Hooters of America, Inc. History

Address:
1815 The Exchange
Atlanta, Georgia 30339
U.S.A.

Telephone: (770) 951-2040
Fax: (770) 618-7032

Website:
Private Company
Incorporated: 1984
Employees: 25,000 (systemwide)
Sales: $275 million (2002 est.)
NAIC: 533110 Lessors of Non-Financial Tangible Assets; 541613 Marketing Consulting Services; 722110 Full-Service Restaurants

Company Perspectives:

Mission Statement Hooters Brand--Our mission is to provide a family of hospitality and services that achieves excellence and enhances lifestyles of all who come in contact with the Hooters brand.

Key Dates:

1983:
First Hooters restaurant opens.
1984:
Franchise rights are sold to Atlanta investors, who form Hooters of America, Inc.
1991:
Equal Employment Opportunity Commission launches investigation of chain.
1996:
Chain generates more than $300 million in revenues.
2001:
Hooters of America buys trademark from Hooters Inc.
2003:
Hooters Air is launched.

Company History:

Hooters of America, Inc. operates and franchises a chain of casual restaurants that feature waitresses known as Hooters Girls. The first Hooters Restaurant opened in Clearwater, Florida, in 1983. The concept was licensed in 1984 to Hooters of America. The franchiser bought the trademark from Hooters Inc. in 2001.

Free Publicity Launches the Concept: 1983-89

The first Hooters restaurant was opened on April Fools' Day in 1983 in Clearwater, Florida, by six friends, all businessmen who had no experience in the restaurant industry. As Gil DiGiannantonio, one of the partners, told Florida Trend magazine three years later, after Hooters had become a roaring success, they were "a bunch of guys who got tired of going to fern bars." Apocryphally, the six combed Clearwater Beach searching for attractive young women who were interested in becoming the first Hooters Girls.

In addition to DiGiannantonio, a sales representative for a liquor distributor, the other founding partners were: L.D Stewart and Dennis Johnson, also partners in a general contracting business; Kenneth Wimmer, who had worked for Stewart and Johnson before starting his own paint business; Ed Droste, owner and chief executive of a resort development business; and William Ranieri, a former service-station owner who had retired to Florida. Stewart was the majority owner.

The restaurant struggled for almost a year before receiving a fortuitous break in the form of free publicity. In January 1984, Tampa hosted the NFL Super Bowl between the Los Angeles Raiders and the Washington Redskins. John Riggens, then a star running back for the Redskins, ate lunch at Hooters the day before the game. After the Super Bowl, he returned with several teammates for a midnight snack. With the resulting media attention, Hooters quickly went from grossing $2,000 a night to nearly $4,000.

In 1984 the original owners, who had formed Hooters of Clearwater, Inc., sold expansion and franchise rights to Neighborhood Restaurants of America, a group of Atlanta investors, who formed Hooters of America, Inc. Hooters of Clearwater received 10 percent of Hooters of America and 3 percent royalties on all Hooters sales. Hooters of Clearwater also retained the final say on restaurant design and menu, and the right to build Hooters restaurants in Pinellas and Hillsborough counties in Florida.

Hooters vs. EEOC: 1991-96

Within two years, Hooters had become a $16 million chain with nine restaurants in Florida and two in Atlanta. By 1991, there were some 50 Hooters restaurants and Hooters of America had revenues of more than $100 million. The chain had reached 100 restaurants and $200 million in revenues by the end of 1993.

Hooters continued to thrive on free publicity. When the Soviet national boxing team was in Tampa to fight the Americans in the summer of 1986, the Soviets ate dinner at Hooters. The next day, the Tampa Tribune ran a full color picture of a Russian boxer eating chicken wings with a Hooters Girl, wearing a tight-fitting Hooters T-shirt, standing next to him. In July 1986, Hooters girl Lynne Austin was Playboy magazine's Playmate of the Month. The men's magazine also included a small article about Hooters and some of the pictures showed Austin in a Hooters outfit. Droste told Florida Trend, "We were already doing well at that point, but (the Playboy article) was important because it gave us our first national exposure."

But probably the greatest marketing coup came in 1995 when Hooters of America hired a hairy male actor and dressed him in a Hooters waitress outfit to poke fun at allegations that Hooters restaurants discriminated against men. Hooters of America ran full-page advertisements showing "Vince" in USA Today and the Washington Post. But more importantly, according to then vice-president of marketing Michael McNeil, television camera crews showed up at every Hooters restaurant in the United States the same day to do local stories.

Hooters of America liked to boast that "Hooters is to chicken wings what McDonald's is to hamburgers." But the Hooters Girls, not the restaurants' food or drink, were always the essence of the Hooters concept. Hooters restaurants hired young, attractive women as waitresses and dressed them in orange running shorts--"sized to fit comfortably," according to corporate literature--and white tank tops or T-shirts. Hooters of America readily acknowledged that "the concept relies on natural female sex appeal" and the waitresses were encouraged to sit down and chat with the predominantly male clientele.

Hooters Girls also made celebrity appearances at sporting events and charity functions, and were pictured on billboards, trading cards, and calendars. Hooters of America published a glossy Hooters Magazine that featured Hooters Girls in everything from swimsuits to evening wear. According to the corporate literature, Hooters Girls were expected to "always maintain a prom-like appearance with hair, make-up and nails done neatly. Hooters Girls should project a positive attitude with a bubbling personality and the prettiest smile in the world."

Although the founders of the original Hooters in Clearwater always insisted the name referred to an owl in the restaurant's logo, they did so tongue-in-cheek, and it was a claim that few people accepted. "Obviously the name is a double entendre," McNeil told Business First, a Columbus, Ohio, business newspaper in 1994. "Hooters is an innocuous slang expression for a part of the female anatomy. We don't deny that. We also realize that most people believe that that is the case." Critics of the name and concept dubbed Hooters the nation's first "breastaurant."

In 1996, the American Spectator noted that Hooters featured "socially adept and lightly dressed young women who delight a generally beefier crowd of male patrons by simply feeding them from a reasonably priced menu. It is a simple but successful concept, one that would offend only the worst sort of prig." But offend it did.

Women's groups expressed outrage at the skimpy Hooters Girls uniforms. Hooters restaurants were also forced with some regularity to defend themselves against allegations of sexual harassment. In the most high profile case, three former waitresses at a Hooters franchise operated by Bloomington Hooters Inc. at the Mall of America in Minnesota filed suit in 1993, claiming they had been fondled and verbally abused by male employees at the restaurant. Representing the waitresses, attorney Lori C. Peterson, who also sued the Stroh Brewery Co. over its controversial Swedish Bikini Team commercials, went on television talk shows to denounce the Hooters concept. Among her demands were that Hooters change its name and uniforms.

But in an interview with Corporate Report Minnesota, attorney Lisa A. Gray, hired by the restaurant, countered, "For me to deny that sex appeal is part of the concept, part of what's happening at Hooters, would be ludicrous. But I've always thought feminism is all about choice. If people are offended by Hooters, they should vote with their feet. Don't go to the restaurant to eat. Don't apply to work at it." Hooters of America also denied that Hooters restaurants fostered a "hostile environment" for women and publicly stressed a strict corporate policy against any form of sexual harassment. The suit was eventually settled out of court.

Hooters restaurants also attracted the attention of the Equal Employment Opportunity Commission (EEOC), which launched an investigation in 1991 into alleged discrimination because Hooters refused to hire male waiters. In an 80-page finding released in 1994, the EEOC determined that "no physical trait unique to women is required to service food and drink to customers in a restaurant." The EEOC demanded that Hooters of America pay $22 million to men who could show they had been denied jobs because of their gender. The agency also demanded that Hooters establish a scholastic fund "to enhance the skills, employment opportunities or education of males."

The EEOC findings were generally ridiculed by the news media and a public that had grown skeptical of government interference, especially since the EEOC had a backlog of seemingly more serious cases. Bureaucracy watchdog James Bovard, writing in the Washington Post, responded, "What sort of education program did the EEOC have in mind? Teaching the new male hirees how to flirt with burly construction workers without getting punched in the nose?"

Hooters of America argued that Hooters Girls, in addition to foodservice, provided entertainment, which entitled the restaurants to an exemption from equal employment laws under the "Bona Fide Occupational Qualification" section of the Civil Rights Act. Forcing Hooters to hire men as waiters, the restaurant chain said, would be like forcing Radio City Music Hall to hire male Rockettes for its famed chorus line.

In a more serious vein, McNeil explained that "Hooters Girls have been the essence of our business since the first store opened in 1983," and pointed out that Hooters employed men as cooks and in management positions. Hooters fought back with a $1 million publicity campaign, featuring "Vince," the hirsute waiter in a skimpy Hooter's outfit, designed to ridicule the EEOC. Under the headline "What's wrong with this picture," the newspaper ads complained, "The Equal Employment Opportunity Commission is wasting taxpayers dollars, ignoring its mission, and setting aside the interests of individuals with real discrimination claims in an effort to force Hooters Restaurants to hire men to be Hooters Girls. This excessive government interference threatens Hooters business and the jobs of more than 13,000 employees. Taking away jobs from Hooters gals to hire men is unfair and it's just plain ridiculous."

Tad Dixon, then public relations manager for Hooters of America, told Nation's Restaurant News that his office received more than 500 telephone calls the day the campaign broke. Hooters of America also coordinated a "March on Washington" with a rally at Freedom Park in Washington, D.C., where more than a hundred Hooters Girls carried placards with such slogans as "Men as Hooters Guys--What a Drag."

In addition to the newspaper ads, Hooters used "Vince" on billboards, other print materials, and even on its radio commercials. In a brief statement, the EEOC called the public relations campaign an effort "to intimidate a federal law enforcement agency, and, more importantly, individuals whose rights may have been violated." But, eventually, the EEOC dropped its demands and the investigation. In 1996 Gilbert F. Casellas, then chairman of the EEOC, sent a letter to the U.S. House subcommittee on employment in which he concluded "it is wiser for the EEOC to devote its scarce litigation resources to other cases."

In 1996 the privately owned Hooters of America operated 57 Hooters restaurants and franchised 135. Of the more than $300 million in revenue generated systemwide, Hooters of America said 65 percent came from the sale of food, 30 percent from the sale of beer and wine, and 5 percent from Hooters merchandise, including Hooters Girls trading cards. Restaurant & Institutions ranked Hooters as the 75th largest foodservice chain in the United States, and 11th among casual, dinner-house restaurant concepts.

Controversy Continues: 1997-99

While the company was waging battle with outsiders an internal struggle ensued in the Hooters system. Hooters of America CEO Robert H. Brooks had bristled against the constraints of the franchise agreements with Hooters Inc. from the outset. Mickey H. Gramig wrote for the Atlanta Journal/The Atlanta Constitution in 1997, "They've repeatedly lawyered the licensing agreement, altering it twice in 1984, three times in 1986, and again in 1990 and 1995." Hooters Inc. filed a lawsuit against Hooters of America in 1997 claiming franchise violations, including requiring franchisees to buy products from a Brooks-owned company.

Brooks's first experience with the food industry came on his family farm in South Carolina, followed by a dairy science degree, in 1960, then a seven-year stint with a food company. He founded Eastern Foods Inc. in the late 1960s, introducing the Naturally Fresh line in 1980. In 1984, while recovering from a stroke, he put up money for an associate's purchase of a Hooters franchise. Brooks took possession of the endeavor when his partner was unable to pay him back.

By 1997, the Hooters of America owned or franchised restaurants outnumbered Hooters Inc. 192 to 12. Brooks's Hooters restaurants were bringing in an average of $2 million in annual sales. Part of his profits went to buying out Hooters shareholders, purchasing a country club, and donating to charity. Among his donations was an art center at Clemson University, honoring Mark Brooks. His son had been killed in a 1993 plane crash along with Hooters of America sponsored NASCAR driver Alan Kulwicki. The company had entered into sports sponsorships to build loyalty among members of its target market.

Hooters Girls would remain all female with the settlement of a class-action lawsuit in 1997. The $3 million-plus out of court agreement compensated men denied employment as waiters because of gender. Hooters would continue to hire only women as Hooters waitresses but would consider men on an equal basis for other more visible positions, such as manager or bar assistant, according to Time.

The company's ability to garner controversy was not limited to the states. In Mexico, where Hooters had begun opening restaurants, they faced the challenge of translating its name and sexy image in another culture. On a broader scale, American companies were seen by some as "corrupting Mexican values," according to the Chicago Times, especially since 1994 when the North American Free Trade Agreement went into effect. North of the border, Miss Canada International lost her crown when she became a Hooters Girl. Two years later, an Edmonton lawyer moved to keep Hooters Inc. from gaining a Canadian trademark.

The Hooters management maintained its sense of humor and even facilitated the negative product placement in the 1999 box office hit The Spy Who Shagged Me. "Some might say that [Big Daddy's depiction of Hooters] was disparaging in some way," Ed Droste, one of the founders, told Fortune. "But we're very much tongue-in-cheek; we make fun of ourselves."

Trademark Changes Hands: 2001-05

Hooters of America purchased the Hooters trademark from Hooters Inc. in 2001. Brooks said of the $60 million deal in a PR Newswire release: "As the Hooters system expands throughout the United States and internationally, we at Hooters of America felt that it was important that we own the trademark and have complete control of the Hooters concept and thus our own destiny."

Hooters of America operated 80 company owned restaurants and had agreements with 25 domestic and 12 international franchisees, operating, respectively, 170 restaurants in the United States and 20 restaurants in countries including Canada, Mexico, Argentina, England, Singapore, Switzerland, Austria, Puerto Rico, and Aruba. Hooters Inc. would continue to operate in Tampa Bay, Chicago, and New York and gain rights of development elsewhere.

The groundwork for the trademark sale was laid in 1999. Hooters Inc. won the legal dispute over contractual agreements but Hooters of America was granted the option of acquiring all trademarks.

Hooters Air was launched in March 2003. An attempt by Brooks to buy the belly-up Vanguard line in 2002 failed, but he was able to purchase charter air carrier Pace. The company began with flights between Atlanta and Myrtle Beach where its golf course was located. The going price for tickets exceeded that of discount flights, but two Hooter Girls aboard each flight, in addition to the professional crew, were the promised perks. Other routes were in the works.

Hooters of America was highlighting its plans for international expansion during the later half of 2004 and into very early in 2005. Thailand, India, Trinidad, Shanghai, Croatia, and Australia were the locales on the docket.

Principal Competitors: Buffalo Wild Wings; Carlson Restaurants Worldwide; Metromedia Restaurant Group.

Further Reading:

  • Baker, Ryan, "Hooters No Stranger to Controversy," Ottawa Citizen, June 8, 2000, p. A4,
  • Brovard, James, "The EEOC's War on Hooters," Wall Street Journal, November 17, 1995, p. A18.
  • Cebrzynski, Gregg, "Move Over Xena: Halle the Hooters Girl Makes Her Comic Book Debut," Nation's Restaurant News, February 23, 1998, pp. 106+.
  • de la Garza, Paul, "Opening of Hooters Exposes Nerves of Some in Mexico City," Chicago Tribune, November 25, 1997, p. 10.
  • "EEOC's Politically Correct Crusade Against Hooters a Wasted Effort," Nation's Restaurant News, December 4, 1995.
  • Farkas, David, "Hooters of America Expects Systemwide Sales to Increase from $500 Mil in 2000 to Around $570 Mil in 2001," Chain Leader, June 2001.
  • Gramig, Mickey H., "Hooters vs. Hooters: Fighting for Control," Atlanta Journal/ Atlanta Constitution, September 21, 1997, p. G1.
  • Grimsley, Kristin Downey, "Hooters Plays Hardball with the EEOC," Washington Post, December 10, 1995, p. H1.
  • Goto, Shihoko, "GoTo Shop: Hooters' Family Fun," United Press International, March 13, 2003.
  • Hagy, James, "How Big Can Hooters Get?," Florida Trend, September 1987, p. 80.
  • Hayes, Jack, "Hooters Comes Out Against EEOC's Sex-Bias Suit," Nation's Restaurant News, November 27, 1995, p. 3.
  • ------, "Hooters Eyes Franchise, Int'l. Growth in 2001," Nation's Restaurant News, April 16, 2001, pp. 4+.
  • ------, "Hooters Founding Group Hits Road with Pete & Shorty's 'Joints,'" Nation's Restaurant News, April 1, 2002.
  • "Hooters of America, Inc. Acquires Hooters Trademark," PR Newswire, March 23, 2001.
  • "Hooters vs. the EEOC," Seattle Times, May 6, 1996, p. B4.
  • "Hostess with the Mostest," Economist, June 28, 2003, p. 65US.
  • Huettel, Steve, "Hooters Wings, Aisle 2, Servers Not Included," St. Petersburg Times, October 14, 2003, p. 6E.
  • Mckay, Rich, "Hooters Celebrates 20 Years," Orlando Sentinel, May 25, 2003, p. H1.
  • Prewitt, Milford, "Hooters Unit Sued for Harassment," Nation's Restaurant News, May 3, 1993, p. 3.
  • Segal, David, "Hooters Vows to Decide Where the Boys Aren't," Washington Post, November 16, 1995, p. B11.
  • Shiflett, Dave, "Hooters Gals," American Spectator, July 1996, p. 48.
  • Wheat, Alynda, "One Man's Insult Is Another Man's Publicity," Fortune, August 16, 1999, p. 38.
  • Wieffering, Eric J., "Defending Hooters," Corporate Report Minnesota, September 1991, p. 52.
  • Wright, J. Nils, "Hooters Eatery Is Coming to Town with Controversial Fare," Business Journal (Sacramento, Calif.), April 25, 1994, p. 8.
  • Zagorin, Adam, "Sexism Will Be Served," Time, October 13, 1997, p.65.

Source: International Directory of Company Histories, Vol.69. St. James Press, 2005.