Hooters, the restaurant chain that is also a NASCAR partner, faces serious financial problems. Bloomberg recently reported the restaurant chain is in negotiations with creditors over a $300 million large debt. The report raised concern about the possibility of bankruptcy.
Hooters has enlisted the expertise of Ropes & Gray to prepare for different scenarios. This is an alarming turn of events for the popular restaurant and sports sponsor.
Around 40 Hooters have closed in various states such as Rhode Island, Virginia and Florida. In spite of these closures the company has been working to support their employees by opening new locations and expanding its frozen food line.
Red Lobster is an example of a brand that has overcome similar challenges.
Hooters is in a financial mess due to several factors. In 2023 the restaurant business faced many challenges, such as rising food prices and increased labor costs. COVID-19 had an impact as well, with reduced footfall and altered consumer behaviors. A difficult environment is forcing the chain of restaurants to undergo a restructuring.
Hooters Legacy in NASCAR & Recent Sponsorship Challenges
Hooters has been a part of NASCAR since 1991, when it first became involved. Hooters gained rapid popularity after Alan Kulwicki, who won the Winston Cup championship in 1992 with Hooters sponsorship. Hooters made a return to NASCAR after a short hiatus in 2016. They sponsored Greg Biffle, before teaming up with Chase Elliott and Hendrick Motorsports for 2017.
In the partnership, Chase Elliott created popular promotional campaigns such as “When Chase wins, you win,” which offered fans free wings after Elliott’s triumphs. Hooters will launch a new online concept restaurant in 2022 called Chase Elliott’s chicken tenders to further engage fans.
Financial challenges, however, ultimately affected the NASCAR sponsoring. Hooters’ partnership with Chase Elliott Hendrick Motorsports ended in 2024 after Hooters failed to fulfill its financial commitments. Hendrick Motorsports then filed suit against Hooters for $1.7million of missed payments.
Financial strains intensified when Kroll Bond Rating Agency degraded the bonds of the company in 2024. Hooters sought the assistance of Houlihan Lokey Inc. in order to create strategies that would address its debt problems.
NASCAR sponsorship shifts and the competitive landscape
While Hooters is struggling with its finances, other competitors like Dave & Buster’s & Twin Peaks have been expanding by opening more locations.
New sponsorship opportunities have arisen as a result of Hooters leaving NASCAR. Coca-Cola will be the primary sponsor of Chase Elliott’s Richmond Raceway car in 2024. Amazon Prime Video partnered up with Hendrick Motorsports on the No. The No. 9 Chevrolet will run from 2025-2027.
The company has shown resilience in the face of financial instability by opening locations in Las Vegas, Florida and Florida.
Hooters made the following statement in a letter to Nation’s Restaurant News:
Hooters made the tough decision, as many others have undergone pressure due to current market conditions. Our priority is to ensure the health and safety of our team in rare situations.
This 41-year old brand remains relevant and resilient with new Hooters locations opening in the United States and abroad, as well as new Hooters products being launched at supermarkets.
The company is looking forward to providing its guests with a great experience at home and in restaurants around the world.
Hooters’ future is uncertain. However, the efforts of the company to adapt to a changing market and its focus on finding new opportunities may help it to turn around despite these challenges.