By now it’s incredibly obvious, but bears repeating: 2020 will end up as maybe the worst year ever for the restaurant industry. An alarming number of temporarily closed restaurants won’t ever reopen, and even big chains like McDonald’s and Dunkin’ are each planning to close hundreds of locations this year. With restrictions on indoor dining in effect across most sensible jurisdictions, it’s a particularly horrible time to run a fast casual restaurant chain.
Case in point: California Pizza Kitchen has filed for Chapter 11 bankruptcy. Company financials cited by CNN makes it pretty clear as to why the move was necessary. On-site dining normally accounts for 80% of CPK’s business, which has taken a huge and obvious hit over the past few months. By that metric, the restaurant chain should almost consider itself lucky that revenue is only down 40% from this point in 2019.
While filing for bankruptcy is never a good sign for a company, it’s worth noting that Chapter 11 doesn’t mean California Pizza Kitchen is going out of business just yet. The goal of the filing is to reduce its long-term debt in the hopes of making it through to the other side of the pandemic intact.
WATCH: These New Mozzarella-Stuffed Takis Are Exactly What We Need Right Now
That’s perhaps why CPK CEO Jim Hyatt was able to put a somewhat positive spin on the situation in a press release cited by CNN. “The unprecedented impact of Covid-19 on our operations certainly created additional challenges, but this agreement from our lenders demonstrates their commitment to CPK's viability as an ongoing business."
Obviously, the fast casual chain will have to make some changes. CPK has already hinted at closing some of its less-profitable locations, but just how many of its 200 restaurants will shutter remains unclear. CNN notes that CPK has been behind on rent at “a majority of its locations” since Covid-19 forced widespread restaurant closures a few months back.
The news adds California Pizza Kitchen to a growing list of restaurant chains who’ve filed for bankruptcy in recent months, which includes the parent company for Chuck E. Cheese, Le Pain Quotidien, and one of the biggest Pizza Hut and Wendy’s franchisees. It’s almost inevitable that more will eventually join the list.
With some time to implement outdoor dining, there’s hope that other restaurants will be able to narrowly escape a similar fate, but who really knows. The only thing one can know for sure is that the restaurant landscape of the (eventual) post-pandemic future will be almost unrecognizable from what it was in March of 2020.
Source: Read Full Article