Krystal to Sell 100-150 Company-owned Restaurants to Franchisees

Staff Report From Metro Atlanta CEO

Thursday, October 31st, 2019

The Krystal Company plans to refranchise approximately 100-150 company-owned restaurants to well-capitalized multi-unit operators as part of its ongoing business and fleet revitalization. To that end, Krystal has engaged The Cypress Group, a specialized investment banking firm, to manage the refranchising initiative. Restaurants in Alabama, Florida, Georgia, Mississippi and Tennessee will be refranchised.

"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. "We've seen great success with the new restaurant prototype, remodels and operational upgrades. It's time to accelerate the redevelopment of the fleet and expand our footprint through strategic refranchising."

Macaluso added that the sales lifts from upgrading to a newer, smaller and more efficient prototype have been unlike others he has seen in his 25-year QSR career. The brand has rebuilt nine restaurants since 2018, generating first year-over-year comp sales ranging from +29.8 percent to +107.5 percent for the periods each has been opened. He added, "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. Same menu, same location, just a new building – and you see how people really flock back to the brand. We now want to bring this elevated experience to our customers across our footprint."

Macaluso hired Cypress to insure a consistent and disciplined approach to the process. Focused exclusively on the restaurant industry, Cypress has completed refranchising engagements for national and regional brands and is widely regarded as the category leader.

Krystal recently signed veteran franchisees Anand Patel and Kalpesh Das of Slider Joint, LLC to a three-unit deal in Jonesboro, Arkansas. Das and Patel are the first new franchisees to join Krystal since 2005. Additional information about Krystal's new franchisees, the stellar results of the recent "scrape and rebuild" restaurants and the overall momentum of the Krystal brand were shared in a recent article in QSR Magazine.

The South's oldest fast-food brand, Krystal was selected to USA Today's Top-10 Best Regional Fast Food List and recently received the ATD BEST Award for its best-in-class talent development practices and programs.