Chattanooga-founded Krystal declares second bankruptcy in long history
3 weeks ago Triangle 0
Written by: Jake Love, staff writer
DUNWOODY, Ga. — The Chattanooga-founded fast food company Krystal, known for its tiny burgers, declared bankruptcy on Monday, Jan. 20, marking the second time in its history the culinary giant has filed.
The Dunwoody, Ga. based company filed for a chapter 11 petition, meaning the U.S. Bankruptcy Court of North Georgia will protect Krystal as it attempts to fulfill its debts. The petition reports how the total of Krystal’s debts currently falls between $50 and $100 million.
The announcement comes shortly after Krystal’s reception of a large investment from their owners K-Square Restaurant Partners LP in 2018, which totaled $59.8 million. Krystal planned to use the money for paying off debts, restructuring and investing in the company’s various departments. Part of this restructuring included the closing of over 40 stores, some in Knoxville and Chattanooga, in 2019. No Dayton stores were affected.
The petition also closely follows a change in leadership for the company, as CEO Paul Macaluso and CFO Berry Epley left the company in November. Macaluso was replaced by former President of Captain D’s Tim Ward, and Epley’s job was filled by former Senior Vice President and CFO of Quiznos Bruce Vermilyea.
Krystal blamed their troubles on outside agents, claiming that higher labor wages and the rise of fast food delivery services burdened their finances. Additionally, USA Today ominously reported how the company is “actively investigating a security incident that involves one of [their] payment processing systems.”
To lead the rebuilding process, Krystal hired Jonathan Tibus, who is the current head of the global professional service firm Alvarez and Marsal. Some of Alvarez and Marsal’s past clientele includes Lehman Brothers and HealthSouth.
Krystal first filed for bankruptcy in 1997, when complaints from employees reporting unfulfilled overtime pay forced them to shell out $150 million.
Founded in Chattanooga, Tenn. in 1932, Krystal is America’s second-longest-running fast food chain, and is the longest-running Southern-based fast food company. They operate over 300 restaurants across the South, including 182 company-owned restaurants and 116 franchised locations. The company itself has 4,890 employees.
Despite their financial stressors, the entirety of Krystal’s restaurants, including over two-dozen in Chattanooga, will continue operation throughout the restructuring process.
Jake Love is a staff writer for the Triangle. He is an English major with an emphasis on creative writing and is from Soddy-Daisy, Tenn. He enjoys reading and consuming large amounts of caffeine.