Krystal’s New COO an 'Operations Guy' First
New Krystal COO Tim Ward.
In a surprise shake-up, Krystal has a new president and COO who is leaning on his deep operational background to continue pivoting the company toward growth.
Tim Ward officially took the reins in mid-November, but had already begun his indefinite roadshow before that.
“Prior to me accepting the job and since, I’ve been in over 40 restaurants. And I think we’ve slipped a little bit on our operations focus and delivering service to our guests. As I continue to dig in deeper, my operations expertise will not only help fix the restaurants and the customer service we deliver and the consistency,” Ward told Franchise Times in his first interview as COO. “My roadshow will go on forever, I’m an operations guy. When I interviewed I said, ‘If this is a desk job, I don’t want it.’ I will make decisions from the field for the betterment of the restaurants.”
He said out on the road, in the restaurants is where he brings the most value: engaging managers and helping fix all the little execution details that mean so much in the world of value-forward QSR.
“Anything that takes them away from providing guests with great service, we will look at making changes,” said Ward. “I ask the employees and the managers what decisions are we making that you think are ineffective, and what are we doing to complicate your life.”
He said those discussions would inform the changes ahead, and likely mean pushing more of the day-to-day office work up to the corporate headquarters.
The leadership change also brings on CFO Bruce Vermilyea. Former CEO Paul Macaluso and former CFO Berry Epley both left to “pursue other opportunities.” So far, the CEO position has not been filled.
Krystal, held by Argonne Capital since 2012, reported $378 million in sales last year, a slowdown of 4.3 percent in sales as it also shed seven locations—ending the year at 356 outlets.
Since it was acquired in 2012, the company headquarters moved to Atlanta, and it went through a series of leadership changes and other projects in search of growth. Lately, those efforts seemed to be paying off. The company recently announced its first development deal since 2005, with Anand Patel and Kalpesh Das of Slider Joint.
The three-unit agreement wasn’t a monumental deal, but showed that the company had made some real headway in new efforts, especially a new restaurant prototype. Many Krystal locations “haven’t been touched in 30 years,” said Ward.
But the new design has proved beneficial, from a fresh look to a full scrape-and-rebuild project. Typically, QSR projects like this have generated between a 5 and 10 percent lift in topline sales but because of the perhaps overdue nature of the update, the company has seen incredible sales growth.
“We have seen sustained increases ranging from 30 percent to nearly 108 percent in year-over-year comp sales at the nine remodeled restaurants,” said Ward.
That success spawned a refranchising program prior to Ward joining, something he said he will look at closely but would very likely continue under his leadership.
Dean Zuccarello CEO at the investment-banking firm The Cypress Group was tapped to assist with that big refranchising push. He said the success of the remodels so far is a great way to both enhance the brand overall and also makes an attractive story for the sophisticated franchise groups the company is looking to sign on.
“The financial part of that equation has been tremendous,” said Zuccarello. “They really want to couple that and get that through the system as quickly as they can and the right lever to do that is refranchising, which is the strategy they wanted to do anyway.”
He said his team had just started the process of identifying how to potentially package locations by geographies or markets ready for franchisees.