Krystal, a Fast-Food Chain, Has Filed for Chapter 11 Bankruptcy protection
Krystal, the nation’s second-oldest fast-food chain, had 4,890 employees at Sunday’s bankruptcy filing.
This is despite its efforts to improve its bottom line through the closing of dozens of more restaurants.
The Dunwoody-based company, which has restaurants all over the US, blamed rising labor costs and increased competition for online delivery as factors that led to its bankruptcy.
According to court filings, Krystal owns 182 restaurants and has 116 franchise locations. These are located in at least nine states: Georgia, Tennessee, and Alabama.
Many of the restaurants are in suburban areas, close to interstate exits.
Krystal was founded in Chattanooga in Tennessee, in 1932. It is best known for its square-hamburger slider.
Jonathan Tibus, chief restructuring officer, wrote Monday that the main reasons for the Krystal’s bankruptcy were “Shifting consumer preferences and tastes, growth in labor costs and commodity prices, increased competition and unfavorable terms of the lease” in a court filing.
He also spoke out about “the proliferation of fast-casual restaurants and online delivery services” and “increasing difficulty in finding and keeping qualified workers in the current labor marketplace.”
K-Square Restaurant Partners LP owned Krystal. In April 2018, Krystal received $59.8 million. According to a court filing, this was used to repay $42,000,000 of loans, fund “substantial remodeling,” and make other investments.
To boost its finances, the company has closed 44 locations in the past year, 13 Dec. 15.
On Tuesday, the company released a statement stating that both franchised and company-operated Krystal restaurants would remain open as normal. Customers could continue to enjoy the great food and service they have come to love from us.
“The actions that we are taking will enable Krystal to establish a stronger business in the future and undergo a rapid and efficient restructuring. We are happy to have all our stakeholders’ support and move toward a better future for the brand.
Krystal also stated in court filings that it is “actively investigating” a security incident involving one of its payment processing systems that serve some of its restaurants.
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