Krystal Co. plans to sell 100 to 150 locations in several states to franchisees as part of a strategic effort to spur the chain’s growth.
The company has hired investment banking firm The Cypress Group to manage the effort. Krystal wants to sell restaurants in Alabama, Florida, Georgia, Mississippi and Tennessee to operators.
The refranchising represents more than a third of the company’s more than 350 locations and roughly half of its more than 200 company-owned restaurants.
“We’re ready for the next step in the brand transformation that began when I came on board in 2018,” CEO Paul Macaluso said in a statement. He said the chain has had “great success” with its new prototype, remodels and operational upgrades. “It’s time to accelerate the redevelopment of the fleet and expand our footprint through strategic refranchising.”
System sales at the Atlanta-based chain have declined more than 9% over the past two years, according to data from Restaurant Business sister company Technomic.
Macaluso was named CEO 18 months ago and the company unleashed numerous changes, including some designed to generate more customer enthusiasm. The efforts included an all-you-can-eat offer this past July that helped generate both sales and traffic.
Krystal has rebuilt nine restaurants since last year that generated first-year same-store sales ranging from nearly 30% to 107.5%.
“Same menu, same location, just a new building, and you can see how people really flock back to the brand,” Macaluso said.
The company recently signed its first new franchisees since 2005. Cypress will manage and coordinate all sale discussions and work with potential buyers on the refranchising strategy.