Hooters closes dozens of underperforming restaurants as inflation ravages industry

As inflation wreaks havoc on the restaurant industry, Hooters closes dozens of low-revenue restaurants.

The sports bar-style restaurant chain has not said how many locations will be closed or released a list of affected outlets, but local reports say several dozen locations are closing in states including Florida, Kentucky, Rhode Island, Texas and Virginia.

The chain blamed difficult economic challenges, including rising food and labor costs, for the decision.

“Like many restaurants facing pressure due to 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 closing in recent weeks. According to restaurant consulting firm Technomic, that means Hooters now has 293 locations worldwide — a nearly 12 percent drop since 2018.

Despite the closures, Hooters said the 41-year-old brand has remained “extremely resilient and relevant,” citing its new range of frozen foods for supermarket sales and restaurant openings abroad.

“We look forward to continuing to serve our guests at home, on the go and in our restaurants here in the U.S. and around the world,” the company said.

The closures come against a backdrop of inflation hitting the restaurant industry: According to National Restaurant News, about a third of all big-name restaurant chains will end 2023 with fewer locations than they began.

At the same time, according to the Bureau of Labor Statistics, menu prices at full-service restaurants rose 0.4 percent, while fast-food restaurants saw a 0.2 percent increase.

Price increases have led consumers to avoid eating out, with census retail sales showing that spending on dining out has declined in four of the past six months for the first time since the pandemic began.

A recent survey by consulting firm KPMG found that 41 percent of consumers plan to spend less at restaurants this summer than last summer – only 21 percent said they would spend more. On average, consumers said they would reduce their monthly restaurant spending by 9 percent – more than in any other category.

“Consumers are tightening their belts even further as they hunt for discounts, and even some essential goods are affected,” Duleep Rodridgo, U.S. consumer and retail sector leader at KPMG, said in the study. “We've already seen some retailers cut prices as they try to maintain the balance between their margins and demand.”

Hooters isn't the only restaurant affected by inflation. In May, Applebees announced it would close at least 35 locations this year, and seafood restaurant Red Lobster is facing bankruptcy.

According to NRN, Rubio's Coastal Grill also closed 48 underperforming Mexican barbecue restaurants across California this month.