Hooters Reportedly Nearing Bankruptcy And The Reason Why Couldn't Be Clearer

Feet may not be the primary body part associated with Hooters, but the famous chicken wing chain can thank declining foot traffic as one of the primary reasons for its possible upcoming bankruptcy declaration. In February 2025, Bloomberg reported that Hooters is in bankruptcy talks. Sources familiar with Hooters of America's state the company is working with a legal team at Ropes & Gray to potentially prepare a bankruptcy filing in the coming months. While that bankruptcy filing isn't certain, the chain has faced financial struggles since its 2019 purchase by two private equity firms, Nord Bay Capital and TriArtisan Capital Advisors. Since that purchase and the subsequent debt Hooters took on during the transition, the company appears to have been haunted by changing customer tastes, rising prices, and belt-tightening business moves.

Legal troubles, liquidity problems, lower foot traffic, and decreased revenues also contributed to the chain's sudden permanent closure of 40 locations in June 2024. Many fans of Hooters (or sit-down dining in general) may fear the chain will suffer the same fate of other popular family-friendly restaurant chains. Whether an unconventional bankruptcy plan could save the chain, or confirm that the home of the busty-eyed owl is going the way of the dodo, remains to be seen.

One possible route to save Hooters' future involves going back to its past. Sources close to the company told Bloomberg in February 2025 that a potential Hooters savior could lie in one of its largest franchisees, which has ties to the chain's former glory days. Florida-based HMC Hospitality Group (formerly Hooters Management Corp.) claims to be run by some of the "original" Hooters founders and associates of the those founders since the main chain's Florida founding in 1983. HMC, unlike Hooters of America, counts recent years as successful for the chain, rather than struggle-filled. HMC runs 22 Hooters locations nationwide, with plans to build more in 2025, including a Las Vegas expansion.

In a February 2025 statement provided to online publication OutKick.com, HMC CEO Niel Kiefer, who has been affiliated with Hooters since 1992, said: "In reaction to the recent news concerning the possible bankruptcy by franchisor Hooters of America, LLC ("HOA"), the original founders of Hooters Restaurants (HMC Hospitality Group, Inc. "HMC") want to reiterate its strong financial position and is in position for continued growth of the Hooters brand," and adds: "We remain grateful for the unwavering support of our employees, customers, and partners. Their trust and commitment have been instrumental in our continued success."

Per Bloomberg, HMC is in talks with Hooters of America's creditors to possibly team up to take control of the struggling brand. While this move could sidestep a greater Hooters bankruptcy filing, or at least metaphorically mop up some of its spilled wing sauce, it is unclear how far along such talks are, or how sustaining such a save would be in the long term.

Any attempt to keep the Hooters owl hooting along must contend with two elephants in the room: Hooters of America's $300 million whole-business securitization debt, and America's great dining-out decline. While a variety of reports feature the chain blaming rising operational costs and negative market pressure as the reason behind Hooters' struggle, ignoring the private equity purchase to massive debt load acquisition to widespread closure to bankruptcy declaration pattern seems shortsighted, at best. Another private equity assist could help pull Hooters up, or could be the nail in its orange-and-brown coffin.

Large restaurant chains have been filing for bankruptcy at a steady clip since 2020. Much like Red Lobster and TGI Fridays, major backing by private equity sometimes temporarily "saves" a restaurant chain, only to conduct a short-term profit grab that only benefits certain investors, rather than the actual restaurant brand, its patrons, and employees. While private equity may not always be a bad thing, when paired with greed, speed, and mismanagement, it can clearly be devastating for long-loved brands.

Additionally, America' tastes (and discretionary funds) are certainly changing. Hooters may still possess its "delightfully tacky, yet unrefined" charms, but the entire concept might be more '80s than '20s. Even if modern diners still enjoy the tank-topped and tongue-in-cheek Hooters vibe, there are plenty of economic uncertainties taking casual dining off the table for many Americans.