FAT Brands reports another quarter of sales growth

FAT Brands reported another quarter of revenue growth while operating at a loss, largely due to last year’s acquisition of Smokey Bones, which created both additional revenue and additional debt for the company. The company reported a 2.7% decline in same-store sales growth for the third quarter ended September 29, as the company continues to focus on greater development momentum with 1,000 stores in the pipeline.

“We continue to prioritize accelerated growth in our stylish casual category, especially through Twin Peaks, our fastest growing concept,” said Ken Kuick, co-CEO of FAT Brands, in a statement. “To date we have opened nine new lodges, bringing our total to 115 locations. We also completed our first Smokey Bones to Twin Peaks conversion in Lakeland, Florida in the third quarter, with our second conversion underway and several more planned for next year.”

Conversions of underperforming Smokey Bones restaurants have been part of FAT Brands’ strategy for several quarters. The company is also still considering taking Twin Peaks public, but now with Smokey Bones together as a combined entity. FAT Brands said the company filed a registration statement with the Securities and Exchange Commission in May, which is the next step in going public.

However, as the 2024 fiscal year end approaches, FAT Brands executives have now said that Twin Peaks/Smokey Bones could look for an alternative transaction, which could include options such as a direct public listing or the use of a special purpose acquisition company, or SPAC. .

Either way, the goal is for FAT Brands to pay down its debt and leverage its balance sheet so the company can become profitable, including refinancing Twin Peaks’ securitization debt.

“FAT Brands will look to monetize its investment in Twin Peaks over time and use that to pay down other debt and reduce overall debt at FAT Brands,” said Andy Wiederhorn, Chairman from FAT Brands, during this week’s earnings call. “I expect this to happen later in 2025 and that will include redeeming some of the preference shares that are expensive and that we have to redeem. It just takes a long time because of market conditions.”

For the third quarter ended September 29, FAT Brands opened 22 new restaurants, with another 29 openings planned for the final quarter of 2024. The company reported total revenue growth of 31.1% to $143.4 million, up from $109, 4 million in the third quarter of 2024. 2023. Net loss was $44.8 million, or $2.74 per share, compared to $24.7 million, or $1.59 per diluted share, in the third quarter of 2023.

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