Chattanooga: Comfort for tough times

At the Krystal on Brainerd Road, the calm before the storm is not very calm.

As the sunlight faded in the late afternoon, three cars sat in the drive-through with five customers inside and another three cars in the nostalgic drive-in area.

“We need fries,” said manager Mark Ferrell to his crew after he boxed up three Chiks sandwiches and checked the ticket.

Seconds later, the sandwiches and fries were whisked out the drive-through window and the next order became top priority.

“It’s early,” Mr. Ferrell said around 5:30 p.m. “The rush usually comes later — 6, 7, 8.”

Krystal is one of a few local companies fortunate enough to have “rushes” at a time when the economic downturn is making consumer dollars scarce. When money’s tight, people look to “comfort foods” — sometimes defined as cheap and filling — to get by. Representatives of Krystal, MoonPie and Double Cola, all Chattanooga-based, inexpensive Southern favorites, say sales are holding steady or even increasing as the recession looms.

“People tend to reach back for ‘comfort foods’ during hard economic times,” said Tory Johnston, vice president of marketing at Chattanooga Bakery Inc., maker of MoonPie, the chocolate, cookie and marshmallow treat invented in 1917. “We’ve been here through recessions, depressions, wars, births, deaths, marriages — you name it — so I believe that’s also a factor.”

Dr. Matt Murray, associate director of the University of Tennessee Center for Business & Economic Research, said no business is recession-proof, but sales of inexpensive food items may be boosted by consumers choosing them over more expensive options. After all, people have to eat, he said.

“There will likely be some substitution,” he said. “People will certainly go for cheaper outings and these kinds of places offer that, or things like MoonPies offer a treat at relatively lower cost.”

Officials at Krystal, Chattanooga Bakery and Double Cola Co. say they have an advantage over younger companies because they were founded during tough economic times and have learned how consumers respond to their products through thick and thin.

“Having been around so long, we know what we do well corporately,” Mr. Johnston said in an e-mail. “We understand the elasticity and limits of our brand.”

Little Debbie Snacks, named in the 1960s but created years earlier by Chattanooga-based McKee Foods, have a similar story, but company officials declined to discuss current sales or the company’s history.

All four companies are privately owned so their financial figures are not public, but Double Cola Marketing Director Gina McCommon said year-to-date sales for Double Cola, which was first sold in 1933, have increased over last year.

“Unlike our competitors, who have increased their retail prices, our prices have stayed pretty steady, encouraging cash-strapped customers to give our products a try,” she said in an e-mail. “Hopefully this will turn them into repeat customers.”

As for Krystals, which debuted in 1932, “the brand has fought through tough times, but because of the uniqueness of the brand we’ve pulled through it,” said Brad Wahl, vice president of marketing for the company.

Demand for little, square hamburgers remains strong, according to Mr. Wahl. Sales allow the company to continue opening new stores and Krystal hopes to capitalize on its ability to set up new restaurants with cash, while other chains may have trouble getting credit to build new locations.

Chattanooga Bakery’s strategy of targeting bargain distributors such as Dollar General, Wal-Mart and Food Lion seems to be paying off as some consumers ditch high-end retailers, according to Mr. Johnston. Sales continue to increase as they have over the last few years, he said.

“As consumers seek to save money and to ‘trade down’ to lower-priced retailers, they tend to come our way,” he said.

not bulletproof

Still, even businesses with a long history, cheap prices and solid strategies will feel some effects from a deep recession, according to Dr. Murray.

“You can still make a meal at home cheaper than you can go out to the restaurant,” he said.

Though the companies are prospering overall, officials admit that certain sectors are hurting.

Krystal is seeing fewer weekend and late-night sales, according to Mr. Wahl. He said the late-night young crowd may be staying home to save cash rather than going out for entertainment and grabbing a sackful on the way home. The company’s strong weekday sales come predominately from working people stopping by for breakfast, lunch or dinner, folks who may have less flexibility with their time than the late-night crowd, he said.

“Going to work isn’t discretionary. It’s not something you have a choice over,” Mr. Wahl said.

Sales of 20-ounce bottles of Double Cola are also off, according to Ms. McCommon. Because most of those sales come from convenience stores, higher gasoline prices may have kept consumers from spending money on an impulse buy inside the shop, she said.

High fuel prices also hurt Chattanooga Bakery, which has had to eat some of the extra costs to keep from overpricing its product, Mr. Johnston said.

“We, like all manufacturers, had to absorb higher than usual shipping costs, only part of which we can reasonably pass along to customers, given the competitive nature of the snack industry,” he said.