(Bloomberg) — Hooters of America is working with creditors on a plan to restructure the business through bankruptcy court in the coming months, according to people with knowledge of the arrangements.
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The casual dining chain is working with law firm Ropes & Gray to ready a filing, said the people, who added the plans are not final and asked not to be identified discussing private preparations. The court process would likely begin within the next two months, the people said.
The company, known for its skimpy server uniforms and double-entendre owl mascot, was working to address its debt load with its lawyers as well as turnaround advisers from boutique firm Accordion Partners, Bloomberg previously reported. Some of Hooters’ debtholders have tapped Houlihan Lokey Inc. for advice.
Representatives for Hooters, Accordion Partners and Ropes & Gray didn’t respond to requests for comment. A representative for Houlihan declined to comment.
Hooters has faced liquidity issues as foot traffic has declined and has shuttered several locations. The chain sold about $300 million in asset-backed bonds in 2021, according to data compiled by Bloomberg.
The asset-backed bonds are packaged as whole-business securitizations — through which a company pledges most of its assets, including franchise fees, as collateral — a product popular among restaurant chains, fitness clubs and other businesses with franchised stores.
Casual dining chains have come under pressure as inflation, supply chain disruptions and higher interest expenses raised menu prices, making consumers less interested in eating out. More than a dozen large restaurants or franchisees sought bankruptcy protection last year, according to BankruptcyData.
Restaurant prices increased about 44% from 2015 to March 2024, according to data firm Black Box Intelligence, compared to a 26% increase for grocery items over the same period.
–With assistance from Dorothy Ma and Jonathan Randles.
(Updates to add context on casual dining industry in eighth and ninth paragraphs.)
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