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Krystal to Refranchise Majority of Company Owned Stores

Krystal’s brand transformation plans include re-franchising and remodeling its restaurants with a new pro-type in an effort to increase sales. Is it working?

Photo Courtesy of NRN.

The Krystal Company announced plans to refranchise between 100 and 150 of its company-owned restaurants.

The Atlanta-based company has 318 restaurants, with 202 of them company-owned and the remaining 116 franchised.

The company said it has hired The Cypress Group, an investment banking firm, to manage the refranchising initiative for restaurants in Alabama, Florida, Georgia, Mississippi and Tennessee.

"We're ready for the next step in the brand transformation that began when I came on board in 2018," said Paul Macaluso, Krystal president and CEO.

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.

Macaluso said the brand has rebuilt nine restaurants since last year, and they have generated first year-over-year same-store sales increases ranging from 29.8% to 107.5%.

"While we don't need full remodels on all the restaurants we intend to sell, we believe these facility investments demonstrate the appeal of Krystal,” he said.

Krystal said it recently signed its first new franchise group since 2005 in a three-unit deal Anand Patel and Kalpesh Das of Slider Joint LLC in Jonesboro, Ark.

Krystal was founded in Chattanooga, Tenn., in 1932 and has units in nine states.

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