Southern burger chain and slider pioneer Krystal files for bankruptcy

Krystal

Krystal rolled out its Nashville Hot Chik sandwich systemwide Sept. 30. The chain known for its tiny burgers filed for bankruptcy over the weekend. Provided

BIRMINGHAM, Ala. — The Krystal Co., the Georgia-based restaurant chain known for tiny hamburgers and late-night service across the Southeast, has filed for bankruptcy protection.

Federal court documents showed Krystal sought legal shelter from its creditors in Atlanta on Sunday. The company said it owed between $50 million and $100 million to food suppliers, equipment companies and others.

“The actions we are taking are intended to enable Krystal to establish a stronger business for the future and to achieve a restructuring in a fast and efficient manner,” the company said in a statement Tuesday.

With nearly 350 restaurants in 10 states, the Dunwoody-based company didn't announce plans to close any locations, but it previously closed dozens of restaurants.

The company operates 182 of its current locations with 4,890 employees, and franchisees run another 166 locations, restructuring officer Jonathan Tibus said in a court filing.

In South Carolina, the chain's website shows three restaurants: in Aiken, Gaffney and North Augusta. Krystal pulled out of the Charleston market in 1996.

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Shifting consumer tastes, growing costs, tight labor markets and the growth of online food ordering all contributed to the company's latest financial problems, Tibus said.

In November, it announced the hiring of two new senior executives, chief operating officer Tim Ward and chief financial officer Bruce Vermilyea, during what it called a revitalization plan. The company closed more than 40 restaurants, including 13 that shut down in December, over the past year, according to court documents.

Founded in Chattanooga, Tenn., in 1932 during the depths of the Great Depression, Krystal is best known for little, square hamburgers served with steamed buns and chopped onions. The company, which calls itself the South's oldest fast-food chain, moved its headquarters to metro Atlanta in 2013.

Many of its restaurants are open 24 hours a day or until the early morning hours, making Krystal a favorite stop for many after a night of partying. A huge Krystal on Bourbon Street in New Orleans often has long lines after midnight.

Krystal was founded by Rody Davenport Jr. and Glenn Sherrill about 11 years after White Castle opened in the Midwest selling a nearly identical type of small hamburger, a predecessor to the modern-day slider.

In addition to South Carolina, Krystal's website lists restaurant locations in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina and Tennessee.

The Post and Courier contributed to this report.

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