FAT Brands (FAT) Update – IMPORTANT PROGRESS AT TWIN PEAKS

We expect that the third quarter, ending 9/29, was productive, in a business-as-usual fashion, within FAT Brands’ portfolio, as the summary below of recent announcements show. At the same time, worthy of elaboration is the successful opening of the first Smokey Bones to Twin Peaks conversion.

Followers of FAT Brands are well aware that Twin Peaks is the largest and most promising brand within FAT Brands’ portfolio and is being prepared for independent public ownership. That event is apparently within several months from now, as FAT Brands restructures the $400M portion of their debt that is tied to Twin Peaks, and the SEC registration process moves forward.

Since a “quiet period” is being observed, specifics beyond the announcement of the mid-September opening of the new Twin Peaks in Lakeland, Florida, have not been released. However, reports from unaffiliated observers indicate that operations have gone smoothly, and the restaurant has been busy, so we conclude that expectations, at the least, have been met. The opening took place on time, actually a bit ahead of the Q4 indication on the last conference call.

THE SIGNIFICANCE OF THE SMOKEY BONES TO TWIN PEAKS CONVERSION

Recall that FAT Brands purchased 61 Smokey Bones locations for a total purchase price of about $30M, or $500,000 per leasehold. Management has indicated that about half are being considered for conversion, at a cost of $3.5-$4.5M, versus up to $7.5M for a new unit, including land. This first converted unit, in Lakeland, has been done as a Company operated location, while franchisees, who operate about 70% of the Twin Peaks system, will no doubt do a similar percentage of future conversions.

We do not consider the apparent much lower cash cost to be the most advantageous part of the comparative equation because of the land differential, though there could sometimes be a modest savings. Far more important is the control of approximately thirty attractively situated properties that can be added to the Twin Peaks system within a predictable timetable. More challenging than ever, industry wide,  is the acquisition of attractive locations at a tolerable price, including liquor licenses and permits, so this is a large variable removed.

The development pipeline for the Twin Peaks system (which will approach 117 operating locations by 12/31/24) has a pipeline in place, without the Smokey Bones conversions, that would more than double the chain to 250 units in five years. Not only will the conversions add to that plan, but the PREDICTABILITY AND TIMING of the Twin Peaks long term business plan will be improved. Adding further to the predictability of openings and operating success, is that the franchisee system’s expansion is being driven largely by existing franchisees. They are voting with their capital and their operating credentials have already been demonstrated.

Investors in public companies like nothing more than predictability of expansion on top of strong unit level economics, so the above picture should provide an attractive backdrop for the valuation of soon-to-be-public Twin Peaks.

Roger Lipton

 OTHERWISE AT FAT Brands:

The following announcements (edited for brevity) over the last several months summarize the noteworthy corporate events.

 Scoop Up After-School Smiles at Marble Slab Creamery

Aug. 01, 2024 9:05 AM ET

Frozen Slab Franchise Offering Back to School Happy Hour with Buy One, Get One Deal

LOS ANGELES, Aug. 01, 2024 (GLOBE NEWSWIRE) – Marble Slab Creamery, FAT Brands’ small-batch ice cream franchise that never fails to dream up the ultimate flavor combinations, is drawing up the perfect after-school plans. Starting Monday, Aug. 5 and running through Sunday, Aug. 18, participating stores are offering a special Back to School Happy Hour featuring a sweet deal: guests can receive a free small Ice Cream cup with purchase of a small, regular, or best value Ice Cream Cup. The sweet special is available daily from 4:00-6:00 p.m., and the guest must mention the promotion to redeem.

Native Grill & Wings Launches ‘3 for You’ Value Deal Through Summer 

Aug. 01, 2024 9:10 AM ET

LOS ANGELES, Aug. 01, 2024 (GLOBE NEWSWIRE) – Native Grill & Wings, known for its signature wings and vibrant atmosphere, is launching a new deal that is sure to keep fans full—a “3 for You” meal offer. Available Aug. 5 through Sept. 30, guests who dine-in can enjoy chips and salsa, their choice of Native Burger or Native Chicken Sandwich with Fries and a non-alcoholic beverage for just $10.99.

FAT Brands Expands Dine and Donate Fundraising Program with DonationScout 

Fundraising Platform to Fuel Further Community Support Across Restaurant Portfolio

LOS ANGELES, Aug. 07, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc., a leading global restaurant franchising company, announces a new partnership with DonationScout, an enterprise software solution that streamlines restaurant fundraising for operators and their guests. Portfolio brands including Round Table Pizza, Fatburger, Fazoli’s, Johnny Rockets, Great American Cookies, Marble Slab Creamery, Pretzelmaker, Hurricane Grill & Wings, Smokey Bones, Native Grill & Wings, Hot Dog on a Stick, and Buffalo’s Cafe, are tapping into the platform to drive forward their Dine and Donate Fundraising Programs. Since the inception of FAT Brands (FAT) in 2017, community involvement has been a key pillar for its portfolio of restaurants. Most recently, FAT Brands extended its commitment to creating an impact in areas it operates in by launching a charitable arm, the  FAT Brands Foundation.

A Taste of Fall! Great American Cookies Adds a Sweet Touch to Menu with All-New Caramel Churro Cookie 

Aug. 12, 2024 9:00 AM ET

Beloved Seasonal Favorite, Pumpkin Spice Cookie, Also Makes Return

LOS ANGELES, Aug. 12, 2024 (GLOBE NEWSWIRE) – Great American Cookies, home of the Original Cookie Cake franchise owned by FAT Brands (FAT), is falling for cooler temperatures and adding two cookies to its lineup, brand-new Caramel Churro and returning fan-favorite, Pumpkin Spice. Sweater weather starts early this year—the limited-time offerings will be available starting today, Aug. 12, and be baked fresh in-store daily through Oct. 31. A melt-in-your-mouth cookie with a delightful combination of caramel chips and cinnamon sugar crunch, the all-new Caramel Churro Cookie perfectly captures the iconic Spanish treat with a sweet twist. Fall isn’t complete without pumpkin spice, which makes its annual festive return this month. The Pumpkin Spice Cookie is a fixture at Great American Cookies come fall—made with pumpkin, brown sugar, cinnamon, vanilla and white chocolate and a dusting of powdered sugar.

Marble Slab Creamery Releases Pumpkin Spice Latte Ice Cream!

Aug. 12, 2024 9:05 AM ET

Original Frozen Slab Franchise Releases Their Take on America’s Favorite Seasonal Flavor – Completely Customizable with Unlimited Mix-Ins

LOS ANGELES, Aug. 12, 2024 (GLOBE NEWSWIRE) – Marble Slab Creamery, FAT Brands’ small-batch ice cream franchise that never fails to dream up the ultimate flavor combinations, is spicing things up this fall with the release of Pumpkin Spice Latte ice cream. Made with real pumpkin, rich coffee and a dash of cinnamon, the new creamy treat is sure to spice up your fall! The new offering is available starting today, Aug. 12, through Oct. 31.

Thanks to Marble Slab’s unlimited mix-in philosophy, the new Pumpkin Spice Latte can be enjoyed any way you spice it – from pie-inspired toppings like Mallo Crème and graham cracker crumbs, to nutty, classic combinations like chopped pecans, caramel and marshmallows, every guest is sure to dream up their perfect Pumpkin Spice creation.

Break Breadsticks This Back to School Season with Fazoli’s $4 Pastas

Aug. 13, 2024 9:00 AM ET

Fan Favorite Deal Returns Just in Time for Study Hall

LOS ANGELES, Aug. 13, 2024 (GLOBE NEWSWIRE) — Time to crack open the books and dig into some breadsticks! Fazoli’s, America’s favorite fast and fresh Italian chain owned by FAT Brands Inc. (FAT), is offering a saucy, scholarly deal – $4 fan-favorite pastas – to celebrate back to school! Available now and running through Sept. 9 at participating locations, guests can indulge in fan-favorite pasta dishes for only $4, including Regular Spaghetti with Marinara or Meat Sauce and Fettuccine Alfredo!

Available for dine-in, drive-thru and online guests who use the code BACK4SCHOOL, fans should be sure to pencil in this hot deal ASAP. All three pasta offerings are loaded with flavor and, as always, served with free freshly baked, signature breadsticks.

FAT Brands Bolsters Development Team with Two New Senior Hires 

Aug. 28, 2024 9:00 AM ET

Ammy Harrison and Maiyo Hood Join Global Franchising Company to Support Non-Traditional and International Growth

LOS ANGELES, Aug. 28, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc. announces the hiring of Ammy Harrison as Senior Vice President of Non-Traditional Development and Maiyo Hood as Vice President of International Development. The new team growth underscores FAT Brands’ commitment to driving organic growth, especially non-traditional and international. Year-over-year, the brand continues to build upon its over 2,300-unit global footprint.

Ms. Harrison brings nearly 25 years of industry experience with high-growth restaurant brands, including spearheading non-traditional growth at Papa John’s International, Inc. Prior to joining FAT Brands (FAT), Ms. Harrison also served as Vice President of Development and Strategy at Penn Station East Coast Subs. Mr. Hood also joins FAT Brands with a strong background, most recently serving as a Managing Director at Subway, Greater China, where he was key in driving forward the development of over 4,000 locations across China. Mr. Maiyo also held a supply chain role at YUM! Brands Inc.

”Fazoli’s Expands Georgia Presence with Latest Opening in Newnan

Aug. 29, 2024 9:00 AM ET

Beloved Quick-Service Italian Chain Increases Footprint in Peach State to Eight Locations

LOS ANGELES, Aug. 29, 2024 (GLOBE NEWSWIRE) – Fazoli’s, FAT Brands’ fast and fresh Italian chain, is proud to announce its latest opening in Georgia. Located at 207 Bullsboro Dr. in Newnan, this marks the brand’s eighth location to date in the state. Over the years, the brand has steadily built its following in Georgia with its pasta offerings loaded with flavor and free freshly baked, signature breadsticks.

FAT Brands’ Wing Concepts Gear up for Fall and Football Season with New Menu Items 

Sep. 04, 2024 9:00 AM ET

Hurricane Grill & Wings, Native Grill & Wings and Buffalo’s Cafe Take the Field with New Shareables and Drinks

LOS ANGELES, Sept. 04, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc., a leading global restaurant franchising company and parent company of award-winning wing brands Hurricane Grill & Wings, Native Grill & Wings and Buffalo’s Cafe, announces new limited-time menu items across its portfolio of wing concepts heading into fall and football season, available at participating locations now through Dec. 15.

Hurricane Grill & Wings - Huddle up at Hurricane Grill & Wings and dig into fan-favorite dishes and new shareables, including Carne Asada Loaded Fries, Honey Hot Wings and Boom Boom Sliders. Guests can also celebrate their teams’ return to the field with new cocktails including the Spicy Guava Rita (Espolón Blanco Tequila, guava and jalapeño); the Old Fashioned (Elijah Craig Small Batch Bourbon, Angostura Bitters, Filthy Black Cherry and garnished with an orange peel); and the Red Bull A’Rita (Espolón Blanco Tequila, passion fruit, Red Bull Tropical^® and lime). Guests can also enjoy Miller Lite, High Noon and Modelo Especial beer bucket specials for professional and college football games.

Native Grill & Wings - Get gameday ready with Native Grill & Wings with an all-new winning menu line-up, featuring zesty Chicken Bruschetta Flatbread, a hearty Native Meatball Appetizer or Sub, and a savory White Garlic Pizza. A new playbook of cocktails has also arrived including El Jefe (Espolón Reposado Tequila, Licor 43, Kahlúa and Owen’s Nitro-Infused Espresso) and Tito’s Handmade Vodka Strawberry Lemonade (Tito’s Handmade Vodka, strawberry and lemonade). For professional and college football games, 20-ounce draft specials of Modelo Especial and Coors Light are also available.

Buffalo’s Cafe - Join the herd at Buffalo’s Cafe to take in all the action with hot new items including Firecracker Wings or Shrimp and a Sidewinder Wrap. Need a sidekick? Sip on the all-new Downhome Punch featuring Evan Williams Bourbon, Peach Schnapps, Citrus Sour, orange juice and lemon-lime soda. Beer bucket specials of Miller Lite and Modelo Especial are also available during professional and college football games.

 FAT Bands Announces Opening of First Twin Peaks Conversion from a Smokey Bones

Sep. 17, 2024 9:00 AM ET

Fast-Growing Sports Lodge Fuels Additional Growth Through Sister Brand Conversion Strategy

LOS ANGELES, Sept. 17, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc., (NASDAQ: FAT), a leading global franchising company and parent company of 18 iconic brands including Twin Peaks, is pleased to announce the opening of the first converted Smokey Bones location to Twin Peaks in Lakeland, Florida.

Since acquiring Smokey Bones last year, FAT Brands (FAT) has identified a select number of Smokey Bones locations to convert to its fastest-growing brand, Twin Peaks. The global restaurant franchising company has identified this strategy as a key growth pillar for the brand and currently has a pipeline of approximately 30 Smokey Bones locations they are looking to convert over the next several years.

“Converting Smokey Bones locations to Twin Peaks provides a significant return on investment as altering a standing restaurant with similar square footage and real estate draw like Smokey Bones cuts out about a year and a half of construction time,” said Ken Kuick, Co-CEO and CFO of FAT Brands. “Twin Peaks is our fastest-growing concept, producing strong and growing average-unit volumes. We believe this strategy will further drive the brand’s robust expansion plans domestically as it continues to redefine the polished casual dining sector.”

Great American Cookies and Marble Slab Creamery Launch Co-Branded Online Experience

Sep. 18, 2024 9:00 AM ET

New Ordering Journey Includes First-of-its-Kind 3D Cookie Cake Builder

LOS ANGELES, Sept. 18, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc., parent company of Great American Cookies, Marble Slab Creamery and 16 other restaurant concepts, announces the launch of Great American Cookies and Marble Slab Creamery’s new co-branded online ordering experience in partnership with Rapturous, the digital restaurant transformation and customer experience wing of 3 Owl, and Olo (NYSE: OLO), a leading technology provider for restaurants.

The new user experience comes at a time when Great American Cookies and Marble Slab Creamery are experiencing robust growth. Since the co-brand launched in 2014, the concept has since surpassed over 150 units worldwide. The new website functions as a dynamic co-branded platform that seamlessly integrates the two brands. The innovative site optimizes the guest experience, whether they are visiting a co-branded location or a standalone Great American Cookies or Marble Slab Creamery.

Another key initiative to enhancing the customer’s digital journey is the creation of the first-ever 3D Cookie Cake Builder, now live at www.greatamericancookies.com. Unlike any other digital Cake builder, the new Great American Cookies model delivers the delight of building a cake in real time. It provides 3D design visuals as guests select icing colors, Cookie Cake flavors, and personalized messages for their Great American Cookies Cookie Cake.

Pretzelmaker Adds a Bucket List Worthy Menu Item – Bucket of Bites! 

Sep. 30, 2024 9:00 AM ET

The Innovator of Pretzel Bites Launches Bucket of Bites to Elevate Snack Game

LOS ANGELES, Sept. 30, 2024 (GLOBE NEWSWIRE) – Pretzelmaker, owned by FAT Brands Inc (FAT). and innovator of Pretzel Bites, is crossing an item off its menu bucket list. Starting Sept. 30 at participating locations, the chain is rolling out the ultimate shareable item—Bucket of Bites. Available in sweet and savory flavors, the all-new Bucket of Bites, 85 ounces in size, features mounds of Pretzel Bites served with six different sauces of the fans’ choice, including customer-favorites such as Cheddar Cheese, Pizza Sauce, Honey Mustard and Cream Cheese.

Hollywood Favorite, Fatburger and Buffalo’s Express, Debut First Location in Puerto Rico 

Oct. 01, 2024 9:00 AM ET

Co-Branded Burger and Wing Concept Open First of 10 Planned Units on Caribbean Island

LOS ANGELES, Oct. 01, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc. announces the opening of the first Fatburger and Buffalo’s Express in Puerto Rico. The restaurant is the first of 10 locations set to open on the Caribbean Island in partnership with local franchisee Conceptos Restaurants LLC. The all-new Fatburger and Buffalo’s Express is located in Plaza Carolina, Puerto Rico’s second largest shopping center known for its exciting dining options, shopping, and cinemas.

“We are pleased to kick-off Fatburger’s growth in Puerto Rico with our first opening of 10 slated over the next several years,” said Jake Berchtold, COO of FAT Brands’ Fast Casual Division. “We continue to seek new growth opportunities that only further position Fatburger as a global leader. Fatburger’s iconic burgers and Buffalos’ award-winning wings provide a unique dining experience which we are confident will resonate with Puerto Rico locals.”

Great American Cookies and Marble Slab Creamery Co-Branded Concept Continues Growth in Georgia

Oct. 08, 2024 9:00 AM ET

Sweet Sister Franchises Notch Four Peach State Openings in 2024

LOS ANGELES, Oct. 08, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc., parent company of Great American Cookies, Marble Slab Creamery and 16 other restaurant concepts, announces the opening of four new Great American Cookies and Marble Slab Creamery locations in Georgia. The latest growth is a testament to customer desire for the two brands’ complementary treats and FAT Brands’ commitment to growth in the state, which is also home to its proprietary cookie dough and pretzel mix facility. Adding to over 50 existing locations in the state, Great American Cookies and Marble Slab Creamery are now open in Cartersville, GA, Athens, GA, Bethlehem, GA, and Snellville, GA.

Fazoli’s to Break Breadsticks in Utah with Five Unit Development Deal

Oct. 09, 2024 9:00 AM ET

Fast and Fresh Italian Chain to Make Highly Anticipated Return to State with First Opening in Saratoga Springs

LOS ANGELES, Oct. 09, 2024 (GLOBE NEWSWIRE) – FAT (Fresh. Authentic. Tasty.) Brands Inc. parent company of Fazoli’s, and 17 other restaurant concepts, announces a new development agreement in partnership with franchisee Valor Acquisitions Group, LLC to bring five Fazoli’s locations to Utah over the next five years, with the first unit expected to open in 2025 in Saratoga Springs