few months will be crucial. If Hooters can stabilize, it may continue its long-standing presence in the restaurant industry.