No More Twinkies? Hostess Files for Bankruptcy
It’s a sad, sad day for those who love Twinkies, Ding Dongs, and other Hostess snacks. Founded in 1930, it’s a brand that’s been shared by generations of families, and has steadily made around $2.5 billion a year in sales.
What went wrong? First off, Hostess workers have been striking across the country after rejecting a contract offer back in September that slashed wages and benefits. Then, last night’s deadline to reach a deal with them passed without a solution, resulting in the loss of 18,500 jobs.
Hostess Brands Inc. says it had no other choice but to file a motion with the U.S. Bankruptcy Court this morning so it could stop operations. And, striking workers knew what the outcome would be if a deal couldn’t be reached.
CEO Gregory Rayburn told CNBC today, “I don’t know if they thought that was a bluff,” but that it was now too late for workers to change their minds.
It’s a sad ending for the company that filed for Chapter 11 protection at the beginning of this year. Rayburn places the blame of the company’s demise on the union’s leadership.
He says the union misled workers into believing there was a buyer waiting in the wings to come rescue the company, and that calls to reach them had gone unanswered the past month.
While the strike may be a big part of the abrupt ending to this brand, Hostess was fighting battles beyond labor costs. The company has faced increased competition from “healthier” snack brands for years. With the American obesity epidemic getting worse, Hostess snacks have been banned from many households looking to eat healthier.
Hostess, a privately held company, has around 30 different brands including Ho Hos, Dolly Madison, Drake’s and Nature’s Pride snacks, and Rayburn is hopeful they’ll find a buyer to take over the brands.
While some stores will remain open to sell out as many remaining products as possible over the next few days, 33 factories halted operations today.
It’s a sad ending for a company many of us remember fondly.