Hooters Seeks Financial Reboot Under Bankruptcy Protection Plan

Petition for bankruptcy document with pen.

Hooters files for Chapter 11 bankruptcy to restructure debt, but fans of the iconic wing chain need not worry as most restaurants will remain open during the transition to new ownership.

Key Takeaways

Hooters of America has filed for Chapter 11 bankruptcy protection but will continue operating during the restructuring process.
The company is shifting to a franchise-only model by selling restaurants to a group of current franchisees, including the chain’s cofounders.
Some underperforming U.S. locations will close, but the company’s international franchise operations will not be affected.
Hooters is seeking $40 million in financing to fund operations during bankruptcy and plans to emerge from Chapter 11 within months.
No changes to Hooters’ menu, rewards program, or other customer offerings are planned during the restructuring.

Restructuring While Maintaining Operations

Hooters of America has officially filed for Chapter 11 bankruptcy protection as part of a strategic financial reorganization, but the company assures customers that restaurants will remain open during the process. The move comes as the well-known restaurant chain seeks to address debt issues while continuing to serve its loyal customer base. Unlike typical bankruptcy scenarios, Hooters is using the Chapter 11 process to reorganize its debts and transition to a more sustainable business model rather than shutting down operations.

The company has entered a Restructuring Support Agreement with plans to sell some of its locations to a group of current franchisees, which includes the chain’s cofounders. This buyer group already owns nearly one-third of all domestic franchised Hooters locations, including 14 of the top 30 highest-volume restaurants in the United States. The transition signals a move away from Hooters’ current hybrid franchise and company-owned model to a solely franchising approach.

5. Hooters files for bankruptcy as brand eyes turnaround plan #hooterscto

Hooters has filed bankruptcy as the casual-dining brand known for its chicken wings and skimpy server uniforms struggles to lure customers. pic.twitter.com/7epX3AV3cw

— Stock Jabber (@Stock_Jabber) April 1, 2025

Strategic Business Model Shift

Hooters’ leadership views the restructuring as an opportunity to simplify operations and create new growth opportunities by focusing exclusively on franchising. This strategic pivot comes after the company closed several underperforming restaurants and recently settled a $900,000 dispute with Hendrick Motorsports over unpaid sponsorship money. The bankruptcy filing follows reports of mounting debt, liquidity challenges, and declining customer numbers in recent years.

To fund operations during the Chapter 11 process, Hooters is seeking $40 million in debtor-in-possession financing, including $35 million in new capital. This financing will ensure the company can maintain normal business operations, pay employees, and fulfill obligations to vendors while reorganizing its financial structure. Hooters aims to complete this reorganization swiftly, with plans to emerge from bankruptcy within the coming months.

Impact on Customers and International Operations

Customers can expect business as usual at most Hooters locations during the restructuring process. The company has confirmed there are no planned changes to its menu, rewards program, or other offerings that have made the chain popular for decades. While some underperforming U.S. locations will close as the company evaluates its operational footprint, most restaurants will continue serving wings, beer, and their signature hospitality experience without interruption.

Importantly for the brand’s global presence, Hooters’ international franchise operations will not be affected by the restructuring and will continue as usual. This stability in international markets helps preserve the company’s worldwide brand recognition while domestic operations undergo necessary changes. CEO Sal Melilli has emphasized that the company is evaluating its operational footprint to focus on its strongest assets moving forward, which will position Hooters for long-term success once it emerges from Chapter 11.