Houston-based SPB Hospitality today announced the completion of its merger with Krystal Restaurants, a quick-service burger chain with nearly 300 restaurants.
With this merger, the 91-year-old, Chattanooga, Tenn.-based Krystal joins SPB’s growing roster that includes Logan’s Roadhouse, Old Chicago Pizza & Taproom, J. Alexander’s, Merus Grill, Redlands Grill and Stoney River Steakhouse and Grill. SPB also operates Rock Bottom Restaurant & Brewery, Gordon Biersch Brewery Restaurant, ChopHouse & Brewery, Big River Grille & Brewing Works, AIA Ale Works Restaurant & Taproom, Ragtime Tavern Seafood & Grill and Seven Bridges Grille & Brewery.
In an interview Wednesday afternoon, SPB’s interim CEO Josh Kern said Krystal may seem like a unique fit for the company’s portfolio, which includes full-service and brewery concepts across 35 states, but adds that it fills a very important gap in an important QSR category.
“For us, as we start to turn on our business drivers and look at our growth potential, it just made sense to get this out there and put all of these brands under one roof while still maintaining their individuality,” he said. “When you’ve got all these brands, from QSR to upscale, it can be complicated and it doesn’t necessarily fit like a Lego brick. But ultimately it will attract more franchisees and it will provide opportunities from being in a shared environment.”
The shared services model is the impetus behind this merger. The discussion to add Krystal began in the throes of the pandemic, when Fortress Investment Group acquired the chain out of bankruptcy. Later that year, Fortress acquired the newly formed SPB. In 2021, SPB added J. Alexander’s to the mix.
These moves were made to expedite recovery from an unprecedented time and SPB was hardly the only company adding more companies to expand its scale for stronger positioning. That strategy remains critical now and Kern said Krystal stands to benefit from being a part of a shared services model accordingly.
“In creating a shared services entity, we became more efficient and have taken those learnings to understand what makes the most sense for our brands – how do we use the point-of-sale to our advantage, what do we do in terms of distribution, those elements. As you build a tech stack and put your menus together you can see what’s really working and that allows us to be more razor sharp,” Kern said.
This work toward efficiency has become more important, he adds, as restaurants became “too complicated” prior to the pandemic.
“Over the years, we just started adding widgets and gadgets and overcomplicated things,” Kern said. “When we went through Chapter 11, we had to look at all of it and some of our vendors and partners, we didn’t know what they were. Now we’re trying to turn this thing on its head. We can’t do what we’ve always done in the past. We’ll never homogenize the brands, but we can find efficiencies and that is the approach we’re taking.”
SPB’s near-term plans with Krystal are to modernize the brand – from the POS to the drive-thru – update facilities, leverage that new shared services model to drive down electric, gas and other costs, and continue its refranchising efforts.
“Over the years, the brand has slipped a little bit. We are going back to the basics and really focusing on operations and having the best experience at the drive-thru and looking at the product itself. There are a lot of opportunities,” Kern said. “We are going to be as basic as we can by focusing on food quality, service and atmosphere.”
Those three attributes are a priority for all of SPB’s brands and Kern said that will be the case for the foreseeable future.
“The strategic direction of our company is focused on food quality, service and atmosphere,” he said. “For example, we can and have learned from a superior level of service at J. Alexander’s and have started to apply that at Logan’s and I see no reason we can’t do the same at Krystal. If we focus on those three things, that will set us up successfully.”
Contact Alicia Kelso at [email protected]