One of the factors to check into when you’re planning on franchising a business is how long they’ve been in business. The longer the track record, the more confident you can be about their concept, quality, and customer loyalty.
One restaurant that’s been around for nearly a century is Krystal. Many have been a fan of their sliders, including The King of Rock and Roll Elvis Presley himself. To this day, Krystal remains open for business and franchising.
How much does it cost to open Krystal Restaurant?
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To start, you’ll need a liquid capital of $500,000 and a minimum net worth of $1,500,000. The total investment to expect for this chain is $450,000 to $1,400,000 and the franchise fee is $32,500.
But that’s not all! This restaurant has gone through a lot of changes (good and bad) the past 2 years. To understand more about Krystal Restaurant, read on as I walk you through the advantages and challenges this fast food chain.
Financial Requirements and Fees
These are the financial requirements and fees that Krystal has posted up on their website:
|Fees / Expenses||Financial Amount|
|Liquid Capital||$ 500,000|
|Net Worth||$ 1,500,000|
|Total Investment||$ 450,000 to $ 1,400,000|
|Franchise Fee||$ 32,500|
Aside from these fees, Krystal also requires a royalty fee of up to 5% of gross sales and a marketing fee of 4.5% of gross sales. As for the total investment mentioned above, do note that this does not include the costs for real estate, land, and site work expenditures.
A more thorough breakdown of their fees in their franchise disclosure document (FDD) will be discussed with you once you submit an application.
Average Sales / Revenue per Year
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Krystal reports that they have system wide sales of $306,802,570. These numbers may look impressive but sales are known to have been on the decline since 2016. Krystal also filed for bankruptcy in 2020. Fortress Investment Group acquired Krystal in May of the same year for a fire sale of $48 million.
Krystal Restaurant Franchise Facts
|Incorporated Name||Krystal Restaurants, LLC|
|Industry||Quick Service Restaurant|
|Subsector||Food and Beverage|
Krystal was started in 1932 in Chattanooga, Tennessee by Rody Davenport Jr. and J. Glenn Sherrill. It was the time of the Great Depression and yet the two had an idea to put up a business that served affordable good food with quality service and a clean environment. The idea was also fueled and inspired by Rody Davenport Jr.’s visit to White Castle.
It was Rody Davenport Jr.’s wife that thought of the name Krystal. Cleanliness was going to be a central part of their business and so, after seeing a crystal ball lawn ornament and having the phrase “clean as crystal” come to mind, they swapped the “c” with a “k” and used Krystal as the name of their new business venture. This is the reason why a crystal ball can be seen on top of some of the old restaurant designs.
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Krystal is also another term for their sliders. When they first opened in 1932, Krystal had only sliders and coffee on their menu. At present, Krystal has more than just sliders. They’re also known for their pups (which are their mini dogs in mini buns which also comes as mini corn dogs or mini chili cheese dogs), wings and chicken strips, loaded fries, breakfast bowls, sundaes, apple turnovers, and chiks (which are mini chicken sandwiches). All of their buns are also known to be steamed and the food is fresh from the grill.
Krystal is quite popular in the southeastern part of the United States where most of its locations can be found. One of their claims to fame is the story of Elvis Presley in 1954 ordering a hundred sliders and then handing them out to his fans who came to the Krystal location he ordered it from. He was also known to be a fan of eating Krystals.
The chain is also popularly known for its eating contests. They used to host the Krystal Square Off World Hamburger Eating Championship but this event didn’t last long. The last event was in 2009 and it was Takeru Kobayashi who won. He ate 93 burgers in just eight minutes.
As mentioned above, Krystal filed for bankruptcy in January of 2020 and was bought by Fortress Investment Group. Prior to their announcements, efforts to speed up Krystal’s growth were made by the company planning to sell 100 to 150 locations. But it wasn’t enough. Business operations continue and so are their efforts in allowing Krystal to be franchised.
The franchise process for a Krystal location involves
- Pre-qualification: you will have to submit your inquiry by filling up their form. Once they’ve screened your inquiry, you’ll get a call and will then be given a franchise application.
- Initial Meeting: this is the part where you’ll be signing their FDD, visit Krystal locations, meet their executive team and formally talk about the territory you would like to put up your Krystal location.
- Joining Krystal: you’ll submit all the documents needed such as territory and franchise agreements.
- Opening: once your site is approved, construction of your Krystal location will begin. There will be a proper turnover before you will finally have your grand opening.
The site options they are looking for should allow a double drive-thru that is highly visible and is easily accessed. As for the site criteria, Krystal is looking for a space of 1,000 square feet, has 10 parking spaces, and a community population of 4,000 to 7,000 within one mile and 35,000 to 45,000 within five miles.
Currently, Thomas Stager is the CEO of Krystal Restaurants. The chain is headquartered in Georgia.
How Much Does Krystal Restaurant Make in Profit?
Since Krystal Restaurants have just recently started over with new owners, data regarding their profit has not yet been made public.
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It goes without saying due to the recent bankruptcy in 2020, many Krystal locations were not performing well financially.
The reality is there were almost no new Krystal franchisees for 15 years from 2005 – 2020. It’s been rare for entrepreneurs to commit new money to this restaurant concept.
Advantages of a Krystal Restaurant Franchise
A business that has been running for 90 years has its advantages. Here are a few you can expect when you franchise a Krystal Restaurant.
The company has been innovative with their menu over the past couple of years. If Krystal is able to hit on a winning theme or food trend, it could turn things around for the franchise quickly.
One technique the company tested is the Nashville Hot Chik, a spicy chicken slider nationwide in 2019. These sliders sold 50% more than anticipated.
The company has also made numerous value driven plays like pick 5 for $5.55 deal. This options lets customers build their own meal from a variety of classic options like tater tots, French fries, sliders, chili dogs, or soda.
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The restaurant is also catering to breakfast lovers with their country fried breakfast item that includes two eggs, biscuit, tater tots, and country-fried steak. This meal looks like a breakfast you’d be served at a sit-down diner.With menu innovation like this it’s clear that Krystal isn’t resting on it’s laurels.
Once you are accepted to become a Krystal Restaurant franchise operator, you will receive training in certified locations. Not only will you also receive training for being a franchise owner but you’ll also receive management training so you’ll know how to handle your staff. You’ll also receive training for when you open your store and it continues through the many learning programs they’ll provide. This is standard across most franchise concepts, but worth mentioning.
Krystal Restaurants will handle all your marketing which greatly helps your efforts in making sure your community knows about you. They have a grand opening marketing plan that helps get the word out about new stores. They also have ongoing marketing activation and public relations support for your location.
Length of Business Operations
90 years of being in the industry is no joke. Despite filing for bankruptcy, Krystal Restaurants has already been bought and is continuing to offer franchises. Recently, Victor Cruz, a former New York Giants player, bought a franchise and has plans of building five of them in New Jersey by 2023.
So yes, Krystal Restaurants suffered a huge set back, but appear to be emerging from bankruptcy with promise of a brighter future.
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Challenges of a Krystal Restaurant Franchise
As a franchise owner, you will be faced with challenges while running your business. Here’s what you can expect with Krystal Restaurants.
Still in the Turnover Phase
It’s great that Krystal Restaurants have a new set of owners to look after the growing company. But there’s still not much data on how they’re doing well financially in this new change. It’s best to have your lawyers and financial advisers look into this before diving headfirst into signing up an agreement with them.
No Healthy Options
There aren’t any healthy options on the menu. There are no vegan choices as well. Sure, the sizes of the sliders are small enough to help you in eating small portions. But that is if you have strong self-control not to order another one.
Lack of Global Presence
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Yes, Krystal Restaurants may be running for over 90 years but they have yet to establish a global presence. Their number of locations is around the hundreds and a majority of them are located in the southeastern parts of the United States of America. Hopefully, they can get to branch out to the rest of America and different countries all over the world.
Minimal New Franchisee Excitement
As mentioned earlier, Krystal only brought on one new franchisee in a 15 year time period between 2005 and 2020. Why is that? Lack of excitement around the brand? Lack of innovation? Poor marketing? Performance that wasn’t exciting to new investors? Trouble attracting new customers? It’s likely a variety of these reasons.
Is the Krystal Restaurant Franchise Right For You?
If you’re one to take risks especially at a time when Krystal Restaurants are still going through a new phase after filing for bankruptcy then this may be the franchise for you. Usually when a company emerges from bankruptcy you see massive changes in branding and menus. Krystal is no different.
Plus, Krystal has a recognizable brand in certain parts of the country and a loyal following. Just be sure to read all the terms and have a lawyer look through any agreements so you know what you’re getting into as with any franchise opportunity. But as far as branding and food are concerned, Krystal is worth looking at once again.
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What is an alternative Krystal Restaurant franchise?
If it’s a burger place you’re looking for, try Burger King. This multinational chain has over 12,000 units and has been in the business of selling burgers since 1953.
To franchise Burger King, expect investments to be around $316,100 to $2,660,600.