When Fat Brands acquired Global Franchise Group in 2021, it inherited a manufacturing plant in Atlanta that makes cookie and pretzel dough for a pair of chains, Great American Cookies and Pretzelmaker.
Rather than sell that plant, Andy Wiederhorn, the chairman of Fat Brands, has only wanted to make that plant busier. So he’s worked to occupy that manufacturing plant ever since, adding cookies to some of his chains’ menus. And it’s apparently fueling a lot of the company’s acquisition strategy.
“It’s a 40,000-square-foot facility that is only about one-third utilized,” he said at an investor conference last week, according to a transcript on the financial services site AlphaSense. “We have tons of excess capacity and we can run three shifts.”
Not only that, but it can get bigger. “We sit on half an acre of land out of a four-acre site. We have a lot of room to expand,” he added.
The plant itself generated $9.7 million in sales in the second quarter, up 13% over the year before. The plant is now at 40% to 45% of its capacity. Two years ago it was at 33%.
Fat Brands continues to look for opportunities to add to that. The company over the summer started selling cookies at its burger brands Elevation Burger, Johnny Rockets and Fatburger, to produce more dough from that plant.
And Fat Brands wants to buy companies that sell the types of products that can be made in that facility. It has already made one such deal, the 2022 acquisition of Nestle Toll House Café—a concept the company is converting into its Great American Cookies brand.
The company has shifted into a strategic acquisitions mode over the past two years, amid higher interest rates and valuation concerns, after its 2021 buying binge in which it made nearly $1 billion worth of deals. In addition to the Nestle deal last year, it recently acquired Smokey Bones, with plans to convert nearly two-thirds of its 61 locations to its higher-volume Twin Peaks brand.
Acquiring a snack business would also be a strategic move. In so doing, Wiederhorn said, that business would not only add profits from the restaurant chain, it would generate sales at the manufacturing plant.
“We kind of get two bites at the apple,” he said. “The profitability from anything we buy plus the additional manufacturing business.”
Wiederhorn said the company can take the cookie manufacturing in-house in that plant, sell the dough to franchisees with a “30% to 40% margin,” and those operators are still buying the dough cheaper than they can buy it in the open market.
“It’s a really good opportunity as you’re cutting out the middleman in the dough-making business,” he said. “That’s exciting growth for us.”
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