Hooters of America’s bankruptcy filing has sparked uncertainty about the fate of its outlets, but the iconic restaurant chain plans to keep its doors open throughout the process.

On Monday, the company filed for Chapter 11 bankruptcy protection to address its $376 million debt and facilitate a founder-led buyout of its underperforming restaurants.

The company plans to sell its 151 company-owned restaurants to a group of existing franchisees backed by its original founders. Despite the financial setback, Hooters has said that its restaurants will remain open and continue operating as usual during the restructuring process.

Newsweek has previously reached out to Hooters for comment regarding the bankruptcy filing via email and will update this article if a response is received.

Why It Matters

Hooters is an American restaurant chain that first opened its doors in Clearwater, Florida, in 1983, and expanded rapidly across the United States and internationally. While Hooters’ business model is unique—known for its orange uniforms and exclusively female wait staff—the company’s struggles with inflation, high labor and food costs, and reduced consumer spending reflect broader trends affecting the entire restaurant industry.

What To Know

According to filings with the bankruptcy court of the Northern District of Texas, Hooters currently has approximately $376 million of debt, and its 151 company-owned stores brought in around $358.9 million in revenue during the 2024 financial year.

“Company-Owned Stores in recent years have, in general, not covered the Company’s overhead expenses,” the company said in its filing, “and the need to reconfigure the loss-generating Company-Owned Stores is a key factor driving these Chapter 11 Cases.”

As a result, the company said that these stores will be joining the 154 restaurants already owned and operated by 35 franchisees.

“The Buyer Group is comprised of two existing Hooters franchisees (including Hooters Inc., the original Hooters founders), who collectively currently own and operate over 30% of the domestic franchised Hooters locations, including 14 of the 30 highest volume restaurants,” the company said.

What People Are Saying

Hooters CEO Sal Melilli on Monday said: “Our renowned Hooters restaurants are here to stay. Today’s announcement marks an important milestone in our efforts to reinforce Hooters’ financial foundation and continue delivering the guest-obsessed hospitality experience and delicious food our customers and communities have come to expect.”

Hooters of America, in a press release, said: “Hooters restaurants remain open to serve customers and will continue to operate in a business-as-usual manner during its chapter 11 cases. As part of the Company’s broader business transformation and planning, Hooters is evaluating the Company’s operational footprint as part of its financial restructuring process to position itself to invest its resources in its strongest assets moving forward. The Company’s current franchise operations, including its locations outside the U.S., are not impacted by the Chapter 11 process and will continue to be operated by the Company’s franchise and license partners.”

Retail expert Dominick Miserandino told Newsweek that Hooters’ financial difficulties were caused by “multiple factors,” including an evolving business environment and market-wide challenges, as well as the company’s “antiquated business model.”

“It’s a model which might not be as relevant in today’s day and age,” he said.

What Happens Next?

Hooters did not disclose the value of the proposed deal, which remains subject to approval by a U.S. bankruptcy judge. The company expects to exit bankruptcy within “90-120 days,” after which all locations will be owned by franchisees.