The Krystal Co. will move its headquarters from Chattanooga, Tenn., to Atlanta early next year, just one of many changes resulting from company’s sale to Georgia-based Argonne Capital Group in March.
The shift in location comes with other big changes for the quick-service burger brand, including an all-new executive team and the implementation of a restaurant improvement strategy, according to Doug Pendergast, who became Krystal's president and chief executive in April.
The move was also motivated in part by the fact that most Krystal restaurants are no longer in Tennessee. Krystal operates 360 quick-service restaurants in 11 states, and 115 of those are in Georgia.
Pendergast discussed the move with Nation’s Restaurant News, as well as what’s next for the regional burger brand.
Why is the company moving now?
The timing is related to the sale of the company and a new management team. As soon as we figured out that this was the best answer we wanted to announce it in order to give folks as much time as possible to move.
After taking over the business we rethought several things about the business. One was what our jobs exist here in the restaurant support center, which was previously called the corporate office. We really view ourselves as having an obligation to provide our general managers with the tools and the systems to be as successful as possible. Part of that comes from being in the restaurants — in the field — and it’s quite difficult to do that being based here in Chattanooga. We have a small regional airport, whereas in Atlanta we can take a direct flight to anywhere in our markets. It’s also [going to make it easier for] leaders from our field to be able to come together as a group.
When will the move officially occur?
We will start moving into the new office in February 2013. We’re giving folks a full six months to complete their relocation. We’re targeting to be done with the move in August 2013.
Chattanooga has been a big part of the brand’s heritage. How will that heritage continue to play into the brand after the move?
The home and emotional center of the brand will always be in Chattanooga. That’s where the founding family, the Davenports, still resides. However, the center of our restaurants is clearly in Atlanta.
Where will the executive team be based?
We’ve made multiple changes to the executive team following the sale of the company. Ultimately, the entire executive team will reside in Atlanta.
From the customer’s perspective, and internally, what’s changing at Krystal?
Several things are new. Not a tremendous amount has changed from the vantage point of our customers other than that we’ve had a couple of big promotions to sell Krystals [hamburger sliders] in 12 and 24 packs. We also have a promotion where you can get a three-Krystal meal for $2.99. That’s driven significant lifts in customer count and sales. From the customer perspective we’re just trying to be faster, friendlier and cleaner.
Internally, a lot has changed. The entire senior management has changed. We’ve put together a systematic way of getting feedback from our employees and a systematic way of getting feedback from our customers. We’re seeing a dramatic improvement in the way we run our business.
We’re incredibly excited by this opportunity. We believe we’ve got a brand that’s different from what’s out there in the marketplace. With small, portable, sharable products, we think we’ve got an advantage. We’re sad to leave Chattanooga but excited about the move to Atlanta.
What will the move allow you to do that you couldn’t before?
The only change that we expect related to the move is that we can provide better and more cost-effective support to our restaurants. That said, we have a multi-year game plan in place to improve the business and, said simply: Our plan is to get better and then to get bigger.
Getting better is about improving the basic execution — the customer satisfaction and profitability in our restaurants. We are firm believers in making fact-based decisions. We really focused on improving the cleanliness, improving the value, improving the consistency of execution at our restaurants. Once we’re done improving there, we’ll look to reimage the restaurants and likely rework the menu. But those things are further down the road.
Will the southeastern region of the U.S. continue to be your target for expansion?
We are in 11 southeastern states today, and all of the analysis we’ve done has shown that we can still grow significantly in the region. Our goal is to open at least 150 restaurants [in the Southeast] over the next five years.
[Expansion] will most likely start slowly and progress over time. That’s the experience I had at Church’s. The first couple of years were about improving execution revising restaurant design and improving our site selection model. Once that’s in place then you can expand development.
If within a few years we’re not opening a restaurant a week then we’re doing some thing wrong, but it’s going to take a few years to get there.