Hooters is going bankrupt to return to its OG owners

Another one bites the bust. Buckling under debt, Hooters filed for bankruptcy yesterday so buyers—including its founders—can pivot the brand’s current bro-cave fantasyland image into something more profitable.

Private equity is out: The firms that bought Hooters in 2019 will sell all the US restaurants they own to two franchisees that collectively account for nearly one-third of US Hooters locations, including about half of the chain’s highest-volume spots. The CEO of the Hooters Inc. franchise group, Neil Kiefer, who is also a co-founder of the restaurant chain, blamed the company’s stumbles on “private equity firms and other groups with no history or experience with the Hooters brand.”

• PE owners Nord Bay Capital and TriArtisan Capital Advisors added $50 million onto Hooters’s existing $300 million debt load, per Bloomberg.
• A 2021 decision to swap waitresses’ classic jogging shorts for underwear-like garments and introduce server bikini nights drew widespread criticism. Most franchisees refused the new uniforms.
• Last year, Hooters paid $250,000 to settle a racial discrimination lawsuit and separately closed ~40 restaurants.

Kiefer said the new ownership team will prioritize fresher food ingredients, better service, and a family-friendly vibe.

Zoom out: Hooters shares a private equity owner with TGI Fridays, one of many other restaurant chains to file for bankruptcy in recent months.