Krystal Multi-Unit Franchise Deals Continue to Multiply

In March of 1999, The Krystal Company, based in Chattanooga, unveiled an aggressive multi-unit franchise plan that focused on doubling the company's business over the next five years. Just one year later, it is clear that plan is paying off.

Most recently, System Restaurant Group Holdings, Inc., signed a seven-year agreement for 60 new units in the Tampa, Florida, area. SRG Holdings also will purchase four company-owned restaurants, which include one in Tampa, one in Lakeland and two in Ocala. The agreement represents the largest franchise contract in Krystal's 67-year history. As of early June 2000, The Krystal Company has sold development agreements to new and present franchise groups that represent more than 185 development locations across the Southeast.

"Our strategy has been to focus on those markets in the Southeast where Krystal has little or no penetration and work with seasoned multi-unit operators to help us establish a significant presence in those areas. So far this formula has proven successful and our growth potential appears unlimited,'' said Philip H. Sanford, chairman and chief executive officer of The Krystal Company.

While Krystal will continue to develop more company-owned restaurants, aggressive multi-unit franchising is expected to drive overall growth, doubling the size of the system over the next five years, according to Sanford, whose investment company, Port Royal Holdings, Inc., acquired The Krystal Company in 1997.

"The alliance with SRG is the kind of franchise partnership we will build in similar markets across the region, including Orlando, New Orleans, Atlanta, Charlotte, Little Rock and Greenville,'' said Sanford."It's exciting to work with people like Bob Langford who are veterans in the industry and can recognize and appreciate the strength of the Krystal brand.''

The company's unique brand continues to fuel growth in existing markets and generate interest in markets not built-out by the restaurant chain. By focusing its expansion in the Southeast, where brand awareness is high and the company's presence is strong, Krystal continues to offer one of the most solid franchise investment opportunities in the industry.

"The Krystal Company has a history of success, a loyal customer base, a proven brand and infinite growth potential. Opportunities to partner with companies like this are basically non-existent in the quick-service restaurant industry, so this is a rare and exciting venture for us,'' said Robert M. Langford, chairman of the board of SRG Holdings, Inc. Langford is one of the nation's foremost experts on franchise restaurant operations, and recently served as chief legal counsel and chief operating officer for Shoney's, Inc., guiding that company through a time of leadership and strategic transition.

Within the last year, The Krystal Company has entered into several multi-unit development agreements in the Southeast. These include an agreement with T.B. of Starke, Inc., for seven new Krystal restaurants in the Lake City and Tallahassee, Fla., areas; an agreement with Chattanooga-based Cherokee Foods, Inc., for 10 new Krystals in the Tri-Cities market of Bristol, Va., and Johnson City and Kingsport, Tenn.; and an agreement with FFG, Inc., of Lexington, Ky., for 10 Krystal units in that area.

All new units will feature Krystal's latest restaurant design—the KP-2000. The first such unit opened in Chattanooga in September 1998 and represents the Krystal of the future. The exciting, more efficient design pays homage to the traditional Krystal look while showcasing the company's modern, new image. All existing company-owned restaurants have recently been remodeled, and now feature the new KP-2000 signage and exterior appeal.

Krystal is known for its small, square, onion-flavored burgers.Several new products have contributed to the chain's sales growth, including the Krystal Chik®. This lightly breaded chicken breast filet enjoyed a successful launch in 1998 and complements the signature Krystal hamburger on the menu. Other recent menu additions include Sackfuls, chicken wings and Southern Vidalia onion rings