Andy Wiederhorn, the CEO of the restaurant chain collector Fat Brands, told investors this week that his company is looking at making more acquisitions.
But do not expect the same pace as 2021, when the Los Angeles-based company made a surprising series of big deals, far larger than the small, bargain-hunting deals for which it had been known until then—including Global Franchise Group, Twin Peaks, Fazoli’s, and Native Grill and Wings.
“While we spent almost $1 billion in the past year, I don’t see that scale of acquisitions happening this year,” Wiederhorn told investors. “We are now at a size and scale that we do not need to acquire additional brands.”
Instead, Fat Brands will concentrate on integrating the brands it acquired. “Our focus has to be this year on digesting what we’ve already acquired and realizing the synergies,” he said, referring to potential cost savings associated with operating multiple brands.
And Wiederhorn believes his company has plenty of organic growth even without the acquisition of another concept.
Wiederhorn said that the company and all 17 of its concepts have 850 locations in its pipeline. “Both new construction and franchise sales are stronger than we’ve seen in many years, if not ever,” he said. Wiederhorn said the location commitments would represent 33% unit growth and could generate another $50 million in earnings, assuming the locations get built.
The company’s brands have seen a relatively strong recovery from the pandemic. All 17 of the brands’ same-store sales rose 8.5% in the fourth quarter versus the same period in 2019. The newly acquired brands performed particularly well.
Fazoli’s same-store sales rose 25.6% in the fourth quarter compared with 2019, for instance. Twin Peaks’ same-store sales rose 15.8% on a two-year basis. Global Franchise Group, which operates Great American Cookies, Hot Dog on a Stick and other Brands, generated 10.6% two-year same-store sales in the quarter.
And Wiederhorn said the first quarter has been “very strong.” “Just a ton of new franchise sales, restaurant sales are comping very positively,” he said. “Again, business is really solid. We feel really good about the business now.”
All that said, Fat Brands is still looking at deals, even if they’re not quite at the same pace as last year. “We are still in the early innings,” Wiederhorn said. “We remain active in evaluating additional accretive acquisition candidates to augment our existing brands.”
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