Kempner: New CEO of forgotten Krystal aims at partiers, fans of tiny

In the pantheon of fast-food burgers, the Krystal’s offerings were always undersized.

That was part of their appeal, often for a late-night party crowd or anyone looking for speedy hand-to-mouth food consumption in the South. Thin on meat (an eighth of an inch thick, according to my ruler), heavy on white bread, square and, most importantly, tiny, Krystal burgers didn’t follow the crowd.

That’s been a problem lately for Krystal, which claims to be the second oldest fast-food restaurant chain in the nation and is now based in metro Atlanta.

Sales and profits have been declining for years. Its number of locations is basically flat, with more than 60 in metro Atlanta and 364 overall. That’s down from before the late Great Recession.

“Fundamentally, in this business, if you’re not growing, you’re dying,” said Paul Macaluso who became Krystal’s chief executive officer last month.

The company is profitable, but without a planned reinvestment, “it’s scary,” he told me. “Is it really going to be here five or 10 years from now?”

I often wonder about brands with some age on them that try to keep their uniqueness, while shifting slowly on the basics. Consider  Waffle House, which only relatively recently tried a drive-thru, and The Varsity, an Atlanta icon that has only gingerly contemplated additional locations.

Consumers of even quick food these days are demanding more taste and better ingredients. So where in the shifting standards of the American palette can a chain like Krystal fit?

The burger business is saturated and the trend is toward over-the-top, higher priced burgers, said Charles Winship, a senior analyst with Technomic. The changes “don’t lend themselves well to really miniature, affordable burgers.”

Maybe less-expensive chains like Krystal can zig when others are zagging, Winship said, “so long as they can keep up with quality demands.”

White Castle, which is similar to Krystal but focused in the Northeast and Midwest, recently snagged lots of publicity with plans to sell a plant-based, beef-resembling burger.

Krystal’s Macaluso told me he isn’t planning a similar move. “Of all the things I have to work on, that’s not in the top 100.”

This stuff isn’t easy. He’s the fourth CEO in six years since the Chattanooga-born chain was bought and moved by Atlanta investment firm Argonne Capital Group.

I sat with Macaluso in his Dunwoody office, trying my first Krystal burger in more than a decade. (I had forgotten about the onions.)

“Right now we are very focused on the fundamentals,” he said. That includes making sure food is prepared and served fast, right and hot.

He’s also hiring a new ad agency, pushing for more digital advertising and launching a campaign by the end of June. Apparently it may highlight the chain’s tiny offerings and its appeal to groups and late-night revelers coming in for sacks of burgers, little chicken sandwiches or before-dawn breakfasts. (Many locations are open 24-hours, particularly with drive-thrus.)

“This brand has a social nature to it,” Macaluso said.

He’s expanding use of third-party deliverers, such as Uber Eats. That also apparently feeds Krystal’s appeal to a late-night crowd, with 60 percent of delivery sales occurring after 11 p.m.

And over the next three years the chain is planning 50 new, brighter, more-open restaurants, most of them rebuilds of existing sites, including ones on Piedmont Road, 14th Street and Moreland Avenue in Atlanta. They will include decorative exterior chrome doodads and balls similar to those on early Krystal restaurants.

For a limited time starting next month the company also will serve pimento cheese bites.

Erica Shropshire, a caterer from Norcross, was eating at a Krystal in Gwinnett County when I recently stopped by.

She hadn’t been in one in a long time. But her young daughter was hungry and Krystal was close by.

“Krystal is OK,” she told me. “You can’t been their prices.”

That’s a start. Though maybe less of one than what Macaluso said he’s seen in the community.

Until being recruited for the Krystal job he had been running McAlister’s Deli, which is part of Focus Brands (Moe’s Southwest Grill, Cinnabon, Carvel, etc.) and is controlled by an Atlanta investment firm that owns Arby’s and recently bought Buffalo Wild Wings.

He grew up in Krystal territory on Florida. But until the new job came up, he hadn’t heard much about the restaurant or visited one in a while.

“There’s a latent love for this brand and passion for this brand,” he told me. “It’s just that we haven’t given a reason for people to come back.”

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