This Struggling Burger Chain Is Going Seatless To Jumpstart Growth
When it comes to serving up square-shaped sliders that arrive by the "sackful" in the southeastern United States, nobody is bigger than Krystal. Even so, the old-school chain fell on hard times two years ago and has been looking to reinvigorate its brand and trim excess fat.
One way the company will try to do that is by creating smaller restaurants that focus on drive-thru sales and have no dining rooms to worry about.
Krystal's new prototype reflecting these changes recently broke ground in Alabama and will have a drive-thru and walk-up access but nowhere to sit down—making it a lot cheaper to build. And not only will these new locations be more efficient to construct but by leaning into drive-thru sales and takeout, the restaurant becomes more cost-effective to manage as well.
"You're going to have efficiency when it comes to labor," CEO Tom Stager said in an interview with Restaurant Business. "(And) if you can build something 25% to 30% less expensive, that's intriguing."
The Alabama location will be 40% smaller than the average Krystal restaurant. The new concept is one of two that debuted last year in the company's hometown of Atlanta, Ga.
And it seems like customers won't really miss the dining rooms. From February 2020 to February 2022, delivery increased by a whopping 116%, while drive-thru traffic grew by 20%, according to reports from The NPD Group.
For Krystal, this may be the perfect time for a makeover. Back in 2020, the burger chain filed for Chapter 11 bankruptcy protection citing a debt of between $50 and $100 million. Since then, it has gone through a series of upgrades including launching chicken sandwiches, new breakfast items, and new and improved fries.
The changes have shown improvement for the brand, and sales have recovered in 2022, although the company hopes the new prototypes will help kickstart its growth as well, which has stagnated.
Krystal has 290 locations, some 120 locations fewer than it had 20 years ago, according to Restaurant Business.
And it isn't the only fast-food giant making headway with plans to shrink its locations, which has been a growing trend. Taco Bell's first "Defy" restaurant opened recently in Brooklyn Park, Minn., and features four drive-thru lanes but no dining room.
Additionally, White Castle, Chipotle, and Jimmy Johns have also jumped on board with dining-free locations as chains embrace takeout, curbside delivery, and mobile orders–shedding the traditional sit-down restaurant concept.