Hooters has been experiencing financial strain for several years, with declining sales and restaurant closures marking its recent history. From 2018 to 2023, the chain saw a nearly 15% decline in U.S. systemwide sales and a 12% reduction in its domestic footprint[1]. The company has also faced challenges in managing its debts, with $300 million in unpaid bonds backed by its owned assets[4]. In 2024, Hooters took about four times longer to pay its vendors than the average restaurant chain, with over 20% of its outstanding bills being more than 90 days overdue[1].

The financial challenges faced by Hooters reflect broader market trends affecting the bar and grill segment. Rising costs and a shift in consumer preferences towards quick-service and fast-casual dining options have compounded the difficulties for traditional casual dining chains[1]. As Alex Beene, a financial literacy instructor, noted, "Hooters and similar restaurants are getting hit by three factors concurrently: higher food supply prices, increased meal costs leading to fewer diners, and rising rents"[3]. These factors have created a challenging environment for Hooters and similar establishments.

Hooters has reportedly hired the law firm Ropes & Gray to assist with the bankruptcy filing process, although no final decision has been made[2]. The potential filing would likely occur within the next few months, as the company seeks to restructure its operations and address its financial obligations[5]. If Hooters proceeds with the bankruptcy, it will join other restaurant chains like Red Lobster and TGI Fridays that have sought debt protection in recent years due to similar financial pressures[3].