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Krystal Burger Restaurant Chain Files for Chapter 11 Bankruptcy

Krystal Burger has faced increased competition, a rise of online delivery platforms, and a tight labor market. Will restructuring and a new CEO be the answer to future success?

Photo Courtesy of NRN.

The Krystal Company filed for Chapter 11 bankruptcy protection, citing debts of between $50 million and $100 million.

The Krystal Holdings Inc. petition listed 30 unsecured creditors, with the largest being The Tombras Group media agency of Knoxville, Tenn., at $4.2 million, US Foods Inc. of Rosemont, Ill., at $2.9 million and Radiant Systems of Atlanta at $560,053.

The actions were taken to establish a stronger business and achieve a restructuring in a fast and efficient manner.

The company had a management shakeup in mid-November when Paul Macaluso, president and CEO, and Berry Epley, the chief financial officer had left the brand.

Krystal named Tim Ward, previously from Captain D’s, as president and chief operating officer, and Bruce Vermilyea, who spent 18 years at Qdoba, as chief financial officer.

Just a month before the filing, Krystal had announced plans to refranchise between 100 and 150 of its company-owned restaurants.

In October, Krystal said it had 318 restaurants, with 202 of them company-owned and the remaining 116 franchised.

The Cypress Group, is managing the refranchising initiative for restaurants in Alabama, Florida, Georgia, Mississippi and Tennessee.

Krystal in summer 2018 introduced a new prototype in Jackson, Miss., that reduced the unit size to 1,788 square feet compared to older units that ranged between 2,000 to 2,500 square feet and trimmed interior seating to 36 to 46 compared to an earlier average of 75 seats. The proportion of kitchen space was also increased.

Photo Courtesy of NRN.

In the most recent Nation's Restaurant News Top 200 census, Krystal ranked No. 112 among brands in U.S. systemwide sales, with an estimated $401 million in the fiscal year ended in December 2018, up about 4% from the preceding year.

Krystal, owned by the Atlanta-based Argonne Capital Group LLC, was founded in Chattanooga, Tenn., in 1932 and has units in nine states.

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