Southern burger chain Krystal files for bankruptcy

Krystal Bankruptcy
Posted at 6:57 AM, Jan 22, 2020

BIRMINGHAM, Ala. (AP) — Krystal Co., the Georgia-based restaurant chain known for tiny hamburgers and late-night service across the Southeast, has filed for bankruptcy, but said Tuesday that all of its locations would remain open.

Federal court documents showed Krystal sought Chapter 11 bankruptcy protection in Atlanta on Sunday. The company said it owed between $50 million and $100 million to food suppliers, equipment companies and others.

Krystal has about 300 restaurants in 10 states, 182 of which employ 4,890 people and are operated by the company, restructuring officer Jonathan M. Tibus said in a court filing. Another 116 are run by franchisees, he said.

The company previously closed more than 40 restaurants, including 13 that shut down in December, over the past year, according to court documents. Shifting consumer tastes, growing costs, tight labor markets and the growth of online food ordering all contributed to the company's financial problems, Tibus said.

“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 Tuesday.

In November, Krystal announced the hiring of two new senior executives, chief operating officer Tim Ward and chief financial officer Bruce Vermilyea, during what it called a revitalization plan.

Founded in Chattanooga, Tennessee, in 1932 during the depths of the Great Depression, Krystal is best known for little, square hamburgers served with steamed buns and chopped onions. The company, which calls itself the South’s oldest fast-food chain, moved its headquarters to metro Atlanta in 2013.

Many of its restaurants are open 24 hours a day or until the early morning hours, making Krystal a favorite stop for many after a night of partying. A huge Krystal located on Bourbon Street in New Orleans often has long lines after midnight.

Krystal was founded by Rody Davenport Jr. and Glenn Sherrill about 11 years after White Castle opened in the Midwest selling a nearly identical type of small hamburger.

Krystal said in a court document that it has restaurants in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.