CLEVELAND, Ohio – California Pizza Kitchen said it will close an unspecified number of restaurants after filing for Chapter 11 bankruptcy on Thursday.
In a statement, the company, which operates more than 200 restaurants, said the filing was necessary “to reduce its long-term debt burden and quickly emerge from bankruptcy as a much stronger company.”
The informal restaurant chain said it would close restaurants that are not “profitable,” but did not identify those places. The company operates a restaurant in Northeast Ohio at Legacy Village in Lyndhurst.
“Today’s announcement is a step toward a stronger future for California Pizza Kitchen,” said CEO Jim Hyatt. “COVID-19’s unprecedented impact on our operations certainly created additional challenges, but this agreement from our lenders demonstrates their commitment to the viability of CPK as an ongoing business.”
In court documents, the restaurant chain said the coronavirus pandemic dealt a “significant hit” to its bottom line because restaurants in the restaurant accounted for 78 percent of sales before closing. The company secured a $ 30 million loan, cut payroll by 35%, and temporarily closed 46 locations to keep the business afloat as it turned to bring, deliver, and sell food kits.
However, sales are still down 40 percent and the company now has just $ 13.5 million in cash on hand and is four months behind on rent at most of its locations.
Under the terms of the presentation, the company will receive $ 46.9 million in new funds to keep the restaurants operating and paying employees and vendors. The restructuring plan requires California Pizza Kitchen to reduce its debt from $ 403 million to $ 174 million and to emerge from bankruptcy within 85 days.
“Throughout this process, we will continue to offer the same innovative California-inspired cuisine that we have been serving for over 35 years,” said Hyatt.
