FDD Talk: What You Need to Know About the Hooters Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 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 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Hooters franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Hooters’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, median, high, and low gross sales for the 187 company-owned (105 legacy company-owned, 74 remodel company-owned, and 8 new company-owned) and 135 franchised Hooters Restaurants that operated in the United States for the full fiscal year 2016 (which ended December 25, 2016)

• 2016 aggregate food sales, beverage sales, merchandise sales, total revenue, food costs, beverage costs, merchandise costs, total cost of sales, gross profit, staff payroll, management payroll, indirect payroll and benefits, total controllable payroll, direct controllable costs, fixed controllable costs, non-operating expense, and restaurant EBITDA for the 187 company-owned, 105 legacy company-owned, 74 remodel company-owned, and 8 new company-owned Hooters Restaurants that operated in the United States for the full fiscal year 2016 (which ended December 25, 2016)

Section I – Background Information

13 Things You Need to Know About the Hooters Franchise

Continues International Growth

1.  In the last quarter of 2017, Hooters continued to expand its international presence in countries such as Spain, Mexico, and Japan. The brand currently has about 100 international locations.

2.  Around the end of November, Hooters opened its very first location in Spain in the country’s most famous city, Barcelona. This new location is the first of 15 that Hooters plans to open across Spain and Portugal over the next three years. Hooters plans to open the first wave of restaurants in Spain during the first half of 2018, while the first Portugal restaurant is slated to open in late 2018.

3.  At the beginning of December, Hooters announced its plans to develop nine additional locations across Central, Western, and Northern Mexico over the next eight years. The brand currently has 12 locations in the country and upon completion of the latest additional development commitments, Hooters de Mexico will operate 29 Hooters restaurants throughout Mexico.

4.  Hooters is also expanding its presence in Japan; it opened its newest restaurant in the country last December. The Fukuoka location is the seventh Hooters in Japan, with six more locations planned over the next five years.

Raised $610,000 in Fight Against Breast Cancer

5.  During National Breast Cancer Awareness Month in October 2017, Hooters raised $610,000 by asking America to #GiveAHoot in the fight against breast cancer during its month-long fundraising campaign. The 2017 Give A Hoot campaign directly benefits the V Foundation for Cancer Research, one of the nation’s leading cancer research funding organizations, as well as other local beneficiaries through the Kelly Jo Dowd Breast Cancer Research Fund.

6.  The Kelly Jo Dowd Breast Cancer Research Fund was established in honor of the late Kelly Jo Dowd (who lost her fight against breast cancer in 2007), an original Hooters Girl and the 1995 Hooters Calendar Cover Girl.

7.  During the fundraising campaign, Hooters customers were asked to contribute to the cause by grabbing a pink bracelet, enjoying one of several pink drinks with proceeds benefiting the campaign, or “pinking up” their check during a visit to Hooters. Additionally, for every 2018 Hooters Calendar purchased, Hooters donated $1 toward the Give A Hoot fundraising effort. Across the country, Hooters Girls hosted fundraising parties at their hometown Hooters during “Pink Wink.”

8.  Over the years, Hooters has raised more than $5.3 million to support breast cancer research, much of it through grants in Kelly Jo’s name to the V Foundation.

Plans to Release Special Snoozeberry Sauce as Tie-in to Super Troopers 2

9.  Hooters is a brand that has a fun persona and has decided to team up with Super Troopers 2 – the highly-anticipated sequel to the cult comedy classic – to debut a chicken wing sauce based on the fictional “snozzberry.” The Snozzberry Sauce will debut on April 20 at participating restaurants in the U.S. and Canada, which coincides with the movie’s release. The sauce was created as an homage to the original movie and will enhance Hooters’ latest wing innovation, Smoked Wings.

Company History

10.  Hooters was founded in 1983 in Clearwater, Florida by Lynn D. Stewart, Gil DiGiannantonio, Ed Droste, Billy Ranieri, Ken Wimmer, and Dennis Johnson. They incorporated their new business on April Fool’s Day of that year because they thought that their new business venture would fail. The six friends/business partners opened the first Hooters restaurant a few months later in October.

11.  The first Hooters location was so successful that the founders, who are now known as the Hooters Six, sold the rights to Hooters to Hugh Connerty, who wanted to take the restaurant worldwide. To help grow the brand, Connerty received capital from investors including Robert Brooks, who eventually bought majority control of Hooters.

12.  In 1985, Hooters debuted its first calendar featuring the brand’s iconic Hooters Girls. One of the girls, Lynne Austin, drew the attention of Playboy and soon she and the story of Hooters were featured in the magazine. This move helped solidify Hooters as a national brand and spurred further growth.

13.  Over the next few decades, Hooters continued to expand and became an international brand. Today, Hooters is a part of American pop culture, with over 425 locations around the world.

Section II – Estimated Costs

• Please click here for detailed estimates of Hooters franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Hooters’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

Part 1 – 2016 Average and Median Annual Gross Sales for 187 Company-Owned and 135 Franchised Hooters Restaurants

• There were 187 company-owned and 135 franchised Hooters Restaurants that operated in the United States for the full fiscal year 2016 (which ended December 25, 2016). The table below shows their average and median annual Gross Sales in fiscal year 2016.

A.  Company-Owned Restaurants (187 Restaurants)