FAT Brands Inc. Reports Strong Q3 Financial Results
Join the live conference call today at 5:00 PM ET
LOS ANGELES — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) recently announced its financial results for the fiscal third quarter, reflecting significant progress and growth momentum.
Andy Wiederhorn, Chairman of FAT Brands, expressed enthusiasm about the company’s development, stating, "In the past three years, we've expanded our brand collection to include 18 unique concepts, boosting our operational footprint tenfold — now with over 2,300 locations in more than 40 countries and 49 U.S. states or territories. In the third quarter alone, we launched 22 new locations, cumulatively achieving 71 new unit openings year-to-date, and we are on track to hit 100 by year’s end."
In a further testament to the brand's vibrancy, Wiederhorn explained that the company has signed approximately 225 development agreements to date this year, only slightly fewer than the total from 2023, solidifying a pipeline of nearly 1,000 future locations.
Accelerated Growth Strategy
Ken Kuick, Co-CEO of FAT Brands, detailed strategic efforts towards enhancing the Polished Casual category, spotlighting Twin Peaks, which has emerged as the company’s fastest-growing brand. This year saw the unveiling of nine new lodges, culminating in a total of 115 locations. The innovative conversion from Smokey Bones to Twin Peaks has commenced, with plans for multiple conversions to follow.
Financial Highlights for Q3 2024
- Total revenue surged by 31.1%, reaching $143.4 million, compared to $109.4 million in Q3 2023.
- System-wide sales increased by 6.4% from the previous fiscal year.
- Total store openings for this quarter amounted to 22, bringing the total for the year to 71.
- Net loss was reported at $44.8 million, translating to $2.74 per diluted share, an increase from a $24.7 million loss in the same period last year.
- EBITDA stood at $1.7 million, significantly down from $10.8 million recorded during Q3 2023.
- Adjusted EBITDA for the quarter was $14.1 million, down from $21.9 million a year ago.
- Adjusted net loss was noted at $38.0 million, or $2.34 per diluted share, facing a previous adjusted net loss of $17.1 million.
Understanding the Financial Landscape
Total revenue’s increase by $34.0 million in Q3 2024 is attributed to the acquisition of Smokey Bones and contributions from new restaurant openings. However, the costs and expenses surged by $49.5 million, a 48.1% increase, primarily driven by the same acquisition and intensified operational activity across company-owned restaurants.
General and administrative expenses climbed by $10 million due to the acquisition impact and rising professional fees linked to ongoing litigation. Meanwhile, sales strategies have driven higher costs of restaurant and factory revenues that rose significantly as well, reflecting the increased enterprise scale leading to higher sales across company-owned establishments.
Analyses of System Sales Growth
In terms of sales growth, same-store sales metrics reveal a decline of 2.7% year-to-date compared to the previous year, although system-wide sales growth showed a more stable 6.4% rise in this most recent quarter.
Looking Ahead
FAT Brands is focused on refining its financial structure to prepare for future opportunities, including the anticipated IPO related to the Twin Peaks and Smokey Bones merger. Upcoming refinancing of Twin Peaks' securitization debts is also on the agenda, which aims to optimize the financial landscape of the burgeoning brand entity.
Conference Call and Webcast
The company invites stakeholders to join the conference call, scheduled for today at 5:00 PM ET, featuring insights from Andy Wiederhorn and Ken Kuick on the quarter's performance and future outlook. The call is open for access via telephone and will also offer a replay shortly after the live discussion.
About FAT Brands Inc.
FAT Brands Inc. (NASDAQ: FAT) is a prominent franchising entity engaged in the strategic acquisition, marketing, and development of fast casual and dining concepts internationally. The company boasts an impressive portfolio including 18 multi-brand restaurant franchises with approximately 2,300 locations worldwide.
Frequently Asked Questions
1. What is the main focus of FAT Brands?
FAT Brands focuses on franchising and developing a variety of restaurant concepts globally, including fast casual and casual dining.
2. How has FAT Brands expanded its brand portfolio?
The company has grown to include 18 different restaurant concepts and increased its global operational footprint significantly over the past three years.
3. What are some recent financial highlights of FAT Brands?
For Q3 2024, FAT Brands reported a total revenue increase of 31.1%, despite a net loss of $44.8 million for the quarter.
4. What is the development plan for FAT Brands moving forward?
FAT Brands has a development pipeline of approximately 1,000 future locations and aims to open 100 new units by year-end.
5. Who can join the FAT Brands conference call?
The conference call is open to all stakeholders and can be accessed live via telephone.
