Hooters waitresses might be factor of the previous as money owed spark mass closure fears

The scantily-clad waitresses at Hooters could be a thing of the past as its huge debt sparks closure fears.

Hooters is the latest to face financial woes and the company’s bosses are in urgent discussions with lenders and advisers as they grapple with a staggering $300million debt, according to a Bloomberg report on Wednesday.

The eye-popping chain closed around 40 “underperforming” outlets in Florida, Kentucky, Rhode Island, Texas and Virginia earlier this year in an attempt to reduce costs. However, the debts continue to pile up, necessitating more drastic measures for the 41-year-old brand.

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If Hooters fails to refinance its debt, it may have to consider bankruptcy and further closures. Much like other struggling chains such as Red Lobster, which filed for bankruptcy over the summer, Hooters attributes its difficulties to rising rent and food costs and a decrease in customers dining out.

Bloomberg reports that Hooters is seeking advice from Accordion Partners and law firm Ropes & Gray to navigate its financial challenges and address its escalating debt. Since being owned by private equity in 2019, Hooters has around $300million in bonds that need repayment, data compiled by Bloomberg revealed.

These bonds are backed similarly to mortgages – by assets it owns, including property, brand rights and franchisee fees. This means lenders can pressure the company to sell these assets if debts are not repaid.

Chapter 11 bankruptcy would allow the company to restructure by negotiating leases with landlords and loans with banks. Hooters now operates around 300 global restaurants following this year’s closures, a drop from 333 in 2018 as reported by Techonomic.

During the summer closures, Hooters was not believed to be in as severe a financial predicament as Red Lobster, which has since emerged from Chapter 11 bankruptcy. Company executives stated Hooters “remains highly resilient and relevant,” and drew attention to a new line of Hooters frozen food now available in supermarkets across America.

“Like many restaurants under pressure from current market conditions, Hooters has made the difficult decision to close a select number of underperforming stores,” a spokesperson told DailyMail.com.

“We look forward to continuing to serve our guests at home, on the go and at our restaurants here in the US and around the globe.”

The first Hooters branch opened its doors in Clearwater, Florida, in 1983. As recently as last May, it was still opening restaurants – three in Las Vegas and three in Florida.

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