Hooters is a franchise chain that was founded in Clearwater, Florida, in 1983. The five founders had no experience in F&B, but had vast ambitions.
In those days, there were few franchise options for casual dining. There were Pizza Hut and McDonald’s, which were quick-service restaurants. They did not serve alcohol or provide sports coverage. The founders wanted to provide an easy option for diners to watch American football and basketball.
Hooters provided a sports bar. It was branded around waitresses dressed in orange uniforms. Chicken wings became the trademark menu items. The concept was risque and disruptive.
The franchise rose to worldwide prominence. At its peak, Hooters had over 400 outlets and sales of over US$1 billion ($1.2 billion).
The Singapore outlet was the first in Asia. It was launched in 1996 on the cusp of the Asian economic boom. At its opening in December 1996, there was a long line of patrons waiting at the door.
Last month, Hooters joined a long line of a different kind. It joined the stampede of F&B outlets that have closed down in this city. Nearly 3,000 F&B outlets have shut in the last year. They range from the famous franchises like Hooters to nondescript bars. Over four-fifths of these outlets have never made a profit in five years.
The Hooters brand is over 40 years old. It has aged poorly. Its struggles are symbolic of larger issues.
See also: Grub hub
Rents in Singapore have risen in excess of inflation in the last five years. There has been a shortage of restaurant staff. Servers in Singapore are paid a fixed salary and are not driven by tips. High rent and labour costs have wiped out the margins.
Rising costs are not the only issue. Young people are less likely to party these days. You don’t need to go to a nightclub to socialise.
Dating apps can connect you with a suitable partner. Chatting up strangers in a loud bar is old-fashioned. Paying for overpriced food is not required on apps.
The fans of fried chicken also have another option. Over two-thirds of Singaporeans under 35 use delivery apps once a week. There is no loyalty to a fixed location.
Delivery apps such as Grab let you order any type of cuisine. Travelling to Clarke Quay can be avoided.
There is also a harder truth. Many F&B businesses survived longer than they deserved. It was because of the support during Covid-19. Wage subsidies covered up to 75% of salaries. Low-interest loans kept F&B alive. These measures were vital, but they kept extending the life of dying outlets.
Yet renewal remains possible. F&B can revive if operators adapt to how people now eat. Like Hooters in the 1980s, F&B needs to innovate. We need smaller formats and delivery-first kitchens. F&B outlets should focus on social-media-led branding and flexible menus. Younger consumers expect omnichannel engagement. This would blend dine-in and takeaway.
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Public markets, however, have shown little subtlety. F&B-linked stocks have been sold down as if closures equal collapse. Coffeeshop operator Kimly trades at roughly 6 to 7 times forward earnings and below 4% EV/Ebitda. This is despite excellent daily footfall and cash generation. ABR Holdings is often priced on shuttered outlets. The market is ignoring the double-digit store-level margins of its remaining portfolio. Even diversified groups such as Fraser and Neave trade at 10%–20% discounts to long-term average multiples.
The same mispricing afflicts REITs. Retail landlords with 20%–30% of tenant mix in F&B continue to trade at 40% discounts to book value. These levels are more consistent with structural decline than cyclical churn. Frasers Centrepoint Trust and CapitaLand Integrated Commercial Trust still rely on food as a footfall anchor. Their units imply permanent impairment rather than tenant rotation. The closures are real, but they are evolutionary. It is not the end of F&B. Singapore’s F&B sector is not vanishing. The markets are simply pricing it as if it already has.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era
