SPB Hospitality, the multi-concept operator of casual dining chains like Logan’s Roadhouse and J. Alexander’s, is merging with Krystal Restaurants, the companies said on Thursday.
Both SPB and Krystal are owned by the same private equity firm, Fortress Investment Holdings, which acquired both companies out of bankruptcy in 2020. Krystal is the first fast-food concept in the Houston-based SPB’s portfolio.
Krystal operates nearly 300 restaurants in 10 states, mostly in the Southeast. The company will be operated separately under the SPB Hospitality umbrella as its own division. The brands in the portfolio operate independently, the company said, which allows the concepts to “enhance their unique identity.”
But as part of a multi-brand operator, they can share some services that are not brand dependent. “H.R., accounting, legal, it doesn’t matter if it’s a QSR, a fast-casual or upscale,” said Josh Kern, SPB’s interim CEO. “If we do things correctly, it could benefit Krystal.”
Multi-concept companies have become increasingly common in recent years, particularly among owners of smaller and midsized chains that hope to cut some overhead costs by operating them under a single umbrella.
Kern, however, suggested that such operations don’t always work, and he pointed out the predecessor company to SPB, Craftworks, which filed for bankruptcy in 2020. “I’ve seen it done incorrectly,” he said, “particularly at Craftworks.”
But he said that sharing services can make companies more efficient. Shared services can help these companies cut costs at a time when other costs are increasing and there are more demands for technology and remodels that add to the cost of operations. “There’s going to be more of it in the marketplace,” Kern said. “It’s interesting to really see some of the smaller, hyper-local brands that are starting to get into the shared services platform.”
SPB was created after Fortress acquired Craftworks out of bankruptcy. The company later acquired the upscale chain J. Alexander’s Holdings. That deal gave the company four brands, including its flagship concept, Stoney River Steakhouse, Redlands Grill, Overland Park Grill and Merus Grill. SPB already operated Logan’s, Old Chicago, Rock Bottom Brewery and several other mostly brewery concepts.
SPB has been moving some workers around and may eliminate some locations with the Krystal acquisition. The company has offices in Houston, Atlanta and Nashville from its different acquisitions but, Kern admitted, it may one day close the Houston office.
With its different brands, the company can use different real estate strategies. For instance, it may close a struggling Gordon Biersch Brewery and replace it with a J. Alexander’s. “You can take a restaurant that lost its luster and put one of our other brands in there,” Kern said. “We know the trade area, we know the landlord and we know what we pay for rent.”
Kern also said that, though Krystal is quite different from the other brands SPB operates, they all have the same foundation. “There’s still the basic tenets of what we’re all about and it’s true for QSR or for upscale: quality, service and atmosphere,” he said. “That’s what everything stems from.”
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