Pillsbury to Shed 3 Restaurant Chains, Take 3rd-Quarter Loss

Pillsbury Co. said Thursday that its directors approved a major restructuring plan that includes dropping three of its five full-service restaurant chains, resulting in a fiscal third-quarter charge of $91 million.

Pillsbury spokesman Johnny Thompson said the charge, which amounts to $1.06 per share, will result in a net loss for the third quarter ended Feb. 29.

The big food concern said in a statement issued after a meeting of its board that Pillsbury will sell or shut its Quik Wok, Bay Street and Key West Grill restaurant chains, consisting of about 30 restaurants.

In addition, 43 company-operated outlets of its Godfather’s Pizza and Burger King chains will also be shut. Thirty other full-service restaurants that it operates will be closed or sold, it said.

Pillsbury said Burger King will upgrade 145 units, primarily in and around Chicago and New Orleans, and modernize or close about 50 company-owned restaurants operated by franchisees.

Pillsbury Chairman John M. Stafford said an unspecified number of people will be let go during the restructuring. Stafford also said the company has “no interest whatsoever” in selling its massive Burger King operation.

Last May, Pillsbury abandoned a plan to spin off more than 100 of its Burger King restaurants because it seemed unlikely to get the minimum $73 million it wanted.

Thompson said the company does not know how many jobs will be lost in the reorganization. “We expect some consolidation over time, and we haven’t made those decisions yet,” he said.

Stafford said he expects Pillsbury’s current-year operating earnings to be “quite a bit better than they were in 1987.” Pillsbury made $465.3 million from operations during its fiscal year ended May 31, 1987.

Pillsbury said its restaurant group will consist of two fast-food chains, Burger King and Godfather’s Pizza, as well as two full-service chains, Steak and Ale, with about 135 units, and Bennigan’s, with 200.

Too Much Variety

At the end of fiscal 1987, the company operated 411 full-service restaurants in five concepts.

“By concentrating on fewer concepts, we will capitalize on our strengths and improve our overall performance,” Stafford said.

Analysts had said that Pillsbury, which had moved heavily into the restaurant business during the mid-1980s in search of quicker growth, simply had too many different types of food outlets to do well.

Pillsbury, whose prepared foods include Green Giant frozen vegetables and bakery goods, also said its consumer foods division will be realigned around centralized marketing and manufacturing functions.

In the consumer foods division, two manufacturing plants in the United States will be closed or sold. The company did not identify the plants.

Pillsbury said it will also close or sell two small canned-vegetable businesses acquired with Joan of Arc in 1985 and two small international foods businesses.

Two small international foods businesses will also be sold, Pillsbury said. Flour milling, industrial bakery mix, feed ingredient and grain merchandising operations also have been combined into an industrial foods division, it said.