Hooters is closing down dozens of underperforming restaurants as inflation wreaks havoc on the hospitality industry.
The sports bar-style restaurant chain did not specify the number of locations closing or provide an official list of affected outlets. However, media reports indicate that several dozen locations in states such as Florida, Kentucky, Rhode Island, Texas, and Virginia are shutting down.
The chain has cited rising food and labour costs as the primary reasons for these closures. ‘Like many restaurants under pressure from current market conditions, Hooters has made the difficult decision to close a select number of underperforming stores,’ a spokesperson told CNN.
Several locations reportedly closed over the weekend, while others have been shuttering over the past few weeks. This brings the total number of Hooters locations to 293 worldwide, marking nearly a 12 per cent decline since 2018, based on data from restaurant consulting firm Technomic.
Despite these setbacks, the 41-year-old brand maintains that it ‘remains highly resilient and relevant.’ The company pointed to its new lineup of frozen food products sold at supermarkets and new restaurant openings overseas as signs of its continued strength. ‘We look forward to continuing to serve our guests at home, on the go and at our restaurants here in the US and around the globe,’ the spokesperson added.
Meanwhile, inflation is having a significant impact on the restaurant industry as a whole. About one-third of all brand-name restaurant chains ended 2023 with fewer locations than they started with, according to National Restaurant News.
Menu prices have risen by 0.4 per cent at sit-down restaurants and by 0.2 per cent at fast food establishments, as reported by the Bureau of Labor Statistics. These increases have led consumers to cut back on dining out, with census retail sales data showing restaurant spending has dropped in four of the past six months for the first time since the pandemic began.
A recent KPMG survey revealed that 41 per cent of consumers plan to spend less on restaurants this summer compared to last summer, with only 21 per cent saying they would spend more. On average, consumers reported they would reduce their monthly spending on restaurants by 9 per cent — more than any other category. ‘Consumers are tightening their belts another notch as they hunt for discounts, and even some essentials are being impacted,’ said Duleep Rodrigo, KPMG’s US consumer and retail sector leader.
Hooters is not alone in facing these challenges. In May, another major restaurant chain announced plans to close at least 35 locations this year, while a well-known seafood restaurant is facing bankruptcy. Additionally, a Mexican grill chain recently shut down 48 underperforming locations across California.
As inflation continues to take its toll on the hospitality industry, many restaurants, including Hooters, are finding it increasingly difficult to keep their doors open. The economic pressures have led to store closures and declining consumer spending, a trend that could persist if inflation remains high.