Growth Club
1851 Growth Club
Is Hooters a Profitable Franchise Investment?
The brand has placed emphasis on advancing its fast-casual Hoots Wings offshoot, while the traditional Hooters model may soon depend on sports betting to find profitability.
Few restaurant franchises were impacted by COVID-19 as heavily as Hooters, a franchise that has depended heavily on in-person dining since the 1980’s. The pandemic, along with shifting consumer preference, has made Hooters one of the less profitable brands in the last year.
The brand’s niche market was disappearing even before the pandemic, however. Millennials are less apt to frequent their local Hooters than the people that made it popular throughout the 1980s. Hooters sales were on a decline before 2020, and the entire corporation was sold in 2019.
The company was forced to get clever. Hooters recently launched a fast-casual offshoot named Hoots Wings. It offers plenty of the standard Hooters menu items, but under a fast food model that bears little resemblance to the ‘experience’ of a traditional Hooters. A Yahoo! article titled “Hooters is doing great, in case you were wondering” points mainly to the brand’s adaptive success through Hoots Wings and Uber Eats, instead of its traditional restaurant setup.
The brand’s most profitable franchise investments right now are through Hoots Wings, and less through the traditional Hooters restaurant. Julie Littman of Restaurant Dive wrote that “while Hooters added curbside earlier [in 2020] and sports betting in Indiana, Pennsylvania and New Jersey,” it also had to lay off “hundreds of workers [last year] in states like North Carolina, Missouri, Michigan and Indiana due to the challenges of the pandemic.”
The sports betting market is expanding, which could mean increased business for Hooters locations if state legislation allows its units to offer that service. Many Hooters franchises can collect a large piece of that revenue right now and promote their in-person dining experience unlike ever before.
The traditional model for Hooters does not project strong revenue, but a gambling-inspired method to draw people in could eventually yield some serious franchised income. The standard Hooters may be less of a restaurant in the coming years and more of a sportsbook, but the potential for profitability still exists.
