Atlanta-based Hooters of America has grown rapidly since its sale to H.I.G. Capital LLC and KarpReilly LLC four years ago, a source said. EBITDA has more than doubled to north of $65 million, a source said.
Hooters of America’s owners put the company up for sale in January, hiring Piper Jaffray to find a buyer. The company was reportedly seeking bids of 7x to 7.5x times.
The owners, with the sale, were not “getting credit” for Hooters of America’s growth, the person said.
“The auction is off,” the source said.
Hooters of America investors now plan to recapitalize the company and take a dividend. In two to three years, the owners plan to revisit options, which could include a sale or IPO, the source said.
Hooters of America is considered the original “breastaurant.” Founded by six friends in 1988, the chain features waitresses wearing skimpy orange shorts and tight white T-shirts. In January 2011, a consortium including H.I.G. Capital, Karp Reilly and Chanticleer Holdings acquired the company. H.I.G. Capital has a majority stake.
The company is an operator and franchisor of about 430 restaurant locations in 28 countries. The company owns 160 of them, the Hooters of America website said.
CEO Terry Marks, who joined in 2011, has worked to remove the stigma associated with Hooters of America. “It’s not like a strip club but [Hooters] has a perception about it,” one banker said.
Hooters of America has been trying to appeal to a broader array of tastes.The restaurant chain now sells fresh chicken wings and offers five different types of salads. The restaurant offers seafood like steamed shrimp or fish tacos, as well as five different types of burgers.
Sales rose 3.4 percent to $990 million in 2014, according to data from research firm Technomic.
Hooters of America, KarpReilly and Chanticleer could not be reached for comment.