The Krystal Company is seeing results from recent revitalization initiatives implemented during CEO Paul Macaluso's tenure. Razed and redesigned stores, also known as "scrape and rebuilds," in multiple markets are generating sustained sales volume lifts of 70-80 percent with average staffing increases of 66 percent. The redesigns are part of a company-wide initiative to improve the dining experience and adapt to changes in consumer behavior.
"The impact of the redesigned stores has exceeded our expectations. Customers love the streamlined, efficient drive-through and the fresh look and feel of the new restaurants, which are also a magnet for recruiting and energizing employees," Macaluso said.
Krystal opened its first "Iconic Series" prototype restaurant, named after Krystal's iconic burger and new abstract burger emblem used in both the exterior and interior design, in Jackson, Mississippi in August 2018, followed by locations in Tifton, Georgia, Tuscaloosa, Alabama, Memphis and Chattanooga, Tennessee. Atlanta's first prototype stores are scheduled to open in early February. The new restaurants are smaller with expanded work zones and a double drive-through lane. Architecturally, the buildings are both contemporary and nostalgic, with full-glass fronts and wood-framed open ceilings and community tables in the dining rooms. The buildings are square like Krystal's famous burgers.
Increased sales have necessitated additional labor. Staffing has increased on average from 30 employees to 50 employees at each of the five prototype stores. Updated kitchens and facility layouts are contributing to consistently higher overall satisfaction (OSAT) scores. The company will redesign 75-100 restaurants over the next five years, representing approximately 40 percent of Krystal's corporate portfolio.
Third-party delivery (3PD) is emerging as a key sales driver, particularly for dinner and late-night dayparts. Krystal continues to grow its 3PD business, from 2 percent of its restaurants in early 2018 to over 60 percent by the end of this month via Uber, DoorDash, GrubHub and Waitr.
"Delivery is a huge trend that's increased late-night sales by eight percent over last year," Macaluso said.
According to Macaluso, 2018 delivery sales soared for late night, Krystal's sweet spot, with 50 percent of 3PD sales occurring after 10 p.m. and 75 percent after 4 p.m. with the average check increasing significantly. Krystal plans to grow its 3PD partners as it expands delivery into new markets.
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