FAT Brands Reports 31% Revenue Growth, Net Loss in Latest Quarter

FAT Brands Inc. reported significant financial developments in its latest 10-Q filing for the thirteen weeks and thirty-nine weeks ended September 29, 2024. The company, which operates a multi-brand restaurant franchise model, experienced a notable increase in total revenue, which reached $143.4 million for the third quarter, up from $109.4 million in the same period of 2023. For the thirty-nine weeks, total revenue was $447.4 million, compared to $321.8 million in the prior year, reflecting a 39% increase primarily driven by the acquisition of Smokey Bones and new restaurant openings.

Restaurant sales also surged, with $99.2 million reported for the third quarter, compared to $62.6 million in the previous year. However, the company faced challenges in profitability, posting a net loss of $44.8 million for the third quarter, worsening from a loss of $24.7 million in the same period last year. For the thirty-nine weeks, the net loss was $122.4 million, compared to a loss of $63.9 million in 2023.

General and administrative expenses rose significantly, totaling $34.5 million for the third quarter, up from $24.5 million in 2023, and $94.0 million for the thirty-nine weeks, compared to $62.8 million in the prior year. This increase was largely attributed to the acquisition of Smokey Bones. The cost of restaurant and factory revenues also increased sharply, reaching $96.8 million for the third quarter, up from $59.2 million in 2023, and $296.0 million for the thirty-nine weeks, compared to $177.8 million in the previous year.

The company’s total liabilities increased to $1.73 billion as of September 29, 2024, up from $1.64 billion at the end of 2023. Cash and cash equivalents decreased to $16.8 million from $37.0 million at the end of the previous fiscal year. The company reported a total stockholders' deficit of $386.2 million, worsening from a deficit of $228.7 million in the prior year.

FAT Brands also highlighted its strategic acquisition of Barbeque Integrated, Inc. for $31.3 million, which is expected to enhance its market presence. The company continues to focus on expanding its franchise locations, with approximately 2,300 locations open or under construction, 92% of which are franchised.

In terms of financing, the company reported net cash provided by financing activities of $46.6 million for the thirty-nine weeks, primarily from borrowings. The company believes it has sufficient liquidity to meet its needs for at least the next twelve months through available cash, cash flows from operations, and access to capital markets.