First Pizza Hut, Now Twinkies maker Hostess laying off people

Sorry - I meant flatlining of sales. If their prices go up, their revenues would go up too.

 

If by "economies of scale," you mean twinkies the size of toaster ovens, you have my attention.

 

Serious Question: When was the last time we heard of a CEO getting his salary slashed?

Either get fired with a buyout . . . .or they get raises.

Rocket River

 

Hostess has 12 different unions including the BCTGM. Unlike some non-unionized rivals, the maker of Wonder Bread and Drake's cakes had to navigate more than 300 labor contracts, with terms that often strained efficiency and competitiveness. In some extreme cases, contract provisions required different products to be delivered on different trucks even when headed to the same place.

 

With the increases we have seen in fuel prices over the last six years, this is lunacy. It isn't just inefficient...it is a major expense component that could have been mitigated.

 

Their loses stem from a continuous drop in sales over a decade.

In that time, the unions have made repeated concessions, with their salaries dropping 25%, with cuts to pensions and health benefits, and even having to pay weekly surcharges. If you were once making $45K and now make $35k to help a company stay afloat, after 23 years on the job, after pension cuts and health cuts, after being told you have to sacrifice more every few years to keep the company going......and then after all of that, you are asked to cut your pay by another massive amount, to give up more pension and health benefits, I think the workers have a right to say enough is enough.


The unions did their part over the past 1o years. People act like the unions wouldn't budge an inch. This is a ridiculous lie. They sacrificed a ton.

At some point we all have to realize that this company can't make a profit. Sell the brand to someone who can make a profit while still paying their unions a living wage.

 

You keep trumpeting this. Hostess had $2.5 billion in sales last year. That's a lot of bread and snacks sold.

Ignoring their inability to reduce costs by allowing multiple brands to share in shipping costs combined with continue assertions regarding profitability that you could not know without a detailed analysis of the financial statements and the Chapter 11 plan shows that you are merely guessing based on your own biases.

 

I agree on the unions aspect - and I'm not arguing the unions *should* give in. They should each make the decision they feel is best for them. One of the public faces of the Bakers' Union said, fairly effectively, "I can't replace the job I had; but I can easily replace the job they were offering me." I don't blame the unions one bit for standing firm there if they didn't feel the deal they were given was very good.

But that's very different from a company's general inability to be profitable. By all accounts, they've had terrible management and leadership for the past decade. Even the current management publicly stated that the previous management sucked and made lots of mistakes. But that doesn't mean a brand or a business is unfixable. All it means is that the previous guys were unable to fix it. So in that regard, the equity of the company *could* have value if it got new management and new ownership (ie, not hedge funds looking to strip it into pieces).

 

There ya go again...using logic.

Lou continuously claims declining sales without any data to substantiate that $2.5 billion last year is a decline. He has a preconceived notion about junk food companies that is based on his world view rather than data. There is no reasoning with a mindset like that.

He states repeatedly that the company could never be profitable without analyzing the cash flows and the projections that incorporate changes in debt structure via the Chapter 11 plan.

The Baker's Union came to their conclusion. The Teamsters disagreed. We will not know who was right. Any conclusion of who was right must include an analysis of cash flow and must necessarily incorporate the changes in cash flow that would have been dictated had the Chapter 11 plan been confirmed.

 

http://www.scribd.com/doc/113318975/Hostess-Disclosure-Statement

Apparently my warped reality is founded in the crazy world of facts. You should try visiting that world before you attack someone. You don't know what you are talking about and that's common enough on an internet forum, but seriously, at least try to do more homework before regurgitating superficial news talking points.

 

You know...there has been decreased demand of roughly 5% over the last 52 weeks while we have 8% unemployment. Shocking.

I am sure that you have reviewed the financial statements and how the plan would impact cash flows. I am sure that you have analyzed how the 5% or so impacts $2.5 billion dollars in annual revenues.

Also, please explain, if demand is so crippled why the Teamsters found it to be a good bet.

As for me not knowing what I am talking about, I trust that I know more about reorganization plans than most here. I do, after all, practice bankruptcy law. I do not do corporate cases, but I am familiar with the process.

 

5% year over year declines for a while man. It's crippling. And the fact that you try to compare that to the unemployment rate is ridiculous. You don't know what you are talking about. Hostess has gone from nearly 4 billion in sales 10 years ago to 2.4 billion now. It's dropping 100 million a year. You can't keep restructuring every year which is what it has been trying to do for the past decade.

You will have to ask the teamsters why they took the offer. I am not the Teamsters and the union and since when does the Union become the arbitrator of all things wise decisions????

You accused me of lying and making things up. I showed you were wrong. Man up and just admit you falsely attacked me, or just shut up. Geez, you are worse than bigtexxx.

 

Lol I enjoyed how you kept complaining about there not being any data stating sales declined. Then when you were shown that sales declined you justified the decline :grin:.

Entertaining!

 

Here is a suggestion. Do what the rest of us non-union employees would do; Get a different job.

I am not anti-union. Any work environment that has serious safety issues and subjected to work abuse needs a union. The fact remains is that union employees are often overpaid. If this wasn't the case, then these over paid employees would be leaving for greener pastures.

The employees and management are both doing the same thing; Trying to get the best deal for both of them. I don't understand why some feel upper management needs to make the biggest concessions, even if they are making a couple million a year. Sure, they could cut their pay in half and pay the employees more, but in that same aspect, employees could cut their pay in half and help the needy in their own neighborhood. Neither are going to do this because they are both "greedy".

If my employer kept cutting my pay and benefits, I am going to do the same thing the executives did at hostess. Find a better paying job. The only difference is that my company,as an employee, will not shut its doors if i leave.

Do I feel bad for Hostess employees? Not really. They felt the company was morally obligated to give them a well paying job, when in fact, it was pretty apparent the company was in trouble for years. They had years to prepare to find a better paying job.

 

Employees making $45k and a pension/benefits were already cut to $35k and less benefits already. Now they are asked to take another 30% cut?

Management is getting raises - RAISES and the employees get cuts? That's fair?

Ok, put that aside. I don't feel sorry for anyone here either - business is business, and everyone is responsible for ensuring their own future. But I think it's find if the union doesn't want to take a crappy offer and no one should demonize them for it. This quote from a former employee best somes it up:

Here's the deal this guy was offered:

Like I said, business is business, but people here are demonizing the unions for not taking a really really crappy deal. Teamsters or no Teamsters, I don't blame the Bakers for saying No.

 

You know what. You're right.

You brought data. My apologies.

I admittedly have not read the 154 page disclosure statement and plan. Given the sales decline, I do find it curious that a bankruptcy judge felt the plan meritorious enough to justify mediation with the union.

It is an odd situation. It would be interesting to see the transcripts from the hearings.

 

It's cool. I probably was a bit overboard there in my reaction. I do respect your opinions and usually find that you are fairly analytical in your thinking.

I think any person would want two sides to hash it out to make an iconic American brand say alive. Judge probably was just trying to give it one last go.

And you are right - there is other junk food brands that are doing well so clearly it isn't just the declining sales - it's the inability for this company to adjust to a smaller market for it's product. It could be a marketing failure, but more likely an inability to find efficiencies in their overall way of doing business. They tried to reduce costs by hitting labor, but I think they milked all they could from that to a point they were offering uncompetitive comp.

Instead they needed to consolidate their factories and find ways to streamline operations - something they neglected for too long and now they have to pay the price.

Hopefully another company will buy the brands and keep them going. Ironically, i came home for thanksgiving and found that my mom had bought a loaf of wonder bread - whole wheat. I asked her why and she said, "It was the only whole wheat brand left on the rack that day"

 

It is the most odd situation I have ever seen in business. Well, GM was weirder because its bankruptcy arguably didn't even comply with the bankruptcy code.

You may be spot on when you state that the judge wanted to give it one last go. Under section 105 of the bankruptcy code, the judge can issue any orders that further the goals of the code. It is pretty much a catch all to allow the judge to do whatever he or she wants that is not in direct conflict with the code. That Judge Drain was willing to spend his time acting as mediator is, I would guess, an indication that the plan was otherwise confirmable. Section 1129 requires a finding that the plan is feasible in order to confirm it.

That is all just a guess. Nobody knows how the judge would have ruled on confirmation.

I do appreciate the kind words. I too overreacted. That ought to teach me to post without reading it first.

 

Pizza Hut slowly going down in flames

https://www.cnn.com/2020/08/17/business/pizza-hut-closures-npc-international/index.html

300 Pizza Huts are closing after a giant franchisee goes bankrupt
By Jordan Valinsky, CNN Business
Updated 11:05 AM ET, Tue August 18, 2020

New York (CNN) Up to 300 Pizza Hut restaurants are slated to permanently close following the bankruptcy of one the chain's largest franchisees.

NPC International, which filed for Chapter 11 in July, announced an agreement Monday with Pizza Hut's owner Yum! Brands (YUM)to close roughly a quarter of its restaurants and sell the remaining locations. Specific restaurants and timing have not yet been determined, but NPC said a "substantial majority" of affected locations have dining rooms.

The agreement provides NPC with "flexibility to explore options for achieving a value maximizing outcome as it seeks to finalize the terms of a comprehensive financial restructuring and emerge from Chapter 11," it said in a release. A perfect storm of coronavirus-related shutdowns, a massive debt burden of nearly $1 billion and rising labor and food costs tipped NPC into bankruptcy.

Pizza Hut said Monday that the 300 US locations "significantly underperform" compared with the rest of NPC's Pizza Hut locations, and it will help employees find jobs at nearby Pizza Hut restaurants. The chain has been shifting away from opening and operating restaurants with dining rooms. Instead, it is encouraging customers to order pick-up through its website or third-party apps.

"We have continued to work with NPC and its lenders to optimize NPC's Pizza Hut restaurant footprint and strengthen the portfolio for the future, and today's joint agreement to close up to 300 NPC Pizza Hut restaurants is an important step toward a healthier business," the pizza chain said in a statement.

NPC's 1,227 Pizza Hut locations account for 20% of the chain's 7,000 US locations. NPC's remaining portfolio includes operating roughly 400 of Wendy's 6,500 restaurants in the US.​

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