America's second oldest fast-food restaurant chain has emerged from bankruptcy for a second time in the past 24 years.
Krystal Restaurants LLC, which began in Chattanooga in 1932 and is famous for its small, square hamburgers, has been acquired by an investment group organized by Fortress Investment Group LLC, an affiliate of the Japan-based multinational holding company SoftBank Group, and Golden Child Holdings, which also manages and Pizza Hut and other restaurants.
The new owners bought Krystal's assets from the bankruptcy court last week after the restaurant chain filed for bankruptcy in January. Thomas Stager, CEO of Golden Child's Pizza Hut operations and chief operating officer of Golden Child Holdings, has been named president of Krystal.
"The new partnership is excited to continue growing the brand, maintaining an overriding focus on enhancing customer experience," Angela Johnson, Krystal's vice president of marketing, said in an announcement of the new ownership and management. "Even during this unusual time, our iconic brand continues to perform well and we see exceptional opportunities for growth looking ahead."
When it filed a Chapter 11 bankruptcy reorganization petition in January, Krystal operated 182 company-owned restaurants across Tennessee, Georgia, Alabama, Florida, Kentucky, Mississippi, North Carolina, South Carolina and Arkansas. In addition, franchisees own and operate 116 Krystal restaurants.
Krystal has about two dozen restaurants in the Chattanooga area, although it has closed restaurants in Brainerd and Ooltewah during the past year and has limited operations to only take out and delivery through most of the coronavirus pandemic over the past two months.
The company, which is now headquartered in the Atlanta suburb of Dunwoody, was founded in Chattanooga in 1932, and is the oldest quick-service restaurant in the South. Only White Castle, which started in 1921 in Wichita, Kansas, is older than Krysal among fast-food restaurant chains still operating in the United States.
Krystal previously filed for bankruptcy in 1997 due to millions of dollars of employee claims for unpaid overtime. Krystal was acquired out of bankruptcy that same year by Port Royal Holdings in a $145 million deal.
The company was later sold and relocated its headquarters from Chattanooga to Atlanta in 2013 when it was purchased by the private equity firm Argonne Capital.
Fortress Investment Group is a global investment manager based in New York and with offices in Atlanta and has approximately $43.5 billion of assets under management as of Dec. 31, 2019. Terms of the latest purchase were not disclosed and followed an unsuccessful auction for the Krystal assets earlier in May.
Stager, who becomes the third CEO for Krystal in the past six months, has worked in helping to revitalize Pizza Hut and Arby's, according to a release from Krystal announcing his appointment.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.