About 12 Chattanooga IT professionals will lose their jobs when Krystal moves its corporate office to Atlanta, and the rest of the 60 local employees will reapply for their positions to have the opportunity to relocate.
But despite the move, Chattanooga will always be special to the company, which Rody Davenport Jr. founded in 1932 on the corners of Cherry and Seventh streets.
“The heart and soul of Krystal will always be in Chattanooga,” Krystal’s President and CEO Doug Pendergast said Wednesday afternoon.
Leaders will provide severance to those who don’t want to move or aren’t asked to, Pendergast said.
The company will pay for the relocation of employees chosen to transfer to Atlanta.
The 12 employees who will be impacted are in information technology positions. Pendergast said they will work through a third-party vendor for IT services.
In the long run, the move—which will be complete by the end of 2013—will save money, allowing leaders to fund a new restaurant each year, officials said. Each new fast-food restaurant creates about 40 jobs.
In March, leaders with the company announced that they sold the 80-year-old company to private Atlanta investment firm Argonne. Leaders didn’t disclose the amount of the sales agreement at that time.
Pendergast cited easy access to the Atlanta airport as one reason for the move.
Leaders can fly directly to all markets from Atlanta, Pendergast said.
Krystal leaders can only access three of the company’s markets from the local airport, officials said.
Christina Siebold, spokeswoman with the Chattanooga Metropolitan Airport, said local leaders know they can’t compete with the Atlanta airport in terms of the number of flights.
“Our most important work is in providing access to world markets and providing access from those national and international markets back to Chattanooga,” she said via email. “We currently provide six major access points to the world—Atlanta, Charlotte, Chicago, Dallas, Detroit and Washington, D.C., as well as two key vacation destinations in Orlando and Tampa. This will continue to be our key effort.”
She also said that passenger boardings are up by 5 percent this year, cargo is up 240 percent and overall operations are up 15 percent.
Krystal leaders also cited the need to be close to new and existing markets.
The Krystal Corporation has more than 50 restaurants in Atlanta and about 20 in Chattanooga. There are 280 more located around the Southeast.
No local restaurants will close, officials said.
Pendergast noted that the 60 local people impacted make up less than 1 percent of the company's 6,000 employees.
Officials likened the transition out of town to the one Coca-Cola made years ago. The company needs a larger, more centralized location to expand, they said.
And Krystal leaders want to add 150 new stores in the next five years.
Since Argonne took over the company five months ago, leaders said they have already made improvements.
They said they have reversed the downward sales trend by launching new promotional campaigns and deals, such as selling Krystal "sackfuls” at reduced prices.
The new leaders said they have also reduced the cost of building new Krystal restaurants by 20 percent and have improved cash flow and profitability over the past year.
Pendergast said he and his team are working to see what will happen to the offices Krystal currently occupies on MLK.
And he said he spoke with the Davenport family to explain the rationale for the move, and leaders are determined to keep a presence in Chattanooga.
The decision to move wasn't easy, and he understands that some Chattanoogans will be disappointed by the move.
But one possibility for keeping a piece of the company here is creating a Krystal museum, Pendergast said.
Richard Beeland, spokesman for Mayor Ron Littlefield, said discussion about a museum is in the beginning stages.
“A Krystal museum is a great idea, and Chattanooga is the perfect place for it,” he said via email.