FAT Brands Inc. (FAT)
3Q21: The Promise Begins to Emerge
FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
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3Q21 Results. Fat Brands reported 3Q21 revenue of $29.8 million, compared to $4.1 million in 3Q20. The increased revenue reflects two months of the GFG acquisition. Royalties revenue rose to $13.7 million in the quarter from $3.2 million in 3Q20. FAT reported operating income of $2.4 million in the third quarter versus an operating loss of $1.3 million last year. Interest expense of $7.1 million drove a reported $3.6 million, or $0.13 per share, loss in the quarter, compared to a $568,000, or $0.04 per share loss last year. We had projected revenue of $14.8 million and a net loss of $1.4 million, or $0.09 per share.
Sales Trends Continue Improving. Sales continue to improve post-COVID. SSS growth was 16.2% year-over-year and up 3.5% versus 3Q19. System-wide sales grew 378% to $349.8 million, driven by the acquisitions over the past year. Notably, sales at some franchisees rebounded to, or are above, pre-pandemic 2019 levels …
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.