Krystal spent much of the past year working to improve the quality of two core products, burgers and fries, and this year it wanted customers to taste the fruit—or burgers—of its efforts.
The company then turned to an unlikely source for inspiration: casual dining. It’s there, from promotions such as Applebee’s All You Can Eat Riblets and Olive Garden’s Never Ending Pasta Bowl, that Krystal got the idea for its $5.99 unlimited burgers and fries promotion.
“You’re hearing so much about Olive Garden’s success and Applebee’s success,” CEO Paul Macaluso said in an interview with Restaurant Business. “We’re paying attention to what’s working.”
Apparently, the offer is working for Krystal. It has done so well, in fact, that the company is extending it for another month, until the end of August.
“One of the things we saw, in the first few days of the promotion, [was] lots of people responding to us asking if it was real,” Macaluso said. “They thought it was too good a value to be true. People are responding. They’ve gone in and tried it.”
Krystal’s all-you-can-eat promotion, one of the first of its kind in the burger space, demonstrates the aggressive strategies some brands are using to generate customer growth.
Same-store sales and traffic have been weak industrywide for the past four years. While larger brands have deployed marketing strategies and technological solutions to generate customers, smaller chains such as Krystal have to think outside the box.
“You’re always looking for that thing that helps you stand out,” Macaluso said.
Krystal, in particular, was in need of a jolt. The chain’s system sales have fallen in each of the past three years, down 6.5% over that period, according to data from RB sister company Technomic. Unit count declined 2% last year, to 356.
Macaluso was brought in just over a year ago from McAlister’s Deli to lead a revitalization. “We have a ton of initiatives to revitalize the brand,” he said.
That included a focus on the core products. Krystal changed the cooking procedures for its burgers, steaming them longer so customers receive a hotter product. The company also retrained employees on french fries, ensuring staff understood the proper hold times and preparation. Krystal also changed the salt used for the fries and changed the salt shaker.
The chain also recently introduced Tater Tots, which are included in the all-you-can-eat offer.
The promotion was designed to get customers to try those products. “The reason this was such a great start for us is that it was tied into our quality improvements,” Macaluso said.
Interest in the offer has grown since it started. At first, the company was selling about six of the all-you-can-eat deals per day, per store. That has more than tripled as awareness has built.
“We’ve seen a good mix, and it has not stopped,” Macaluso said.
Such deals do tend to generate profitability concerns. Letting customers get as much food as they want for a specific price can be troublesome at a time when the operating environment is proving difficult, especially for franchised businesses.
But Macaluso said the company tested the offer before going systemwide and found that the restaurants can still generate profits despite a “slight” increase in food costs.
Most customers, for instance, add drinks to the order. And about 45% are getting their burgers with cheese, which costs $7.99. Customers are ordering fewer than 10 Krystal burgers per person.
“The other thing is, people are coming in groups, and not everybody is doing all-you-can-eat,” Macaluso said. “Our check is double what the typical average check is when you have an all-you-can-eat item on the ticket. So it not only drives traffic, but it drives profit.”
The deal is also changing how customers use the brand.
Like most fast-food chains, Krystal gets more of its business through the drive-thru. Earlier this year, 70% of its business came through that window. Only 30% was dine-in.
Since the promotion started, the percentage of dine-in business has increased to 33%. The all-you-can-eat deal is only available inside.
“It shows that when you have a compelling offer, customers will actually change a little bit of their behavior,” Macaluso said.
Those customers have included two friends who brought with them a high-school referee to watch over an eating competition, as well as entire football team who tried to see how many Krystal burgers they could eat.
“We’ve seen some really cool customers coming in,” Macaluso said.
Would the company offer the deal again? “We’re open to that,” Macaluso said. The company is “testing other versions of the offer,” but he said future iterations would likely be tied to other product changes or improvements, much like this one.
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