H.I.G. Capital puts Hooters up for sale

Hooters of America, the restaurant chain known for its scantily clad waitresses, has gone on the block, three sources said.

Hooters has hired Piper Jaffray to find a buyer, the sources said.

The restaurant chain is backed by investors including H.I.G. Capital and Karp Reilly. In January 2011, a consortium including H.I.G., Karp Reilly and Chanticleer Holdings acquired Hooters. H.I.G. has a majority stake.

It’s unclear if Chanticleer is part of the Hooters sale. The Charlotte, N.C. holding company is a franchisee owner of Hooters restaurants in international markets like Australia and England. Chanticleer owns two Hooters in the U.S., an October statement said.

Atlanta-based Hooters of America operates and franchises more than 430 Hooters locations in 28 countries. Hooters serves items such as soups, salads, seafood, hot wings and “hooterstizers,” which include cheese sticks, fried pickles and Tex Mex nachos.

The restaurant chain produces EBITDA of around $60 million, according to Mergermarket, which first reported the Hooters sale. The restaurant company is also considering an IPO but a sale is more likely, Mergermarket said. Hooters will likely sell for around 7x to 7.5x, according to two of the sources, who are bankers.

Hooters is an orphan at H.I.G. now that Tim Armstrong has left the PE firm, one of the bankers said. Armstrong was a managing director in H.I.G.’s middle market business and was a director of Hooters of America. H.I.G. closed its second middle market LBO fund at its $1.75 billion hard cap last year.

Bankers pointed to TGI Friday’s sale to Sentinel Capital and Tri-Artisan Capital last year as the best comparison for Hooters. Sentinel/Tri-Artisan acquired TGI Fridays for $890 million or 7.5x. “[Hooters] is probably a stronger brand with better current trends,” the banker said.

Hooters declined comment. H.I.G., Karp Reilly, Chanticleer and Piper Jaffray could not immediately be reached for comment.

Photo courtesy of Hooters