Josh Kern has his work cut out for him.
Kern is the CEO of SPB Hospitality Group, the owner of 16 restaurant brands including Logan’s Roadhouse, J. Alexander’s and Krystal.
He was named interim CEO in August after the departure of Jim Mazany, and last week, the temporary title was made permanent.
Kern’s job has not been easy so far. SPB’s brands struggled last year. Sales at its four largest concepts—Logan’s, Krystal, J. Alexander’s and Old Chicago—increased year over year in 2022, but failed to outpace inflation, according to data from Technomic. Unit growth also stagnated.
Meanwhile, Kern had to navigate a tangled web of “too many projects, too many vendor partners, lots of, ‘Oh, this technology will save the day,’” he said in an interview.
Kern joined SPB after it acquired CraftWorks in 2020. | Photo courtesy of SPB Hospitality Group
That's understandable given that SPB is a patchwork of different restaurant groups stitched together over the past three years.
“There were just a lot of things to essentially clean up and really just get the train on that track and keep that thing humming along,” said Kern, who joined SPB when it bought CraftWorks Holdings in 2020.
As CEO, he has worked to eliminate distractions and refocus SPB on the basics: strong operations, quality food and good service.
Here are some headlines from Kern’s first year on the job.
On the hunt for another brand (or two)
Houston-based SPB was built by acquiring struggling concepts. That began in 2020 with the bankrupt CraftWorks Holdings, owner of Logan’s and a group of brewery brands. SPB then added J. Alexander’s in 2021 and earlier this year merged with 287-unit Krystal. (Both SPB and Krystal are owned by Fortress Investment Holdings.)
That has given SPB a diverse portfolio that includes fast-food, casual, brewery and upscale brands. One gap is in fast casual, but it’s looking to fill that, too.
“We certainly have some opportunities out there to look at potentially growing and adding more flags,” Kern said.
Polishing up Krystal
With Krystal, SPB got a brand that has been losing sales and units for years. Kern said Fortress wanted to bring a new leadership approach to the 90-year-old Southern mainstay.
Its new parent is working to “reignite that fire that Krystal has had,” Kern said. That will include refurbishing the system’s aging restaurants and improving its operations.
“I have the team very much focused on operations 101 for Krystal,” Kern said. “There are just some things that needed to be repaired, replaced, and so really throughout the system, really focusing on what can we do inside those four walls to run more efficiently.”
Technology will be one piece of that. The chain is in the early stages of adding AI voicebots to take orders in its drive-thrus. Once Krysta’s operations are stabilized, Kern said, that initiative will pick up the pace.
Dialing back the tech stack
Speaking of tech, one of the first things Kern did was clean up SPB’s tech strategy. That meant saying no to some vendors and contracts. “We just had a lot of distractions,” Kern said.
Next up is standardizing SPB’s POS system. The company currently uses three different vendors but is in the proof-of-concept stage with a new provider. Unifying the POS across SPB’s more than 500 restaurants will be no easy task.
“The sheer amount of gray hairs these days can probably always go back to point of sale,” Kern said.
Returning to unit growth
SPB’s four largest brands did not add to their unit counts last year, and two of them—Logan’s and Old Chicago—closed locations.
But Kern said both the 135-unit Logan’s and 30-unit J. Alexander’s are growing. A new Logan’s opened recently in Fort Myers, Fla., and J. Alexander’s will open in Naples, Fla., in September and Annapolis, Md., in August.
There are also new Old Chicago stores going up in Denver and outside Atlanta. The full-service pizza chain closed out 2022 with 80 restaurants.
The upscale-casual J. Alexander’s is “our lead growth engine,” Kern said, followed by Krystal, Logan’s and Old Chicago.
Brewpubs struggle
One segment that’s not positioned for growth is breweries. SPB owns about half a dozen brewery brands, including Rock Bottom, Gordon Biersch and Big River.
Kern said concepts like these have more competition now from other forms of “eatertainment,” including local breweries that actually make their beer on-site. And at 10,000 to 19,000 square feet, they are expensive to open and operate.
“It’s just a very tough concept these days,” Kern said.
Virtual brands keep going
One of Kern’s projects as SPB’s former CMO and president of concepts was developing new, in-house brands that could be offered for delivery only.
Twisted Tenders chicken tenders and Roadies Sliders are now available out of all SPB restaurants except J. Alexander’s, Stoney River and Krystal.
And they continue to perform well, Kern said. “There’s some [locations] that do better than others,” he said. The positive is that they use ingredients the restaurants already have on hand and don’t have a negative impact on waste or packaging costs. “We just simply put a sticker on things,” Kern said.
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