K&W Cafeteria Inc., a Winston-Salem-based supplier of Southern comfort foods for 85 years, was sold for an undisclosed price to the Louisiana-based Piccadilly restaurant chain.
Dax Allred, Chairman of K&W, said in a brief statement Tuesday that “After three generations of the Allred family operating K&W restaurants and serving our valued guests, a new leadership group will continue K&W’s longstanding tradition of serving homemade and homemade dishes to our guests.”
Piccadilly has pledged to keep all 11 current K&W locations open, including the Winston-Salem restaurants at 800 E. Hanes Mill Road and 3300 Healy Drive.
Piccadilly could not immediately be contacted to find out when it plans to rename the K&W locations and if there will be any immediate menu changes planned.
“All members of the cafeteria team will have the option to stay on board, so rest assured you will see the same smiling faces on the line, in the galleys and in our dining areas,” Allred said,
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“We cannot thank you enough for the years of loyal support, it has been a pleasure.”
Allred did not respond when asked to sell to Piccadilly and why now.
Piccadilly has 33 locations in the Southeast, but none in North Carolina.
Piccadilly, however, is likely a familiar brand in parts of North Carolina after buying the Morrison Cafeterias chain in 1998.
Piccadilly was subject to its own Chapter 11 bankruptcy filings in 2003 and 2012, which reduced its locations from 270 to 41 in its second appearance in 2013.
K&W’s sale is not unexpected given that it was listed as an option, along with its auctioned assets, when the company filed for Chapter 11 bankruptcy in September 2020.
K&W had 18 restaurants open at the time of the bankruptcy filing, including three in Winston-Salem and 14 in North Carolina. K&W said it had 1,035 employees when it filed for bankruptcy, but fell to 834 employees in a December 2020 filing.
After six months of failing to find a buyer and unable to secure what the Allred family considered an adequate offer for the assets, management reversed course in March 2021 and opted to keep 14 restaurants open.
A federal bankruptcy judge approved K&W’s final reorganization plan in June 2021 and the company emerged from bankruptcy protection in September 2021.
Allred said when the reorganization plan was approved “although our geographic footprint has shrunk, we look forward to operating K&W Cafeterias as a profitable, debt-free business going forward.”
In a related transaction, the K&W headquarters building in Winston-Salem was sold for $984,500 to a Winston-Salem group, according to a Forsyth County deeds register filed Monday. The 1.17 acre property at 1391 Plaza West Road includes a 7,981 square foot office building.
Part of the reorganization plan involved K&W agreeing to pay off the biggest creditor, Truist Financial Corp. by July 1, 2022.
K&W debt owed to Truist includes $6.73 million Paycheck Protection Plan (PPP) loan and $10.95 million lien claim on accounts, inventory, equipment , parts and general intangibles. The PPP loan to K&W was one of the largest for a North Carolina company.
K&W and Truist confirmed in the reorganization plan that there had been a forgiveness of K&W’s PPP loan by the US Small Business Administration.
The reorganization plan listed Truist with $7.77 million in secured claims against K&W. The sale of non-essential properties owned by K&W would be Truist’s main repayment mechanism.
The effect of COVID-19
Before K&W filed for bankruptcy, in August 2020 it closed restaurants in Chapel Hill, Goldsboro, Raleigh and Salisbury. He closed his experimental K&W Cafe in Clemmons in July 2019 and in High Point in January 2020.
Overall, since celebrating its 75th anniversary in 2012, K&W has grown from 35 restaurants to 18.
When K&W closed the two Triangle sites, Allred told the Raleigh News & Observer that its business dropped about 80% during phase one of the statewide COVID-19 pandemic restrictions, which lasted from March 10, 2020 to May 22, 2020.
The first phase only allowed take-out sales and deliveries.
“These were tough decisions, but they were the right business decisions,” Allred said in September 2020. “It allows us to refocus our team and refocus our resources across our 18 locations.”
Although Allred said K&W was able to resume some activity in phase two, which allowed for limited indoor and outdoor service, it continued to struggle because its main customers are elderly diners to whom it has been advised to stay at home during the pandemic.
The business got its start in 1937 during the Great Depression with a restaurant on Cherry Street in downtown Winston-Salem.
Allred said in a Journal 75th anniversary profile in January 2012 that one of the keys to the company’s success is that it has remained true to the guiding principle of its founder, Grady Allred Sr., who died in 1983:
“While trends come and go, good food at a reasonable price never goes out of fashion,” he said.
Dax Allred said the company’s business model and offerings help it to be competitive.
“We always prepare everything from scratch,” he said. “There is no ‘heat and eat’, as we like to call it, in our kitchens.”
Another reason K&W has survived for so many years is its loyal customer base. “They made us who we are today,” Allred said.
He said some people ate at the restaurant on Healy Drive three times a day – for breakfast, lunch and dinner – every day.
Dax Allred said the toughest moment in the company’s history must have been the explosion at his restaurant on Knollwood Street on January 18, 1988.
The explosion, which occurred around 2:30 a.m., flattened the K&W and injured three people. It also damaged the nearby Sheraton Hotel, which had to be razed, as well as homes and businesses more than a mile away.
Investigators said a spark from a boiler ignited a gas leak in the building’s basement. Piedmont Natural Gas Co. was accused of failing to maintain the gas lines.
Photos: K&W cafeterias over the years