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Bankruptcy plan for Hooters involves selling to franchise group that includes original owners

A large sign with the word Hooters
Alan Diaz
/
AP
Under the Hooters bankruptcy plan, 100 company-owned U.S. restaurants would get sold to a group of Hooters franchisees. The franchisees, who include Hooters' founders, currently operate 14 of the 30 highest-volume Hooters restaurants in the U.S.

No restaurants are slated to close. Hooters of America said franchisees or licensing partners would continue to operate all locations. Those franchisees include the Clearwater founders, who own locations in Tampa Bay.

Hooters of America, the Atlanta-based restaurant chain built off the concept developed in Clearwater, has filed for Chapter 11 bankruptcy protection.

However, none of the restaurants are expected to close under a plan filed in the North Texas Bankruptcy Court in Dallas.

As part of the bankruptcy agreement, 100 company-owned U.S. restaurants would get sold to a group of franchisees that includes the original Clearwater founders.

The franchisees currently operate 14 of the 30 highest-volume Hooters restaurants in the U.S., the company said. Many are in the Tampa Bay area, including the original location on Gulf to Bay Boulevard in Clearwater.

“For many years now, the Hooters brand has been owned by private equity firms and other groups with no history or experience with the Hooters brand,” Neil Kiefer, CEO of the Clearwater-based franchise group Hooters Inc., said in a statement.

“As a result of these transactions, the Hooters brand will once again be in the hands of highly experienced Hooters franchisees, and we will be well-positioned to return this iconic brand to its historic success," the statement continued.

Under the entity, Hooters Brand Management, they will continue to operate all existing locations, including those outside the U.S. There are more than 420 Hooters restaurants in 29 countries.

It is the latest legacy restaurant chain to run into financial trouble amid high food and labor prices, changing customer tastes and growing competition from newer casual chains like Shake Shack.

Red Lobster, TGI Fridays and Buca di Beppo all filed for bankruptcy protection last year, while the Tex-Mex chain On the Border filed for bankruptcy protection last month.

Hooters was founded in Clearwater in 1983 by six businessmen with no food service experience who claimed they wanted to run a restaurant they couldn't get kicked out of.

They developed a "delightfully tacky yet unrefined" concept that gained popularity through its breaded chicken wings and skimpy “Hooters Girls” server outfits.

In December 1984, the owners sold the rights to Hooters to businessman Hugh Connerty. The Clearwater group retained ownership over locations in the Tampa and Chicago areas and one in New York City. Connerty was bought out in 2002 by Robert Brooks.

In 2002, Connerty was bought out by Robert Brooks and the Hooters of America group. Brooks died in 2006 and willed most of HOA to his son and daughter.

By then the Hooters business strategy was facing challenges, including lawsuits over hiring only “Hooters Girls” to serve customers.

In 2017, HOA tried opening a restaurant that didn’t feature servers in tight tops as a test of a different approach.

Last year, the chain agreed to pay $250,000 to settle a race and color discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission. According to the lawsuit, a Hooters in North Carolina laid off 43 employees during the COVID pandemic but recalled primarily white employees and Black employees with lighter skin tones once it began rehiring workers.

The Atlanta-based company has also been forced to scale back as its financial woes mounted. In 2019, the Hooters hotel-casino off the Las Vegas Strip was sold to an Indian hotel company and rebranded as the OYO Hotel and Casino. Last year, the company closed around 40 underperforming U.S. locations.

Hooters had sponsored the No. 9 NASCAR car driven by Chase Elliott since 2017, but last year, Hendrick Motorsports ended its ties to the longtime sponsor because it was not meeting its financial commitments.

Through it all, Hooters Inc. in Clearwater has done well, considering the restaurant climate. In February, when Bloomberg reported that that HOA would file for bankruptcy, the Original Hooters' Facebook page posted:

"Please know that this is not our company. We are financially strong and growing including building new restaurants in the Villages and Wesley Chapel, slated to open later this year."

Information from the Associated Press was used in this report.

I’m the online producer for Health News Florida, a collaboration of public radio stations and NPR that delivers news about health care issues.
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