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Fat Brands to buy Fazoli’s for $130M

The owner of Johnny Rockets has agreed to its third major acquisition this year after deals for Twin Peaks and Global Franchise Group.
Fazoli's acquisition
Photograph: Shutterstock

Fat Brands, the Los Angeles-based restaurant chain collector, is adding another concept to its portfolio after agreeing to purchase the Italian fast-casual Fazoli’s for $130 million, the company announced on Tuesday.

It’s the fourth deal in just over a year for Fat Brands, the owner of Fatburger, which had previously acquired Johnny Rockets, Round Table Pizza owner Global Franchise Group, and most recently Twin Peaks.

In Fazoli’s, Fat Brands will get a 200-unit mostly franchised chain that appears set to grow again after shedding locations over the years. The chain, which is owned by Sentinel Capital, has more than 100 locations in its development pipeline, Fat Brands said.

The acquisition will increase Fat Brands’ earnings before interest, taxes, depreciation and amortization, or EBITDA, by $14.5 million to $15 million, suggesting an acquisition multiple of about 9 times. That’s less than what Fat Brands paid for either Global Franchise Group or Twin Peaks.

“Fazoli’s has a great growth story, in particular, over time,” CEO Andy Wiederhorn said in a statement. “They continue to surpass sales expectations across the board.”

Fat Brands has been on its buying spree thanks after completing a whole business securitization last year and after merging with its majority owner, Wiederhorn’s Fog Cutter Capital. Fat Brands has been using funds from the securitized financing mechanism in each of its successive deals.

The latest acquisition will bring its systemwide sales to $2.1 billion and give the company a total footprint of 2,300 locations.

Fazoli’s at one point had more than 300 locations in the late 1990s. It went into steep decline during the last recession but has largely kept unit count stable in the years since.

The company said in April that it expected to add 25 to 30 locations next year, however, after the pandemic spurred strong sales. “COVID brought in people who had fewer options,” CEO Carl Howard said at the time. “Their favorite restaurant was closed or shut down temporarily. We exposed people to our great food and our $8 price point.”

Fat Brands has engineered several deals for restaurant chains since it went public in a $24 million “mini-IPO” in 2017, mostly acquiring small brands at low prices. But the Fazoli’s deal will mean the company has made more than $900 million worth of acquisitions since September of last year.  

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