The Infamous Restaurant That's On The Verge Of Bankruptcy

The costs of inflation are obvious to most folks every time they visit the grocery store these days, with prices having risen 26% between 2015 and March 2024. While bananas seem to be untouched by inflation, egg prices have gone through the roof, and even Costco's popular peppermint bark has felt the sting. 

Yet, restaurants have arguably had a rougher time dealing with it than your average grocery shopper. In that same time frame, inflation, supply chain issues, and interest expenses have resulted in restaurant prices rising by 44%. The harsh truth is that casual dining establishments are struggling to stay afloat, with more than a dozen filing for bankruptcy protection just last year ... and it seems one of the more infamous restaurant chains is slated to follow suit soon. 

Hooters, famous for the revealing uniforms of its servers and its classic wide-eyed owl mascot, has closed several locations recently, in part due to a drop in customers. The subsequent liquidity issues and the company's mounting debts have forced the restaurant to seek the help of law firm Ropes & Gray as it attempts to revamp the business. All of this means that it is slated to head to bankruptcy court, possibly within just two months, in hopes the chain can save itself from shuttering the doors to all its locations for good.

A business going to bankruptcy court doesn't necessarily mean it is going away anytime soon, but it isn't a good sign. Neither is $300 million in debt, which Hooters accrued in 2021 via asset-backed bonds. Still, a company that files for Chapter 11 bankruptcy isn't throwing in the towel. Chapter 11 allows a company to restructure its debt in an attempt to make it more manageable and save the business. Red Lobster also filed for Chapter 11 bankruptcy in May 2024 and was able to more or less right its ship, although that did require shuttering many underperforming locations and changing ownership of the company.

Hooters is no stranger to controversy, having dealt with its fair share of criticism since the first store opened in 1983. Still, if the business does go under, employees at the company's some 300 locations nationwide will be out of work. With restaurants like Applebee's and TGI Fridays also struggling in recent years, Hooters may be the canary in the coal mine for casual dining chains in the U.S.