Popular pizza outlet, California Pizza Kitchen, recently filed for bankruptcy amid losses recorded due to the widespread novel coronavirus pandemic.
Amid the COVID-19 pandemic, several businesses have experienced low sales and ultimately filed for bankruptcy — the latest addition is California Pizza Kitchen (CPK).
In a press release on the restaurant's website, the CEO, Jim Hyatt, explained that they had reached a restricting agreement with lenders, and that will result in the closing of some unprofitable locations.
Photo of a full Pizza with toppings | Photo: Pixabay
As a way of implementing this agreement, the restaurant then proceeded to file for voluntary Chapter 11 protection bankruptcy and would close down the restaurant chain's unprofitable locations.
This would, in turn, reduce the outlet's long-term debt, and eventually, help them come out of bankruptcy as a much stronger company with better operations. The statement also read:
"We anticipate a short stay in Chapter 11 and expect to progress on an expedited timeline - our goal is to complete the Chapter 11 process in under three months."
The outlet's new agreement includes 46.8 million dollars in debtor-in-possession financing and will allow CPK restaurants to continue operations.
The agreement also allows the restaurants to continue paying to vendors, employees, and any other financial commitments during the bankruptcy process.
Jim Hyatt reportedly admitted that COVID-19 might be the greatest challenge for many restaurants.
CPK was launched in 1985 in Beverly Hills, California by two former federal prosecutors, and with the restaurant's hearth-baked pizzas made with unique ingredients, it soon became a people's favorite.
Shortly after its launch, California Pizza Kitchen soon became a chain of business, and over time, it expanded to over 250 locations in more than 30 states across the United States.
The outlet has also been made available in 11 countries and commercial places such as sports stadiums, college campuses, airport stands, and grocery stores.
When the outbreak of the COVID-19 pandemic forced dining rooms and restaurants to close, California Pizza Kitchen permanently shut down 46 locations due to the company's inability to convert them to take out restaurants.
Between the global pandemic and the unexpected closure, California Pizza Kitchen recorded several losses and a significant drop in sales, which ultimately led to its financial woes.
The financial challenges resulted in the restaurant's reduction of corporate payment by 35%, as well as laying off nearly half of their workforce.
They have also put a hold on renovations and stopped rent payments at several locations for the past four months.
CPK joins the list of popular businesses such as Chuck E Cheese and NPC International, Inc, who have also filed for bankruptcy amid the novel coronavirus pandemic.
While speaking about how the ongoing global health crisis has affected them, the company's CEO, Jim Hyatt, reportedly admitted that COVID-19 might be the greatest challenge for many restaurants.
He also added that it might lead to the permanent closure of some of these businesses. Despite the hard time currently being experienced, California Pizza Kitchen is expected to emerge better than it has ever been.