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NRA-Show-Josh-Kern-CEO-SPB-Hospitality-1540.jpg Ron Ruggless
Josh Kern, interim CEO of SPB Hospitality, discusses Krystal merger.

SPB interim CEO advances Krystal merger, deals with private-equity change

Josh Kern cites one gap in company portfolio, and that is fast-casual

While SPB Hospitality is still working on the April acquisition of the Krystal Restaurants, the company also was dealing with a change in private-equity ownership that could expand the portfolio beyond casual dining and quick service.

In late April, Houston-based SPB Hospitality announced the completion of its merger with Krystal, a quick-service burger chain with nearly 300 restaurants.

Josh Kern, SPB’s interim CEO, in an interview Monday during the National Restaurant Association Show, said the company’s operations now spanned quick-service to casual-dining to upscale.

“There's one gap, which is fast casual,” Kern said, adding that recent change in ownership of the company’s parent private-equity owner could lead to more access to capital and provide for more acquisitions.

Reuters reported Monday that Abu Dhabi's Mubadala Investment Co. will acquire a majority stake in U.S. asset manager and SPB owner Fortress Investment Group from Japan's SoftBank Group Corp.

SoftBank, which acquired Fortress in 2017 for $3.3 billion, had been offloading assets to shore up its balance sheet as the value of its tech portfolio faltered, Reuters said.

That could lead to an impact for SPB, which has an expanding 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.

Kern said the Krystal acquisition led the company to change its SPB meaning from “Steak, Pizza and Beer” to “Serving People Better.”

Kern said Krystal has a lot of opportunities. “It's a brand that's been around for over 90 years,” he said during an interview on the Chicago show floor. “People love it.” But it could use some modernization, he said, citing artificial intelligence in the drive-thru.

Kern, who has worked in marketing with such brands as Quiznos and Smashburger., that SPB was applying a share-services approach to Krystal.

“I think of it as putting all these pieces together with a Lego — and sometimes it's a Duplo block,” he said. With 16 different concepts, the company is working toward becoming about 60-40 franchised- to company-owned stores, Kern added.

Fortress bought the company after it had filed for bankruptcy protection as Craftworks Holdings in 2020. The company acquired the 47-unit J. Alexander’s Holdings Inc. in a $220 million deal in 2021.

“We have three point-of-sale systems within this group,” Kern said, “and I'd like to get it into one single source.”

SPB faces the bigger challenges in its brewery group, Kern added.

“It's hard to fix these brands,” he said. “The brewery group is our division that has the most challenges. They have these big microbreweries within the restaurant. … it's very hard from a consumer-acceptance standpoint of a big brewery restaurant.”

Group sales, since the pandemic, have declined, Kern said. “If you lose that and those larger parties, your AUV s can go down significantly. And then you have some sites that were in areas that are not responding very well like downtown Chicago, downtown Denver, downtown Louisville [Ky.] It's hard to get people to come back in those restaurants, and the landlords aren’t going to give us any more relief.”

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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