A long time United States (B)restaurant chain is facing extinction. There are reports that Hooters parent company is looking into the prospect of filing bankruptcy.

The decline is another blight on the restaurant industry with the likes of Red Lobster and TGIFriday seeking protection. It also could be part of the cultural fallout that took place with in the US over the past decade.

We saw this situation play out in a few different companies, although not to this degree.

The company cites a decline in foot traffic as the cause for the situation.

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Hooters Facing Bankruptcy

Things have taken such a turn that restructuring with creditors is the only approach. This is not the end for the company. The question is whether there is a future.

At the top of the list is the marketing and positioning of the company.

Hooters was never known for its food. There was a time when it was average (at best). That said, fine dining was not the draw.

Instead, it was one of the originators of the "breastaurant". A big part of the allure was sexy women dressed in tight shorts and t-shirts.

This, naturally, came under fire culturally over the last decade. As the waistlines expanded, the traffic declined causing the company to depend upon its food as the draw.

According to an article in the New York Post, the company did a $300 million raise through asset-backed bonds. It is using franchise fees and other assets as collateral.

There is an issue within the industry of those that are considered "casual dining". With pocketbooks getting squeezed, Americans are moving away from eating out especially at that end of the market. Upper end restaurants are still hanging on although the luxury market is having issues also.

The company is faced with closing even more locations as it tries to reorganize itself out of this mess.

The Future

Even if the company does refinance, what is the future of Hooters?

Will the company do a reversal and revert to the gimmick it was using. We saw this happen with the likes of Playboy and Sports Illustrated, two publications that historically catered to men.

Even if it does, will it find a market this time. There are other entities in the "Brestaurant" space, highlighting how stale the Hooters brand got. As stated, casual dining might be in for a rough time if the economy keeps deteriorating, not an outlandish prediction.

Brand loyalty does not seem to exist in this instance. While there was a decent following at one time, I never came across anyone who was remotely brand loyal to Hooters. In many instances, it was kind of an after thought.

Here is where navigating the future might be tough. The restaurant industry is notorious for being cut throat, with customers being rather fickle. Trends can change in an instant.

The long term future of Hooters is certainly in question. We might be looking at a company in which its best days are behind it.

Posted Using INLEO