Question of the Day - 27 January 2009

A Hooters-branded casino seemed like a can’t-miss idea at the time the changeover took place in the winter of 2006. However, what may push the boundaries of good taste in Bloomington, Minn., barely raises a yawn in Sin City. Hooters turned out to be, if anything, too tame for Las Vegas, a town where cocktail waitresses’ garb is often quite a bit more revealing and provocative than the standard "Hooter Girl" attire of hot pants, tank top, and sneakers.

But a $130 million augmentation with the Hooters brand, rather than lifting and separating the former Paradise/20th Century/Treasury/Pacifica/Polynesian/San Remo Hotel, couldn’t prevent business from continuing to droop. The unimaginable occurred: Hooters lost money. Cash flow doubled, but one bond analyst deemed the numbers "nowhere near first-year expectations."

Santa Monica-based investor Richard Bosworth and his company –- the colorfully named Hedwigs Las Vegas Top Tier -- came forward in January 2007 with a $225 million purchase offer. In fact, Bosworth had played matchmaker between the then-San Remo and the Hooters restaurant chain back in 2004. He planned to re-rebrand Hooters as a higher-end boutique hotel, possibly shutting it down in the 18-month interim.

Trouble was, Bosworth couldn’t scare up the cash. He kept needing a little more time and then a little bit more. Seventeen months, $6 million in nonrefundable deposits, and a $500,000 missed payment later, Hooters terminated the deal, although Bosworth promised he’d be back.

In the meantime, it looks as though Hooters will continue to limp forward under the owl banner. There’s even cause for optimism. Gambling revenue, driven by promotions, is up and the hotel-casino posted a profit in the second quarter of 2008. Dan Marino’s, the steakhouse, introduced mid-priced food offerings. "We have a pretty good story going on over here," COO Gary Gregg told the Las Vegas Review-Journal. "We're trying to give good value to the middle-market customer."

A regular Vegas visitor and LVA reader writes: "We stayed there November 2007. I found it to be one of the most enjoyable experiences we've had in Las Vegas. Convenient location, perfect size, not crowded, and low key in the mornings. I could go downstairs in my robe and slippers to get my paper & coffee. Food at the Dan Marino restaurant was good, and fairly priced. Luxury, it ain't. But, it is a good value, with an old Vegas feel." Update 1/28/09: The Hooters restaurant chain seems to be one of many that's been caught out in a supply/demand imbalance as the restaurant industry enters what could be its worst year in the past four decades. A two-year-old Hooters in Temecula, Calif., just closed, leading to speculation that further reductions in the portfolio could be forthcoming.