Yahoo Finance Hooters closing dozens of underperforming restaurants as inflation wreaks havoc on industry
Hooters is closing down dozens of underperforming restaurants as inflation wreaks havoc on the hospitality industry.
The sports bar-style restaurant chain did not say how many locations are closing or release a list of affected outlets. However, according to local reports, several dozen locations are closing, spanning states including Florida, Kentucky, Rhode Island, Texas and Virginia.
The chain blamed tough economic challenges including rising food and labor costs for the decision.
“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, with others shuttering in the past few weeks, meaning Hooters now has 293 global locations — a nearly 12 per cent decline since 2018, according to restaurant consulting firm Technomic.
Despite the closures, Hooters said the 41-year-old brand “remains highly resilient and relevant,” pointing toward its new lineup of frozen food sold at grocery stores and new restaurant openings overseas.
“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 company said.
The closures come as inflation is hitting the restaurant industry, with about one-third of all brand-name restaurant chains ending 2023 with fewer locations than they started with, according to National Restaurant News.
Meanwhile, menu prices have risen by 0.4 per cent at sit-down restaurants, according to the Bureau of Labor Statistics, while fast food restaurants have seen prices rise by 0.2 per cent.
The increases have caused consumers to move away from dining out, with census retail sales data showing restaurant spending has fallen in four of the past six months for the first time since the pandemic began.
A recent survey by consultant group KPMG found that 41 per cent of consumers said they 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 said they would reduce their monthly spend 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,” Duleep Rodridgo, KPMG’s US consumer and retail sector leader, said in the study. “We have already seen a few retailers lower prices, as they look to maintain the balance between their margins and demand.”
Hooters is not the only restaurant that has been affected by inflation. In May, Applebees said it would close at least 35 locations this year, while seafood restaurant Red Lobster is facing bankruptcy.
Rubio’s Coastal Grill also closed 48 “underperforming” Mexican grill restaurants across California this month, NRN reported.
