From bust to boom: How Hooters turned around its flagging fortunes

By Frank Chung

Hooters wants to bust the 'breastaurant' stigma in Australia. Photo / Supplied
Hooters wants to bust the 'breastaurant' stigma in Australia. Photo / Supplied

One year after going bust, Hooters Australia has bounced back to rack up a win, reversing plummeting revenue and putting its breast foot forward with massive expansion plans as a fully Australian-owned business.

The "breastaurant" chain, known for its American sports bar-style food and scantily clad waitresses dubbed "Hooters girls", opened its first Australian location in 2006, but suffered numerous setbacks and financial troubles over the years before finally entering voluntary administration in July last year.

Now listed US restaurant group Chanticleer Holdings, which rescued Hooters Australia's five outlets from collapse 12 months ago, has sold its 80 per cent stake in the business to minority owner and local chairman Sydney Borg.

Chanticleer, which operates nine Hooters restaurants in the US, UK and South Africa, approved the plan to exit Australia in June but only finalised the sale to Mr Borg late last month. It had planned to close the remaining stores if it could not reach acceptable sale terms.

Mr Borg would not disclose how much he paid but said it was "fairly sizeable" and "in the millions". Chanticleer's total stake in the Australian operation was around A$9 million.

"Our investors wanted us to focus on our US burger businesses," Chanticleer chief executive Mike Pruitt said.

"Syd's passion and local hands-on ownership is what the business needs. We have complete faith that Syd will make a success."

Chanticleer and Mr Borg, who were previously "silent investors" in Hooters Australia, forced it into administration after the local operators "ran the business into the ground", according to Mr Borg.

Hooters franchises were accused last year of not paying employees' superannuation. The company had also faced a lawsuit over slushie machines, and a fire which destroyed the Gold Coast restaurant.

As part of the rescue deal, the US group forked out $1 million to increase its stake from 60 per cent to 80 per cent, having already invested $8 million in the Australian restaurants.

Hooters, which employs around 120 people, currently has three NSW restaurants in Parramatta, Penrith and Campbelltown, and one in Surfers Paradise. The Townsville location, which opened in May 2015, shut down in September this year.

The "breastaurant" chain, known for its American sports bar-style food and scantily clad waitresses dubbed "Hooters girls", opened its first Australian location in 2006. Photo / Supplied
The "breastaurant" chain, known for its American sports bar-style food and scantily clad waitresses dubbed "Hooters girls", opened its first Australian location in 2006. Photo / Supplied

According to Chanticleer's latest annual report, the Australian operations recorded an operating loss of US$6.27 million (A$8.19 million) in 2015, compared with a loss of US$277,557 (A$362,490) in 2014, largely due to a US$4.9 million (A$6.4 million) non-cash asset impairment charge.

Mr Borg said it was a mutual decision to buy out Chanticleer, which last year had forecast a market opportunity of 15 locations and talked up using Hooters as a launch pad to bring its other food brands to Australia.

"Mike Pruitt's a gentleman," Mr Borg said. "But as Michael rightly said, I was doing all of the work here for 20 per cent of the business. They're focusing on their gourmet burger business in the States, and really Australia was just so far away from everybody it became difficult for them to understand what was going on."

Mr Borg said when they took control of the business, revenue was down 62 per cent year-on-year. "We've clawed that 62 per cent back a year later," he said. "There is no doubt the business has turned around, but we're in a tough market. We're not making millions, I'd be lying if I told you that."

Nevertheless, Mr Borg forecasts revenue growth of 20-30 per cent this year, and has big expansion plans. "I'm going to clean up the mess, continue building the business and expand to new locations," he said.

He said he had just taken over the offices next door to the Gold Coast location and would expand the restaurant's size by 60 per cent, and was currently scouting locations in Newcastle, Brisbane, Adelaide, Melbourne and "possibly" Perth.

"All the restaurants are going to get a small facelift," he said. "We're currently doing renovations to Parramatta, and we're currently designing a new menu that will roll out in December."

The stores are sure to remain controversial. Photo / 123RF
The stores are sure to remain controversial. Photo / 123RF

Mr Borg said Hooters had refocused on its sports bar positioning, signed exclusive contracts with brands including Tempus Two Wines, installed more beer taps and increased its use of promotions to drive customers through the door.

"One of the major shifts that brought business this year was really promoting ourselves as a sports bar," he said. "We have 45, sometimes 50 LCD screens, there's not a single place where you can't see some kind of sports happening. No other establishment can say that.

"We've become the UFC place to be. Every time there's a UFC main event on we televise it live. People are coming in on a Sunday and packing the whole place out."

Other behind-the-scenes changes included renegotiating with food suppliers, and bringing in better quality meats and chicken. "I would absolutely guarantee we have got the best ribs and chicken of any restaurant now," he said.

On the closure of Townsville, Mr Borg said Hooters "should never have been up there". Mr Borg said Hooters should have set its sights on Cairns "where the holiday people are".

"Don't go to a town that's relying on mining and defence," he said.

"Townsville, let's face it, highest unemployment in Australia. The military base there wasn't supporting any bloody restaurant, possibly because they can eat cheaper in the mess. You talk to any other local business there, they're all doing it tough."

Hooters is trying to focus on its food. Photo / Supplied
Hooters is trying to focus on its food. Photo / Supplied

'WE'RE A FAMILY RESTAURANT'

But despite the improved fortunes, Mr Borg said Australia still had the wrong idea about Hooters. "It's certainly more than people think, to be honest," he said.

"The stigma that it's some sort of topless girlie bar is still there. We are so far from it. It's insane, given it's a 30-year-old business with 470 restaurants around the world. We're a family restaurant. A lot of girls come for hen's nights, boys for buck's nights. On the weekends we have to put up balloons for kids parties."

While some figures suggest around 75 per cent of Hooters customers are men, Mr Borg said it was "certainly not that high anymore". "When you look at the demographics, our Penrith store quite often gets more women dining than men," he said.

"We would be close to a 50-50 split now. It's not often you get tables of all men. You'll get tradies coming in for lunch, to be fair, but our figures are indicating virtually a 52-48 split. We're working hard to continue trying to change the mindset of some people."

The stores are sure to remain controversial, however.

Last year, researchers from the University of Tennessee said a survey of waitresses working at breastaurants, including Hooters, showed there was a "psychological toll" associated with the "sexual objectification" of the job.

"Our research suggests that although 'breastaurants' may be good for waitresses' hip pockets, they don't appear to be good for their psychological and work-related health," the researchers wrote.

"Many end up dissatisfied with their jobs. Furthermore, we found a clear inverse relationship: the more their bodies and sexuality were put on display, the less happy they were with their jobs."

Mr Borg disagreed with the study. "There is nothing negative as far as I know about working at Hooters," he said. "No one touches them, there's no sexual innuendo, they get damn well paid. They're in uniform, but a lot of these girls wear less on a beach nowadays.

"As an 18-year-old going through uni, you try going to work at Hungry Jack's or McDonald's for A$16 an hour, and compare that with A$21 an hour."

Mr Borg said many staff who had left under the previous management came back when he took over.

"There were girls who had well and truly finished their uni and moved onto fulltime jobs, but still come back and do casual shifts as Hooters girls," he said.

"There are even girls who have gone on to become policewomen who would love to come back to do casual shifts but can't. Once a Hooters girl, always a Hooters girl. It's almost like alumni. They make friends for life."

Mr Borg said even his 28-year-old daughter was a Hooters girl. "She now works in IT," he said. "This is now her ninth year and she refuses to put down the tools, so to speak. She says, 'Dad, I want to keep being a Hooters girl.'

"She still works one or two nights for the fun of it."

- news.com.au

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