Portland Pastrami Staple Kenny & Zuke’s Is Filing For Bankruptcy

The proprietors of Kenny and Zuke's, the long-running sandwich shop whose Jewish deli fare has been a Portland favorite for more than a decade, are planning to file for bankruptcy, owner and chef Ken Gordon has confirmed to WW.

In an email sent to investors yesterday, Gordon announced that the company's LLC, Body by Pastrami, will be undergoing Chapter 11 reorganization in order to keep the business open. The move, Gordon wrote, is "necessitated by the large amount of debt incurred over the years."

A civil suit from food distributor Performance Food Group, alleging Kenny and Zuke's owes $184,494 in unpaid invoices, was the main factor in the decision, Gordon tells WW.

The planned reorganization, he says, will allow the debt owed to multiple creditors to be paid back in full over the course of eight to 10 years while drastically decreasing their monthly payments.

But Gordon says the restaurant is in "absolutely no danger of closing, or curtailing operations in any way."

"Quite the contrary, we are in the process of formulating plans for further expansion," he says. "We are currently profitable on an operational basis, and expect to increase that profitability in the future."

Kenny and Zuke's opened its original delicatessen at 1038 SW Stark St. in 2007. The brand later expanded to include Kenny and Zuke's Bagelworks in Northwest Portland and a location at Portland International Airport. (Nick Zukin, the restaurant's second namesake, is no longer affiliated with the business.)

In his email to investors, Gordon says he hoped to avoid debt restructuring by selling their bagels wholesale, but "it hasn't been happening fast enough to help that much."

To increase profitability, there are plans to raise menu prices and reduce overhead, while increasing their wholesaling business and "increasing our profile in Portland with more special events and PR." But Gordon says none of its 48 employees will be laid off.