Hooters sparks fears of mass closures as chain takes drastic action over huge debts

Hooters - known for its scantily-clad waitresses - is the latest American restaurant chain facing financial problems.

Bosses at the chain are in urgent talks with lenders and advisers as the popular chain tries to address $300 million of debts, Bloomberg reported Wednesday.

Earlier this year, Hooters shuttered around 40 'underperforming' restaurants including locations Florida, Kentucky, Rhode Island, Texas and Virginia as it bid to cut costs. 

But debts are mounting and more drastic action is needed for the 41-year-old brand. 

If Hooters cannot refinance its debt, it would have to consider bankruptcy and more closures. 

Like other struggling chains such as Red Lobster - which filed for bankruptcy in the summer -  Hooters is blaming the rising cost of rent and food and customers eating out less.

Bloomberg said Hooters is seeking guidance from Accordion Partners and law firm Ropes & Gray to navigate its financial challenges and address its mounting debt. 

Hooters, owned by private equity since  2019, has about $300million in bonds that need to be repaid, according to data compiled by Bloomberg.

These bonds are backed - a bit like mortgages - to the assets it owns, such as its property, brand rights and fees it gets from its franchisees. That means lenders can put pressure on it to sell them if debts are not repaid.  

Chapter 11 bankruptcy allows companies to restructure - by negotiating leases with landlords and loans with banks. 

Red Lobster recently emerged from Chapter 11 after using it to close 100 restaurants and clear debts.  

Hooters now has about 300 restaurants globally after the closures this year. That is down from 333 in 2018, according to Techonomic. 

Rivals Dave & Buster's, Miller's Ale House and Twin Peaks have all slighted upped their restaurant count.  

At the time of the closures in the summer, Hooters was not thought to be in as dire financial situation as Red Lobster, which has now emerged from Chapter 11 bankruptcy. 

In fact, bosses said Hooters 'remains highly resilient and relevant,' and highlighted a new range of Hooters frozen food which is being sold 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.'

DailyMail.com has reached out to Hooters again today - but it has not replied. Neither Accordion Partners or Ropes & Gray responded to Bloomberg when asked for comment.

Hooters, as well as being known for scantily clad waitresses, also calls itself 'the original American wing joint', and celebrated its 40th birthday in 2023.

The first Hooters opened in Clearwater, Florida in 1983. Only last May, it was opening restaurants - three in Las Vegas and three in Florida. 

Across America, restaurants have increasingly been struggling this year. 

Faced with higher costs, they have put up menu prices - but that has led to a fall in customers. 

Big name chains like Applebee's, TGI Fridays and Boston Market have have all recently shuttered restaurants.

Red Lobster filed for bankruptcy in May and shuttered almost 100 restaurants.  It has now emerged from bankruptcy. 

BurgerFi is the latest for file for bankruptcy in September - sparking sparks fears of mass closures of its 162 locations. 

Chains have been worst hit in California where the minimum wage for fast food restaurants jumped to $20-an-hour from April 1. 

In early June, Mexican chain Rubio's shut 48 locations in the state and also filed for bankruptcy. 

Across America, mom-and-pop operations have also been shutting.

For example, Fargo's Pit BBQ in Texas closed after more than two decades of serving brisket, ribs and other barbecue classics.