USA TODAY International Edition
Fast- food chain Krystal files for bankruptcy
Company says stores will continue to operate
Fast- food chain Krystal has filed for Chapter 11 bankruptcy protection despite efforts to shore up its bottom line by closing dozens of restaurants.
The Dunwoody, Georgia- based company, whose restaurants are scattered throughout the southeastern U. S., blamed rising labor costs and online delivery competition as factors leading to its bankruptcy.
Krystal has 182 company- owned restaurants and another 116 franchise locations in at least nine states, according to court filings: Georgia, Tennessee, Alabama, Florida, Kentucky, Mississippi, North Carolina, South Carolina and Arkansas.
Most of its restaurants are in suburban communities, with many of them near interstate exits.
Founded in Chattanooga, Tennessee, in 1932, Krystal is known for its eponymous square- hamburger slider with steamed bun, diced onions, pickle and mustard.
“Shifting consumer tastes and preferences, growth in labor and commodity costs, increased competition, and unfavorable lease terms” were key reasons for the company’s bankruptcy, chief restructuring officer Jonathan Tibus wrote Monday in a court filing.
He also mentioned “the proliferation of fast casual restaurants as well as online delivery platforms” and “increasing difficulty finding and retaining qualified employees in the current labor market.”
Krystal, which calls itself the secondoldest quick- service chain in the country, had 4,890 employees as of Sunday’s bankruptcy filing.
Owned by K- Square Restaurant Partners LP, Krystal received an investment of $ 59.8 million in April 2018, which it used to repay $ 42 million of loans, fund “substantial remodeling” and make other investments, such as marketing, according to a court filing.
The company closed about 44 locations over the past year, including 13 on Dec. 15, to boost its finances.
“Both company operated and franchised Krystal restaurants will remain open and operating as usual and our customers can expect to continue to enjoy the same great food and service that they have come to expect from us,” the company said Tuesday in a statement.
“The actions we are taking are intended to enable Krystal to establish a stronger business for the future and to achieve a restructuring in a fast and efficient manner. We are pleased to be ready to move towards a brighter future for the brand and have the support of our stakeholders.”
Krystal also said in a court filing that it’s “actively investigating a security incident that involves one of the payment processing systems” that services some of its restaurants.