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FDD Talk 2015: The Hooters Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 14, 2015

in FDD Talk 2017: Food Franchises, Franchise Earnings, Restaurant Franchise, Sports Bar Franchise

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Hooters Interior Photo

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the Hooters franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Hooters franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Hooters’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average, high, and low unit sales for the 185 company-owned Hooters restaurants that operated the full fiscal year
  • 2014 average, high, and low unit sales for the 146 franchised Hooters restaurants that operated the full fiscal year
  • 2014 average total revenues, cost of sales, gross profits, controllable payroll, other direct expenses, other general and administrative expenses, other income, and net controllable income for the 185 company-owned Hooters restaurants that operated the full fiscal year

Section I – Background Information

The Hooters restaurant in San Marcos, California, which opened in March 2014, was the second Hooters to be constructed in the brand’s new, modern design. The first was in Overland Park, Kansas, in December 2013.

The new design is clean and bright with large windows and open spaces, highlighted by a huge, very well-stocked bar. The design also features a spacious patio with fire pit and a “Heritage Wall” that looks back on 30 years of Hooters history.

Other developments in the U.S. in the past year include numerous openings featuring the updated design, as well as remodeling projects at many existing Hooters restaurants to upgrade to the new design.

Flagship Relocation in Manhattan

Hooters opened a flagship two-story location in Manhattan in January 2015, near Madison Square Garden and other iconic New York City spots. The corporate restaurant, relocated from another part of Manhattan, features Hooters throwback beach memorabilia on the second floor and the brand’s new modern design on the main floor.

Hooters Known for Hooters Girls, Chicken Wings

Despite the cleaner, more open design, Hooters continues to provide a casual atmosphere, offering music and sports-viewing experiences and a menu highlighted by its original chicken wings. The menu, served by the chain’s trademark Hooters Girls, also includes seafood, burgers, sandwiches and salads.

The Atlanta, Georgia-based Hooters started in 1983 with a single location in Clearwater, Florida, and has grown to more than 430 locations, 160 of which are corporate restaurants, in nearly 30 countries.

New Locations Adding Floor Space

The chain announced in April 2015 that the world’s largest Hooters would join the Palms Casino Resort in Las Vegas. The 15,200-square-foot restaurant will have 50 TVs and seating for 500. A 10,000-square-foot Hooters restaurant currently exists in Dallas, Texas.

Also in April, Hooters announced that the largest international Hooters location would open in Pattaya, Thailand, in 2015.

Franchisee Destination Resorts Co. Ltd. will open the 11,000-square-foot, 564-seat restaurant, part of an agreement signed in February to expand the Hooters presence in Southeast Asia.

Destination Resorts Co. will open 30 restaurants in Southeast Asia during the next six years. The international franchisee, headquartered in Bangkok, Thailand, plans locations in Cambodia, China, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Central America Expansion

Three new Hooters locations in Nicaragua and Honduras will open in the next three years, expanding the Hooters presence in Central America. Luis Felipe Lacayo, a Nicaragua-based developer, will lead a franchise development team in opening the first location in Managua, Nicaragua, late in 2015.

Move into Russia

Hooters entered Russia in April 2014 through a partnership with Andrei Kirilenko, a forward for the NBA’s Brooklyn Nets. Kirilenko, working with a team of restaurant operators, will open a total of five Hooters locations in the next three or four years in his home country of Russia.

Loyalty Program Added

Hooters unveiled its Hooters Hootclub app in April 2014 as part of its new customer loyalty program, which it first tested in Atlanta. The app helps customers earn food and drink rewards, keep up with Hooters events, and register for contests.

Hooters Employees Honored

Jenell Hendrix became Hooters Girl of the Year 2015 in January 2015. She is an area coach and hourly manager in the Hooters of Champaign, Illinois, and part of the Hooters International Training Team. She is also a professional model and has appeared in the TV show “Empire.”

The 2014 Hooters Girl of the Year was Tyler Suess of Rockford, Illinois. Suess is a member of the Hooters International Training Team and has appeared in Hooters promotions and advertisements.

Miss Hooters World 2014 was crowned in August 2014 as Nikolett Szollath of Budapest, Hungary, won the 18th annual Hooters International Swimsuit Pageant in Las Vegas. Szollath, 22, who works at the Hooters of Budapest, is a college student, teaches aerobics to children, and volunteers for organizations such as the Budapest Children’s Hospital and Goodwill of Hungary.

Janet Layug, who works at Hooters in North Lakeland, Florida, was named Miss Hooters International 2014. Layug has been with Hooters for seven years and is a fitness model who is working toward a Bachelor of Science in Nursing at the University of South Florida.

New Executives Named

The restaurant chain has a new chief marketing officer in Carl Sweat, who held leadership positions with Starbucks, Coca-Cola and other brands before joining Hooters in March 2015.

Terri Hoskins was named chief human resources officer in September 2014, and Pete Servold became senior vice president of franchise operations in August 2014.

Section II – Estimated Costs

  • Please click here for detailed estimates of Hooters franchise costs, based on Item 7 of the company’s 2015 FDD.

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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