WK Kellogg Co. is implementing a plan to streamline its operations by closing one cereal plant in Omaha, Nebraska, by the end of 2026. Additionally, the company will be downsizing production at its Memphis, Tennessee, plant starting next year. The decision to optimize operations includes increasing production capacity and investing in new infrastructure, equipment, and technology at its facilities in Battle Creek, Michigan; Lancaster, Pennsylvania; and Belleville, Ontario. The company anticipates investing $390 million in new technology and infrastructure and incurring a one-time charge of $110 million for restructuring costs.
With this restructuring plan, WK Kellogg expects to see a net loss of 550 jobs, although there will be hiring at the plants that are increasing production. The exact number of job losses from the Omaha and Memphis plants has not been disclosed by the company. Regarding the closure of the Omaha plant, Mayor Jean Stothert expressed disappointment, stating that Kellogg’s decision to close the plant came as a surprise and that the company’s departure will leave a significant void after more than 75 years of operation in the city.
WK Kellogg’s Omaha facility was at the center of a strike in 2021, with workers protesting a two-tier wage structure and other issues, leading to a two-month walkout. The strike concluded with the company agreeing to raises and additional benefits. The consolidation efforts by the company come at a time when there is a decline in the demand for cereals in the U.S. Although cereal sales saw a surge during the pandemic, the trend has been on a decline since then, with unit sales falling by 4.2% in the last year and 3.6% the year before, as reported by Nielsen IQ.
The restructuring at WK Kellogg Co. follows the company’s formation last year when it split from its parent, the Kellogg Co., founded in 1906. WK Kellogg retained the cereal business, housing popular brands such as Frosted Flakes, Fruit Loops, Rice Krispies, and Raisin Bran. The Kellogg Company, based in Chicago, manages other best-selling products like Pop-Tarts, Pringles, Eggo waffles, and Cheez-Its.
Despite reporting that net sales dropped by 4% to $672 million in the April-June period, WK Kellogg saw gains from increased pricing and sales of premium products like Special K Zero. However, overall sales volumes experienced a decline of 4.8%, with competitive pressure from store-brand cereals as customers sought better value. The company’s shares declined by more than 7% following the announcement of the restructuring plan.
