published Thursday, March 21st, 2013

Krystal exodus from Chattanooga almost complete

After almost 81 years in the Scenic City, the Krystal Co. headquarters no longer will be located downtown. The company is moving its headquarters to suburban Atlanta.
After almost 81 years in the Scenic City, the Krystal Co. headquarters no longer will be located downtown. The company is moving its headquarters to suburban Atlanta.
Photo by John Rawlston /Chattanooga Times Free Press.

COMPANY AT A GLANCE

Name: Krystal Co.

Owner: Argonne Capital Group, a private equity firm in Atlanta

Units: 350, including 210 company-owned stores, in 11 states

Chattanooga presence: 20 area restaurants; downtown headquarters that formerly held 60 workers

Atlanta presence: 60 area restaurants; Lincoln Parkway Building in Dunwoody, Ga., anticipated to employ 39 workers by summer

Annual sales: $400 million of system sales, $300 million of direct sales

Staff: 6,000 employees

History: Founded in Chattanooga in 1932, the nation's second-oldest fast-food chain behind only White Castle

Future: The company plans to open new restaurants in Knoxville and Ringgold, Ga., in the next few weeks, and will open 11 more in five states through 2013.

KRYSTAL TIMELINE

• 1932 — The first Krystal opens on the corner of Cherry and Seventh streets in downtown Chattanooga selling small, square hamburgers for 5 cents each.

• 1941 — The company grows to 33 restaurants in Tennessee, * Georgia and Alabama.

• 1950s — Company adds drive-through windows.

• 1965 — Krystal opens 100th restaurant.

• 1978 — Krystal has more than 5,700 employees.

• 1982 — Present logo is launched.

• 1992 — Krystal becomes publicly traded company on the Nasdaq Exchange.

• 1997 — Krystal files for bankruptcy and is acquired by Port Royal Holdings in a $145 million deal.

• 2003 — Fred Exum takes over as CEO, company begins offering free WiFi.

• 2012 — Argonne Capital Group buys Krystal in $175 million deal. Doug Pendergast is named President and CEO. Company celebrates 80th year in Chattanooga.

• 2013 — Krystal headquarters will complete move from downtown Chattanooga to the Lincoln Parkway Building in Dunwoody, Ga.

The Krystal Co., the feisty fast-food company founded in Chattanooga, has nearly completed its flight to the Peach State.

Though its red sign could remain on the Krystal building until December, almost all of the workers at the company's former headquarters will be gone by April, officials said. The accounting department and a few top executives will be the last to leave the Scenic City, as most of Krystal's top staff search for new homes — or new jobs.

"While the decision to relocate was a difficult one, we are already seeing results that show it is the best way to support our customers and team members," said Doug Pendergast, president and CEO of Krystal.

The formerly family-owned business was founded here in October 1932 by Rody Davenport and J. Glenn Sherill at a downtown diner on the corner of Seventh and Cherry streets. Six Krystals and a cup of coffee cost 35 cents then.

Today, less than half of Krystal's 60 corporate employees will stay with the company after the move to suburban Atlanta, where Krystal will occupy the first and sixth floors of a Dunwoody, Ga., office building. Krystal could eventually grow back to 55 workers through local hires in the Atlanta area, said spokeswoman Robin Derryberry.

"Krystal's new office is still being constructed, so many of the employees are working from the Chattanooga office or telecommuting," she said.

While Krystal will surrender its prominent downtown headquarters in exchange for a suburban office in north Atlanta, the company hopes to leave behind a downtown legacy in the form of a museum and company store, Derryberry said.

"Krystal has been gathering memorabilia over the past few months and making plans to showcase the company's rich past," she said. "Going through over 7,000 photographs and looking through 80 years of history has been time-consuming but extremely important."

Bob Doak, president and chief executive officer of the Chattanooga Convention and Visitors Bureau, cheered the prospect of a new downtown museum.

"I believe something like this will pique the curiosity of visitors," Doak said. "If Krystal wants to give back, to have a presence in this community, it would certainly be welcomed."

The other major contribution Krystal will bequeth to Chattanooga is office space.

When Krystal finishes vacating more than 26,000 square feet in its downtown building, more space will be available for new corporate tenants, said Russ Elliott, principal broker and leasing agent for Luken Holdings.

In addition to the two floors of contiguous corporate space, the large sign on the building is also up for grabs, along with plenty of covered parking, he said.

"I hate to see Krystal go, because I grew up in Chattanooga and I've eaten my fair share of burgers, but I have an opportunity here to offer space I didn't have before, as well as very prominent signage," Elliott said.

The company first announced it would leave Chattanooga in fall 2012, saying that it could not affordably and reliably support its 350 restaurants in 11 states from the Chattanooga Airport. Transporting executives to the company's far-flung locations was simply too costly and time-consuming, officials said.

"The Chattanooga Airport has direct connections with three of Krystal's cities, while Hartsfield has direct access to all of their markets," Derryberry said.

Nearby access to the MARTA rapid transit system will enable employees to ride to Hartsfield-Jackson Atlanta International Airport, which is especially important as the company opens up 13 new restaurants in five states this year, said Pendergast. The long-term plan is to expand its footprint to 500 locations throughout the Southeast.

"We are following a new road map to make sure Krystal's future lives up to the standards set by our founders in 1932," Pendergast said.

Private equity firm Argonne Capital Group, which bought Krystal for $175 million in 2012, is also based in Atlanta.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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