Iconic casual restaurant chains have battled for survival over the last year with several filing for bankruptcy seeking to reorganize their businesses to continue operating as going concerns.
All of these distressed restaurants first faced setbacks five years ago during the Covid-19 pandemic and never fully recovered. After the pandemic subsided, other economic problems added to their distress with rising costs of labor, food, and supplies from inflation, increased interest rates on debt, and changing attitudes of consumers on dining out.
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Several restaurants that had been popular for over 50 years, such as Red Lobster and TGI Friday’s, needed to file for bankruptcy to reorganize their businesses and stay in business. Red Lobster filed for Chapter 11 on May 19, 2024, closed 120 restaurants and still operates about 545 locations.
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TGI Friday’s filed for Chapter 11 bankruptcy protection on Nov. 2, 2024, to sell company assets, reduce its restaurant footprint, and reject unfavorable leases and contracts. The company had about 600 franchises worldwide, including 213 U.S. locations, before it filed for bankruptcy.
One of the most recent dining chain bankruptcies was Addison, Texas-based Bar Louie’s filing on March 26. The “gastrobar” chain’s parent BLH TopCo LLC filed its petition to reorganize and close locations.Â
Bar Louie, which had as many as 130 locations in 2020, currently has 48 locations, according to its website.
Hooters of America files bankruptcyÂ
And now, popular casual dining chain Hooters of America, which has struggled financially over the last year, filed for Chapter 11 bankruptcy protection on March 31 to reorganize its business, along with a plan to sell over 100 of its locations to a franchisee-led buyer group.
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The Atlanta-based franchisor and operator of more than 420 Hooters restaurants in 42 states and 29 countries filed its petition along with 29 affiliates in the U.S. Bankruptcy Court for the Northern District of Texas, listing $50 million to $100 million in assets and liabilities.
More bankruptcies:
- Popular restaurant and bar chain files for Chapter 11 bankruptcy
- Popular athletic shoe chain files for Chapter 11 bankruptcy
- Award-winning cosmetics brand files for Chapter 11 bankruptcy
Hooters of America, on the same day, reached an agreement to sell over 100 of its corporate-owned locations to franchisees Hooters Inc. and Hoot Owl Restaurants LLC and negotiated a management agreement under which Hooters Brand Management, an entity led by the buyer group, will provide the majority of franchise support functions, according to a statement.
The buyer group consists of existing Hooters franchisees, including the chain’s original founders, who own and operate over 30% of the company’s U.S. locations and 14 of the 30 highest-volume Hooters restaurants.
All existing Hooters franchise locations, including those outside the U.S., will be operated by the company’s franchise and license partners. When all the transactions are completed, the buyer group will own and operate about 70% of Hooters’ domestic locations, the statement said.
“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 Hooters Inc., said in a statementÂ
“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. On behalf of all Hooters employees, customers and franchisees, the buyer group is excited and optimistic about our future plans for the Hooters brand,” Kiefer said.
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