Operations

FAT Brands reports Q3 loss, revenue increase

Provided

November 4, 2021

Although FAT Brands revenues improved 628% to $29.8 million during fiscal third quarter — the 13-week period ending Sept. 26 — the chain saw an adjusted net loss of $2 million or 14 cents per diluted share, compared to an adjusted net income of $0.3 million, or loss of 2 cents per share in the third quarter of 2020, when revenues were $4.1 million.

President and CEO Andy Wiederhorn said that he was excited, however, about the progression in sales across all its brands as the Delta variant wanes and restrictions ease throughout the world.

"We continue to report positive same store sales compared to 2019 with a 4% increase for the third quarter of 2021," he said in a company press release. "We are particularly excited that international same store sales compared to 2019 improved 715 basis points in the third quarter when compared to the second quarter of 2021."

In addition, same-store sales of domestic locations in the third quarter grew 7% compared to the third quarter of 2019.

"Our franchise sales team had a record quarter, closing nine deals that account for 166 locations, which will further enhance our organic growth strategy," Wiederhorn said. "We expect unit growth to continue increasing in the coming months with plans to open 26 additional stores by the end of the year for a total of 85 for 2021."

In October, the chain closed the acquisition of the Twin Peaks for $300 million, a deal that Wiederhorn expects to help steady the brand for future growth.

"This transaction furthers the rapid diversification of our restaurant portfolio, expands our store base to more than 2,100 franchised and corporate-owned stores globally and increases our combined system-wide sales to approximately $1.8 billion annually," he said. "We are excited to integrate Twin Peaks into our portfolio, and believe we can effectively enhance the strong growth the sports-lodge brand achieved under Garnett Station. From this transaction, we expect our post-COVID normalized EBITDA to increase by approximately $25-$30 million."

FAT Brands also announced this week that it would buy Fazoli's, a 220-unit fast casual Italian concept, for $130 million.

"We believe this is a fantastic addition to our portfolio as Fazoli's further enhances our profitability, adding an estimated $14.5 to $15 million to our post-COVID normalized EBITDA in 2022," he said.

Other Q3 highlights

• Total revenue improved 628% to $29.8 million compared to $4.1 million the third quarter of 2020.
• System-wide sales growth of 378%.
• United States sales growth of 418%.
• Rest of world sales growth of 237% .
• System-wide same-store sales growth of 16.2%.
• United States same-store sales growth of 17.3%.
• Rest of world sales growth of 11.9%.
• Opened 25 stores.

FAT Brands owns Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo's Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses. The Fazoli's acquisition should close by the end of the year.