Krystal tangling with Burger King

Krystal tangling with Burger King

April 17th, 2011 by Ellis Smith in Business Around the Region

A stretch limo pulls up to the Krystal drive-through window.

The occupant is visible only for an instant, as the light flashes across his regal plastic face and jewel-adorned crown.

"Back so soon, your highness?" asks the smiling Krystal employee.

As the "Burger King" grabs a sackful of Krystal's popular steamed mini-burgers, he motions for the knowing Krystal workers to keep his secret safe.

This cheeky commercial, and others like it that poke fun at big fast-food giants' mascots, are part of Krystal's award-winning ad campaign that has reignited sales and reinvigorated employees, officials say.

Ads from the campaign, which is slated to run through summer, have taken home American Advertising Federation gold medals, called Addys, in both Chattanooga and the Southeast region.

In June, an ad called "Boardroom" featuring a character that looks a lot like Wendy's red-headed mascot will be considered for national recognition.

Chattanooga companies Krystal and The Johnson Group teamed up for the Nothin' Like It campaign when sales were down in 2009, said Brad Wahl, vice president of marketing for Krystal.

"One of the things the recession did was to get us to go back and re-evaluate the business," Wahl said. "We had lost track of who we are."

Joe Johnson, president of marketing firm The Johnson Group, remembers the moment well.

"Two years ago, transactions were in a decline, food prices were rising, and the recession became real," Johnson said.

Now, the company is opening restaurants in Chattanooga and elsewhere, with a recent opening in Panama City, Fla., setting sales records, Wahl said.

The latest round of commercials, a shot across the big boys' bow, are an expression of how Krystal views itself as a southern underdog teasing the international giants.

Back to square one

When faced with declining sales, companies typically are faced with two choices. They can cut prices or increase marketing.

Johnson recommended an advertising campaign centered on the already inexpensive Krystal burger, emphasizing the value of the small, square hamburgers.

"Sales had been going down so we began focusing on our core, the Krystal," he said. "Almost immediately, we began to see a rising number of transactions."

The Nothin' Like It campaign featured a number of other changes as well.

Gone was the infamous Krystal Square-Off, in which competitive eaters like Takeru "Tsunami" Kobayashi and Joey Chestnut routinely devoured a hundred Krystals in one sitting.

In its place was in-restaurant table service, free Wi-Fi and new employee incentives to work hard and make customers happy.

Walk-in customer David Youngker, who grew up with Krystal in the 1960s, said he noticed the change about a year and a half ago.

"They won't hand you things over the counter, they come around and put it in your hand," said the Chattanooga native. "I just wish they had [a Krystal] downtown."

The changes inside the restaurant came about when the company recognized that "the customer who comes inside is a different customer than the one who goes through the drive-through," Wahl said.

During all the turmoil, Wahl and Johnson made it a point to remind customers what Krystal was all about.

"Krystal has always been a value; we just stopped telling people that," Wahl said. "It's all about that small, square, steamed-in onion-flavored burger."

Krystal clear reception

The burgers now are attracting customers like traveling salesman Lee Mans-field who come for the Wi-Fi Internet link, but stay for the sandwiches.

Mansfield gets a little work done in the restaurant, but he also orders food and drinks while he's there.

Rena Boyd brings her 7-year-old girl, Thelisa, because "the Krystals are easier for my daughter to handle," she said.

"I like the burger," Thelisa chimed in.

"Characters"

The company purposefully chose a TV campaign that reflected a "little bit of giddyup in our step" after market research and rebounding receipts put the company back on a secure footing, Wahl said.

Characters who look an awful lot like Ronald McDonald, Wendy and the Chick-fil-A cows found themselves unable to resist eating Krystals. The ad was a hit with consumers, but some competitors were less than amused.

"Almost anytime you mount an ad, you're going to get a cease-and-desist [order]," Johnson said.

There have been a few "inquiries," Wahl confirmed. "Some brands took it differently," he said.

But Wahl takes any rumblings of discontent from the dominant brands as a sign that the campaign is a hit.

"If it's effective, that's when you get the letters. If you don't get them, it's probably not effective," he said.

Boyd called the company's marketing "real clever," as she laughed with her daughter at the company's Brainerd Road drive-in.

"They really bring it home for me, because there's been times when I worked at a restaurant and I wanted to get food someplace else," she said.

And though Krystal won't release sales or earnings figures, Wahl said that year-over-year store sales are beating the industry average.

But that doesn't blind him to the fact that Krystal is still the little guy taking on Goliath.

"McDonald's spends as much on a product roll out as I spend in a year," Wahl said.