The Krystal Company on Sunday filed for Chapter 11 bankruptcy protection, citing debts of between $50 million and $100 million.
The Dunwoody, Ga.-based quick-service burger brand filed its petition in bankruptcy court for the Northern District of Georgia, according to documents.
The Krystal Holdings Inc. petition listed 30 unsecured creditors, with the largest being The Tombras Group media agency of Knoxville, Tenn., at $4.2 million, US Foods Inc. of Rosemont, Ill., at $2.9 million and Radiant Systems of Atlanta at $560,053.
"The actions we are taking are intended to enable Krystal to establish a stronger business for the future and to achieve a restructuring in a fast and efficient manner," the company said in a statement Monday afternoon. "We are pleased to be ready to move toward a brighter future for the brand and have the support of our stakeholders."
The company had announced a management shakeup in mid-November.
The company said Paul Macaluso, president and CEO, and Berry Epley, the chief financial officer had left the brand. Macaluso later was named president and CEO of Orlando, Fla.-based Another Broken Egg Cafe of America Franchising, a division of The Beekman Group.
Krystal named Tim Ward, previously from Captain D’s, as president and chief operating officer, and Bruce Vermilyea, who spent 18 years at Qdoba, as chief financial officer. The Chapter 11 petition was filed by Jonathan Tibus, the company's chief restructuring officer.
Just a month before, the Krystal had announced plans to refranchise between 100 and 150 of its company-owned restaurants.
In October, Krystal said it had 318 restaurants, with 202 of them company-owned and the remaining 116 franchised. It had hired The Cypress Group, an investment banking firm, to manage the refranchising initiative for restaurants in Alabama, Florida, Georgia, Mississippi and Tennessee.
Krystal in summer 2018 introduced a new prototype in Jackson, Miss., that reduced the unit size to 1,788 square feet compared to older units that ranged between 2,000 to 2,500 square feet and trimmed interior seating to 36 to 46 compared to an earlier average of 75 seats. The proportion of kitchen space was also increased.
In the most recent Nation's Restaurant News Top 200 census, Krystal ranked No. 112 among brands in U.S. systemwide sales, with an estimated $401 million in the fiscal year ended in December 2018, up about 4% from $397 million in the preceding year.
Krystal said it had established a "restructuring information hotline" for interested parties at (888) 249-2792 (U.S./Canada) or (310) 751-2607 (international).
Krystal, owned by the Atlanta-based Argonne Capital Group LLC, was founded in Chattanooga, Tenn., in 1932 and has units in nine states.
Update Jan. 20, 2020: This story has been updated with a comment from the company, hotline information and NRN Top 200 data.
Contact Ron Ruggless at [email protected]
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