KFC franchisee forced to close; sells 14 California stores in bankruptcy deal

Stores in Redding, Anderson, Chico and elsewhere will re-open next year as Popeye's Louisiana Kitchens

ANDERSON KFC CLOSING — Franchisor prepares to shut down Anderson’s Kentucky Fried Chicken/A&W Rootbeer restaurant Saturday, Nov. 10, following a bankruptcy sale that will convert the store and 13 others in northern California to Popeye’s Louisiana Kitchen restaurants.

Photo by George L. Winship, Editor

ANDERSON KFC CLOSING — Franchisor prepares to shut down Anderson’s Kentucky Fried Chicken/A&W Rootbeer restaurant Saturday, Nov. 10, following a bankruptcy sale that will convert the store and 13 others in northern California to Popeye’s Louisiana Kitchen restaurants.

A total of 14 Kentucky Fried Chicken fast food outlets in California and another 14 in Minnesota shut their doors for the final time Saturday, Nov. 10, including two stores in Redding, one each in Anderson, Chico, Oroville, Yuba City, Linda and 7 in the Bakersfield area including one in Taft.

The franchisee-operated stores have been purchased by AFC Enterprises Inc. of Atlanta, a franchisor and operator of Popeye’s Louisiana Kitchen restaurants. After remodeling and refurbishing, the stores will re-open in two to five months as Popeye’s restaurants, company officials said.

The $13.8 million deal, roughly $475,862 per restaurant, was completed with Wagstaff Management Corp. after U.S. Bankruptcy Court Nancy Dreher in Minneapolis approved the sale Wednesday.

“We knew it was coming when we heard 18 months ago that Denny Wagstaff, our franchisee in Boise, Idaho, had filed for bankruptcy under Chapter 11 for reorganization. But it wasn’t until we received an emergency conference call Friday (Nov. 9) that we learned he had lost all of the stores in a bankruptcy sale,” said Tasha Holland, 27, manager of the combination KFC/A&W Rootbeer store in Anderson.

Approximately 20 employees at the Anderson store are affected by the closure and unknown hundreds of employees throughout the north state, said Holland, who started working at the Anderson store when she was 15.

“It was my first job, and I really thought it would be my last job. I intended to work here until the owner’s children and grandchildren had inherited the business,” she said.

Holland and the other KFC employees will learn more about the new owners/operators of each franchise location on Tuesday “when we find out more about the Popeye’s brand,” she said.

“We know the stores will be closed for approximately two months as they redecorate, refurbish and rebrand the locations. It is very possible that we will all be rehired since we already have the expertise and know the communities and our customers,” Holland said.

Meanwhile, a steady stream of customers Holland identified as “regulars” filled the Anderson restaurant’s drive-through lane or lined up at the order counter inside for one last bucket or box of Kentucky Fried Chicken.

“They are showing u a ton of support. We are going to take care of our customers and I just hope the customers will continue to support us after the changeover takes place,” Holland said.

On hand in Anderson to help Holland close up shop Saturday evening was Wen Wagstaff of Salt Lake City, division manager for the franchisee’s 26 California stores.

“We had 82 stores throughout the country at one time, but we sold off some of them,” Wagstaff said.

Until Saturday, Wagstaff Management Corp., also operating as D&D Food Management, had 77 KFC stores in Alaska, Idaho, California, Minnesota and Texas.

However, the company owned more than $61 million to two lenders, GE Capital and Perella Weinberg Partners, plus another in unsecured debt, some of which came from a 2005 purchase of several KFC restaurants in Minnesota, according to court records cited by Jonathan Maze in a May 3, 2011, report published by Restaurant Finance Monitor.

“Wagstaff is known more for being the operator of the Anderson, Calif., KFC where, in 2008, a pair of female employees stripped down to their underwear, took a bath in one of the restaurant’s sinks and then posted the pictures to MySpace. Those girls got fired, but the incident didn’t lead to the company’s bankruptcy. Dept, falling sales and too many capital requirements did,” Maze wrote in 2011 when the bankruptcy was first announced.

Wagstaff’s president, Denman Wagstaff, wrote in a bankruptcy court statement that “the company was operating profitably, but it was left with little cash” after Louisville, Ky,-based KFC Corporation required all of its franchisee operators to upgrade their restaurants to the latest corporate model, according to Maze.

“Those capital expenditures generated little increase in sales” and significantly affected the bottom line when sales and profits “began to fall significantly” in 2008, Maze concluded.

As the second-largest U.S. chicken chain, Popeye’s is hoping to cash in big on its rapidly expanding footprints in both northern California and Minnesota, reports Mike Hughlett of the Minneapolis Star Tribune in a story published Nov. 7.

“Popeye’s has a lone Minneapolis outpost, while KFC has over 40 stores in the Twin Cities, including the 14” just acquired by Popeye’s, Hughlett reports.

In northern California, the only Popeye’s location listed along the Interstate 5 corridor between Sacramento and the Oregon state line is one shop inside the TA Truck Stop between Anderson and Redding.

An Oregon-based KFC franchisor stepped forward late in the process and bit nearly $17 million for Wagstaff’s 28 locations, but the bankruptcy judge required both bidders to come up with the cash by next Tuesday, Nov. 13, only Popeye’s could deliver, Hughlett’s story revealed.

KFC Corporation was founded by Colonel Harland Sanders in 1952 and operates 15,000 KFC outlets in 105 countries and territories worldwide.

There has been a KFC restaurant in Anderson since October 1998, although the franchisor sold the original store and moved to 3088 McMurray Drive in 2007.

UPDATED: to correct locations of other stores affected

© 2012 Anderson Valley Post. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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