K&W Cafeterias has filed for Chapter 11 bankruptcy following the closing of several of its restaurants, including two in the Triangle.
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The Winston-Salem-based company submitted bankruptcy filings last week in North Carolina Middle District Bankruptcy Court. In an emailed statement, K&W president Dax Allred said the restaurant company’s cafeteria-style dining model and often older clientele made it particularly vulnerable to financial strain brought on by the COVID-19 pandemic.
Allred said the company had made efforts to modernize in recent years by adding online ordering and delivery options, but that the onset of the coronavirus crisis led to bankruptcy.
“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. “We are hopeful this restructuring will allow our cafeterias to weather the storm and continue serving guests for years to come.”
K&W opened in 1937. Allred is the grandson of founder Grady Allred.
According to bankruptcy filings, K&W has assets of around $30 million and debts of $22.1 million between more than 100 creditors.
The largest single debt is for a $6.7 million Paycheck Protection Program loan, part of the federal program designed to help small businesses make payroll and cover rent while the pandemic diminished revenues. K&W’s loan was one of the largest given out to North Carolina businesses and preserved 500 jobs, the max for the program, according to the Small Business Administration database. Due to the PPP guidelines, the portion of K&W’s loan used for payroll could be forgiven.
Other debts include $1.06 million for food supplier Performance Food Group, hundreds of thousands of dollars in state and local taxes and hundreds of thousands of dollars in remaining lease obligations.
Restaurant closings in Cameron Village and Chapel Hill
At the end of August, the company closed six of its restaurants, including locations in Chapel Hill and Raleigh’s Cameron Village. The Cameron Village location opened in 1968 and had been in its current location since 1993, its popularity enduring for decades and its closing mourned by generations.
The remaining K&W locations will continue to operate during the company’s bankruptcy proceedings. The Triangle’s one surviving location is at 3620 Bastion Lane, off of New Bern Ave. in Raleigh.
In an interview last month, Allred said the locations that were closed weren’t profitable when reopened following COVID-related shutdowns.
The pandemic has crippled the nation’s restaurant industry, but poses a particular dilemma for cafeteria and buffet style restaurants, where self-service is part of the model. K&W reopened its dining rooms and continues takeout, but many of the company’s older diners are often more susceptible to the more severe cases of the coronavirus, Allred said in an interview last month.
“It is a difficult day in our company’s history, but essential for the future of K&W. We are so very thankful for the support of our loyal guests and team members at our locations, who have allowed us to be a part of their lives for generations, and look forward to serving future generations as we emerge from this stronger,” Allred said in a release.
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