THE KRYSTAL COMPANY MARKS 75th ANNIVERSARY WITH RECORD SALES AND PROFIT IN 2007

CHATTANOOGA, Tenn. – The Krystal Company, the fast food icon famous for its little food with the big taste craved by millions all across the South, today announced that it achieved its highest revenue and profitability in company history in 2007. The Chattanooga, Tenn.-based company, which celebrated its 75th anniversary in October, recorded more than a 10% increase in operating profits and a 4% growth in average unit volume in 2007.

“We’re proud to have celebrated Krystal’s 75th anniversary with the highest sales and profitability in the company’s history,” said Fred Exum, President and Chief Executive Officer of The Krystal Company. “Our success is driven by our continued focus on improving operations at all levels while introducing exciting, new product offerings that complement our core menu items and deliver a great value—not just in price but also in quality.”

Krystal’s record-breaking performance in 2007 was complemented by a number of highlights, including:

- The number of employees systemwide who earned the rank of Master Cashier increased from 440 in 2006 to 748 by the end of 2007. The special designation, which requires certification and ongoing training, recognizes employees for exceptional customer service and handling of cashier duties.

- QSR Magazine’s “Best in Drive-Thru 2007” study ranked Krystal #1 in accuracy in the QSR hamburger category. According to the study, 80% of consumers rated accuracy as the most important factor to a good drive-thru experience.

- Krystal’s new MilkQuake line, featuring premium ice cream and all-natural flavors, was an immediate hit when introduced in May. The made-to-order milkshakes fueled profits during all dayparts and as a snack-time treat. In November, two holiday-inspired flavors were introduced, the Eggnog MilkQuake and Candy Cane MilkQuake.

- Krystal continued the extensive re-imaging of its restaurants both inside and outside, and at the end of 2007, more than half of its company-owned stores were re-imaged, including all units in Krystal’s largest markets: Atlanta, Chattanooga, Nashville and Jacksonville, Fla.

- Krystal’s new Dine-In, Drive-In and Drive-Thru restaurant concept was unveiled in Chattanooga. The state-of-the-art design features a 38-seat dining room, drive-thru and full-service drive-in with classic carhop service, in-your-vehicle Wi-Fi Internet access and a digital media board, complete with a LCD TV, positioned in front of each parking space.

- Limited-time products such as Krystal’s Chik’N Stik’Ns, which were promoted with free music downloads from Universal Music, drove incremental sales while sales of the company’s popular Krystal Chik sandwich were boosted with new flavor introductions, including Buffalo Ranch and Marinara Mozzarella.

- In its fourth year, the Krystal Square Off World Hamburger Eating Championship continued to generate national brand recognition for Krystal and was once again televised live to a nationwide audience on ESPN—drawing twice the audience of ESPN’s daypart average during the NFL season. The event resulted in more than 200 million non-paid media impressions worldwide.

“Our success last year gave us excellent momentum going into 2008, and we’re confident that we’ll continue this positive trend moving forward,” said Exum. “We’ve implemented an improved menu management strategy, and our commitment to the customer experience has never been greater.”

Already this year, Krystal has followed up the successful introduction of its MilkQuake line with two new flavors, the Java Cream MilkQuake, which uses real Italian espresso flavoring, and the Chocolate-Covered Cherry MilkQuake, which blends real cherry flavoring with premium chocolate or vanilla ice cream topped with HERSHEY’S Magic Shell®. The company plans to roll out between six to eight new limited-time MilkQuakes in 2008.

“Our guests are showing a lot of excitement for our MilkQuake line, and we’ll continue to introduce new limited-time flavors throughout the year as well as new frozen drink options like our Krystal Freeze, which is set to rollout in mid-March.”

On the operations front, Krystal has recently launched the Production Master program, a counterpart to its Master Cashier program that is designed to increase the quality and consistency of food preparation and production. To become a production master, an employee must pass a series of comprehensive tests demonstrating his or her knowledge of every aspect of production and preparation for all Krystal menu items.

In addition to the company’s improvements to menu and operations, Krystal is also moving forward with plans to expand its business through the development of company-owned stores both in heritage markets and in new markets. Krystal plans to open a total of seven new company-owned restaurants in 2008, including three in San Antonio, Texas and one in Greenville, S.C. Approximately 60% of Krystal’s new company-owned restaurants will be opened in heritage markets.

The Krystal Company
Founded in 1932, Krystal restaurants have become more than sparkling-clean eateries where friendly employees serve up fresh, delicious food. Krystal has become a cultural icon and an experience that virtually every man, woman and child in the South has shared. The Krystal brand and the great food, service, value and setting that it represents has taken a prominent place in the South’s cultural landscape.

The Krystal Company is the oldest quick service restaurant chain in the South and the second oldest in the United States. The Chattanooga, Tenn.-based company currently has nearly 400 restaurants in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia. For more information, visit www.krystal.com.

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