K&W Cafeterias, a North Carolina-based brand founded 83 years ago, filed for bankruptcy earlier in September.
The company entered 2020 with 28 locations across North Carolina, South Carolina, Virginia, and West Virginia, but has since reduced its footprint to 18 stores. The open stores will continue serving customers during the bankruptcy proceedings.
The brand is deciding between selling its open locations as going concerns—individually and/or as a group—or opting for a more traditional reorganization, which may include a sale at a later date.
According to the filing, K&W has more than $30 million in assets and more than $22 million in liabilities. During the pandemic, the restaurant received a Paycheck Protection Program loan worth $6.73 million and used it to save 500 jobs.
The COVID crisis has wreaked havoc on buffet-style and cafeteria-style brands. Garden Fresh Restaurants, parent of Souplantation and Sweet Tomatoes, permanently closed all 97 of its stores and liquidated its assets. Texas-based Luby’s, which oversees Luby’s Cafeterias, announced plans to dissolve as well, with the possibility of a future sale.
K&W President Dax Allred said that in the past few years, the team has made progress in modernizing its cafeterias, such as the rollout of online ordering and delivery. But the COVID pandemic proved too much to bear, given the restaurant’s model and older demographic.
“Unfortunately, the impact of COVID-19 and related operating restrictions had a disproportionately negative impact on our loyal guests and cafeteria-style dining,” Allred said in a statement. “We are hopeful this restructuring will allow our cafeterias to weather the storm and continue serving guests for years to come.”
Allred told the News & Observer in late August that sales tanked 80 percent at the peak of the pandemic. He noted that PPP funds allowed the brand to survive through North Carolina’s Phase One and Phase Two.
When North Carolina began allowing indoor dining, he said the restaurant saw some improvement, but still faced a significant, uphill battle.
“While the coronavirus hasn’t left any segment untouched, we’re particularly impacted, as our clientele is trending towards the elderly,” Allred told the outlet. “There’s been a disproportionate impact on that guest demographic.”