Restaurant Finance Monitor
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We attended FAT Brands multi-branded franchisee convention in Las Vegas earlier this week, having recently written how unusual it is for analysts these days to be voluntarily “exposed” to franchisees of publicly held franchised systems. We understand that at least a dozen prominent restaurant analysts were invited, but only a couple (including ourselves) took them up on it. We obviously found the time well spent.


There were about 2,000 attendees at the Wynn Hotel, with all seventeen brands heavily represented. The Company has published the long list of presenters, so we need not repeat that here. Suffice to say that the agenda was packed with pertinent, informative information, as well as the predictable uplifting, motivational, and entertaining presentations. From both an entertainment and inspirational standpoint, the highlight had to be Earvin “Magic” Johnson’s hourlong appearance. He had 2,000 people in the palm of his hand as he mingled with the audience and reflected on his athletic and business careers. We’ve been to a great number of conferences but can’t recall a more impressive presentation.

Management of FAT Brands not only provided a first-class event, which they started planning over a year ago, even before owning Twin Peaks, Fazoli’s, Round Table and others. Top management, administrative staff, and Directors as well, all “walked the talk” throughout, as gracious hosts and, most importantly, appreciative partners of their franchisees. One of the themes enumerated throughout by CEO, Andy Wiederhorn, and his team, is that the purpose of the conference was not to “congratulate ourselves” but to “make ourselves collectively better”. “It’s not about what’s working, but about what we can do to improve.” It’s worth noting that, while FAT Brands provided three days of food and drink and presentations, attendees paid in time and travel expense and seemed uniformly grateful for the experience.


A clear objective of the convention was to sell franchises. I think the phrase was “Drive to One Thousand”, with the previously quoted pipeline of stores to be built in the 900s. We don’t know what the tally will turn out to be, but new commitments were clearly taking place.

We didn’t hear any specific reference to short term comp sales, but the mood was clearly upbeat, from franchised operators to the executives at the manufacturing plant, who are optimistic that a great deal of the unused capacity can be put to productive use. The Company has publicly made reference to strong sales trends and openings at the major brands, and we heard no indication of momentum being lost.  We would be remiss not to single out the leaders of Twin Peaks, FAT Brands’ single largest brand, in terms of their confidence and commitment to building Twin Peaks to more than double its 93 store current footprint.

The overriding most important aspect of the event was that management of FAT Brands (and their entire organization) communicated effectively their primary dedication to the long-term success of each franchisee.  There was every indication, including a conversation we had with a supervisor that has been with Fatburger (and Andy Wiederhorn) for seventeen years, that the message provided to franchisees in Las Vegas represents deeply held principles. We’ve previously written about Dunkin’ Donuts spending over $1B to buy back stock while Starbucks was “eating the lunch” of their franchisees, and how Restaurant Brands hollowed out their field organization to cut G&A after buying Burger King. Based on everything we observed in Las Vegas, there is no such risk to franchisees at FAT Brands.


  • The spirit within the portfolio is excellent. We heard no doubt expressed relative to the effort or effectiveness of FAT Brands’ leadership. To the contrary, a number of franchisees were more confident in their new franchisor, in terms of understanding their business and long-term commitment to it, than under previous private equity ownership who are basically financial types and, from the beginning, predictably planning their exit strategy.
  • Comps and the rate of new store openings seem fine.
  • The pipeline of stores to be built is growing.
  • Management has stated their expectation of a $95-100M post-Covid EBITDA run rate. We must first emphasize: There is no indication whatsoever of any downgrade of that expectation. However, it doesn’t matter which month they reach that level. What matters is that the brands are healthy and growing and management is properly building the platform to produce $200M of EBITDA (our “suggestion”, not an estimate) in 3-5 years, and more long term.


Roger Lipton